Economics Chapter 4
Which characteristic of monopolistic competition does this cartoon illustrate?
A. Monopolistically competitive firms use product differentiation to compete.
What effect does the availability of substitutes have on a monopolistically competitive firm?
A. Such firms have limited control over price.
To achieve deregulation in the late 1970s and the 1980s, the government often
A. eliminated price controls and barriers to entry.
What type of market structure is shown here?
A. pure competition
What was the main goal of the federal actions shown on this timeline?
A. to ensure economic competition
Why could the market structure for this product never be a monopoly?
A. too many substitutes
Each letter represents one of the four types of market structure. Where on this continuum would monopolistic competition be located?
B. b
Which characteristic of non-price discrimination is most likely the reason why people choose to buy this watch?
B. status or image
This business operates in Grand Teton National Park. It MOST LIKELY has been granted
C. A franchise
Which of the following is an example of a natural monopoly?
C. A subway system
Which characteristic of a purely competitive market BEST fits the scene described above?
C. Buyers and sellers are well informed about products.
What does this map tell you about the telephone companies that resulted from the breakup of AT&T?
C. Each one served a single region of the country.
Which of the following BEST summarizes the change in browser usage between 2000 and 2013?
C. Microsoft no longer had a near-monopoly in the browser market.
What is the MAIN barrier to entry into the business shown in this photograph?
C. high start-up costs
Suppose you decide to open a business like the one shown in the photo above. What would be the market structure of such a business?
C. monopolistic competition.
Which two market structures have relatively high barriers to entry?
C. oligopoly and monopoly
Based on this timeline, which of the following companies resolved a government antitrust issue by sharing patented information with its competitors?
D. Google
Which characteristic of pure competition is illustrated by this scenario?
D. Sellers are able to enter and exit the market easily.
In the market represented in the graph above, if one of the firms doubled its output, what would happen to the price?
D. The price would remain the same.
If one of the companies shown in the table above cut its ticket prices significantly, what might that lead to?
D. price war
The main advantage of firms with economies of scale is that
A. Nomatter how high their output rises, their average cost continues to fall.
Drug companies have a monopoly on many brand-name prescription drugs. What does this graph indicate about drug companies' economic decisions during the period shown?
A. They chose to limit output and charge more for their products.
Which price makes the most sense for a monopolist drug company that wishes to maximize profits?
B. $11
To operate in a national park, this business was granted a franchise by
B. A Federal agency.
How did the government finally "tame" this monster?
B. It applied the Sherman Antitrust Act to break up the Standard Oil monopoly.
Why is the company that makes these jeans considered both monopolistic and competitive?
B. It has a monopoly on its own design, but it must compete with other makers of jeans.
Why does it make sense for theaters, museums, restaurants, and other facilities to offer discounts to senior citizens?
B. Many senior citizens would not visit the facility if they had to pay full price.
Based on this headline, the writer is LIKELY predicting that one or more members of the OPEC cartel plan to
B. increase production.
Purely competitive markets are
B. rare.
Read the excerpt from the text. Why might a firm, through a merger, seek to increase market power?
B. to gain more control over prices and total market output
Which of the following industries is most likely to exist in a purely competitive market?
B. wheat
Why did local phone companies have a natural monopoly before the arrival of cellular technology?
C. It was inefficient for more than one company to run the wires connecting customers.
Why did the cartoonist characterize Standard Oil as a kind of monster?
C. The company took over other businesses and exerted undue influence over politicians.
Which of the following businesses would fit all of the characteristics shown above that allow it to engage in price discrimination?
C. airlines
Each letter represents one of the four types of market structure. Where on this continuum would oligopoly be located?
C. c
Which of these factors causes a monopolistically competitive firm to have little control over the price of its product?
C. the ready availability of substitutes
California deregulated its wholesale electricity market in 1996. Which of the following BEST summarizes the data in this graph?
D. After deregulation, California's electricity rates were higher than the national average.
Aside from what is shown in the diagram, what else is true about this type of market?
D. It generates minimal profits.
This company has a monopoly on the service it provides because
D. It is a natural monopoly; it would not be efficient for more than one company to provide this service.
What characteristic of a purely competitive market does crude oil have?
D. The product is the same no matter who produces it.
Suppose that a firm seeks to enter a market, but it quickly realizes that its employees do not have the technical skills needed for the firm to compete in that market. What do economists call the factor that is keeping this firm out of that market?
D. barrier to entry.
What is likely to be the MAIN barrier to entry into the business shown here?
D. complex technology
By being close to the airport, the owner of the business this sign points toward is engaging in a type of
D. non-price competition.
According to the table, which of the following BEST describes the structure of the airline industry?
D. oligopoly
What kind of market structure does this pie graph illustrate?
D. oligopoly