Econ chp 5

Businesses will generally shut down if they lose money for one or two years; T OR F

False

Perfect competition requires non-standard product; T OR F

False

A business can I skate perfect competition by building a better more innovative product; T OR F

True

Advertising the brand can help create a reputation affect; T OR F

True

And perfect competition, if there are no barriers to entry, only lowest cost businesses survive over the long run; T OR F

True

In perfect competition a profit maximizing business will expand until it's marginal cost equals the market price; T OR F

True

In the market with perfect competition given enough time no barriers to entry profits will tend toward zero in the Long run; T OR F

True

Perfect competition all buyers and sellers are price takers; T OR F

True

Under the right circumstances competition could be a win-win proposition for companies and consumers; T OR F

True

Monopolistic competition is characterized by; a-A large number of sellers with a similar product b-One seller with a standard product c-A limited number of sellers with a variety of products d-One seller with a variety of products

a-A large number of sellers with a similar product

An example of an oligopoly is the; a-Airline industry b-convenient store industry c-car wash industry d-photocopying services industry

a-Airline industry

A business with market power may; a-be less innovative than businesses in perfect competition b-force employees to work harder and longer c-create new markets due to competitive forces d-sometimes use high profits to research new technologies

a-be less innovative than businesses in perfect competition

When businesses have market power, they are able to charge a price higher than the price charged by a business in perfect competition. That's the market power equilibrium on a diagram will be; a-higher and to the right of the perfect competition equilibrium b-higher and to the left of the perfect competition equilibrium c-lower and to the right of the perfect competition equilibrium d-lower and to the left of the perfect competition equilibrium

a-higher and to the left of the perfect competition equilibrium

Which of the following is NOT an example of a barrier to entry;a-lower costs b-scarce land c-rare natural minerals d-heavy government regulation

a-lower costs

__________ is the ability to raise prices about the level perfect competition would produced by restricting the quantity supplied; a-market power b-monopolistic power c-oligarchic power d-perfect marketing

a-market power

Perfect competition of businesses in the market produce at the point where______ equals______; a-market price, marginal cost b-marginal price, marginal cost c-average revenue, average cost d-average price, average cost

a-market price, marginal cost

Profitable business will attract; a-new competitors b-Government regulation c-increases in marginal revenue d-exiting businesses

a-new competitors

In the long run, monopolistic competition starts to look like; a-perfect Competition b-market satiation c-market balance d-equalized market

a-perfect Competition

The four main types of market structure are; a-perfect competition, monopolistic competition, oligopoly, monopoly b-land, labor, capital, and business Know how c-average market, market balance, equilibrium, and marginal product d-marginal cost, revenue, product, and price

a-perfect competition, monopolistic competition, oligopoly, monopoly

If all of the restaurants in a small town colluded and agreed to raise dinner prices, this would lead to a loss to a society because; a-some dinners that could be served are not b-The number of dinner served stays the same but the buyers face higher prices c-collusion is illegal d-restaurants would become too crowded with new customers

a-some dinners that could be served are not

If the local car dealership can sell eight cars per day at a price of $25,000 each but must reduce the price to $24,000 to sell one more car, what is the marginal revenue of the ninth car; a- $-1000 b-$16000 c-$24000 d-$216000

b-$16000

_________ it's paid communication with potential customers in a public media, such as newspapers and television; a-journalism b-advertising c-public relations d-brand identification

b-advertising

An oligopoly occurs when there; a-Or a large number of sellers in a market producing a variety of products b-are a few sellers in a market c-is only one seller in a market d-very large number of sellers producing similar products

b-are a few sellers in a market

A_________ makes it more difficult for a competitor to enter a market;a-luxury product b-barrier to entry c-lower price d-lower cost

b-barrier to entry

If two or more oligopolistic companies work together to keep the price is high and split the market between them it's called; a-occlusion b-collusion c-profit splitting d-market sharing

b-collusion

Marginal revenue is generally________ for businesses that do not operate under conditions of perfect competition;a-lower than the average cost b-higher than the price c-lower than the price d-lower than the marginal product(IDK AB THIS)

b-higher than the price

____________ collusion can occur even when oligopolistic businesses do not directly communicate with each other; a-explicit b-implicit c-ordinary d-extraordinary

b-implicit

AT&T is an example of a business that used market power to; a-avoid government regulation b-invest in important research benefiting society c-minimize average costs of productions-squash the competition

b-invest in important research benefiting society

Profit maximizing monopolist will always charge________ a perfect competitor would; a-less than b-more than c-the same as

b-more than

Does the stock market resemble a perfectly competitive market; a-no because there are not enough buyers and sellers in the stock market b-no because the products(stocks) in the market are not standardized enough c-no because the buyers and sellers in the market lack access reliable information about prices in the market d-yes the stock market doesresemble a perfectly competitive market

b-no because the products(stocks) in the market are not standardized enough

Natural monopolies have been slowly eroded by; a-perfect competition b-technological change c-market imbalances d-rising costs

b-technological change

Which of the following is most likely to be sold in a perfectly competitive market; a-law school admission test tutoring b-wheat c-fast food d-automobiles

b-wheat

Profit maximizing rule says that the seller will expand output up to the point; a-where marginal revenue equals price b-where marginal revenue equals marginal cost c-where marginal revenue is less than the price d-where marginal cost equals marginal revenue

b-where marginal revenue equals marginal cost

Example of a barrier to entry is; a-plentiful natural resources b-low-cost resources c- lack of a key resource d-helpful government regulation

c- lack of a key resource

Good example of monopolistic competition is; a- neighborhood restaurants b-defense contractors c-Airline serving a small city d-Brain surgeons

c-Airline serving a small city

Monopolies generally________ Technology and globalization; a-grow with b-thrive with c-Are reduced in number by d-are unaffected by

c-Are reduced in number by

A_________ is anything that might make it more difficult for a competitor to enter market; a-monopolistic entry b-marginal entry c-Barrier to entry d-perfect competition market

c-Barrier to entry

If music was perfectly competitive, then all performers would; a-charge the same price for concerts but not necessarily play the same music b-Play the same music, but not necessarily charge the same price for concert c-Play the same music and charge the same price for concerts d-produce a nonstandardized product

c-Play the same music and charge the same price for concerts

In perfect competition, P=MC means; a-profit equals marginal cost b-Price equals market cost c-Price equals marginal cost d-profit equals market cost

c-Price equals marginal cost

Compared to businesses with market power, businesses in perfect competition will charge_________prices and sell_________ output; a-higher,more b-higher, less c-lower,more d-lower,less

c-lower,more

From World War II the early 1970s, GM, four, and Chrysler enjoyed; a-perfect competition b-a natural monopoly c-market power d-market advantage

c-market power

A market where there is only one seller, and buyers have no good alternative, is called a; a-oligopoly b-oligarchy c-monopoly d-perfect competition market

c-monopoly

A ________ Monopoly is an industry in which it makes economic sense to have only one provider; a-specific b-original c-natural d-competitive

c-natural

In perfect competition, higher cost businesses; a-thrive and grow b-increase marginal revenue c-tend to go out of business if unable to adjust d-tend toward oligopolies

c-tend to go out of business if unable to adjust

The easiest way to have a monopoly today is;a-to be in a socialistic country b-to have the government protect you c-to own everything in your market d-with a strong business plan

c-to own everything in your market

Natural monopolies include; a-Cell phone b-fast food outlets c-colleges and universities d-The local water company

d-The local water company

Microsoft to main products, Windows and office, could be examples of; a-perfect competition b-monopolistic competition c-A natural monopoly d-an oligopoly

d-an oligopoly

If two drugstores in the market agreed that they will both sell Fritos at a higher price, and neither will undercut the other, this is Called; a-market banding b-occlusion c-implicit collusion d-collusion

d-collusion

In perfect competition, profit maximizing business will expand until it's__________ equals the market price; a-marginal product b-average cost c-marginal revenue d-marginal cost

d-marginal cost

Companies often spent considerable amount of money to create a__________ in regards to the brand-name; a-market effect b-product orientation c-rational effect d-reputation effect

d-reputation effect

Market power is; a-the combination of price and product b-the balance between average and marginal product c-another term for equilibrium d-the ability to raise prices above the prices that would exist under perfect competition

d-the ability to raise prices above the prices that would exist under perfect competition