Question

 

1. Which of the following is true concerning a monopoly?

A single consumer can impact the market price

The firm is a price taker

The firm has significant market power

Many small firms sell the same good

2.Which of the following is an example of a monopoly?

A. One large firm supplies the entire product to the market

B. One firm supplies 60 percent of the product to the market and there are two other rival firms

C. Many firms supply the same product essentially, but each has significant brand loyalty

D. A few large firms supply the entire product to the market

3. Which list has market structures in the correct order from the most to the least market power?

Perfect competition, oligopoly, monopolistic competition, monopoly

Monopoly, monopolistic competition, oligopoly, perfect competition

Monopoly, oligopoly, monopolistic competition, perfect competition

Oligopoly, perfect competition, monopolistic competition, monopoly

 4.An industry in which two firms supply a particular product is:                   

             A. A duopoly.     

             B. A monopoly.                  

             C. Monopolistic competition.                       

             D. An oligopoly.

5. A perfectly competitive firm is a price taker because:  

            A. It has no control over the market price of its product.                 

            B. It has market power.                  

            C. Market demand is downward sloping.                 

            D. Its products are differentiated.

6. In which of the following industries is the firm referred to as a price taker?                      

A. Monopolistic competition

B. Monopoly

C. Perfect competition  

D. Oligopoly

7. A flat or horizontal demand curve for a firm indicates that:                      

A. The firm has no market power.            

B. The law of demand does not apply in the market.                        

C. Price equals average total cost.            

D. The firm is a monopoly.

8.The price of a good multiplied by the quantity sold equals:       

A. Total profit.                  

B. Total revenue.            

C. Marginal revenue.                     

D. Marginal cost.

9. A rightward shift in market supply curve could be caused by:  

A. An improvement in technology.                          

B. An increase in the market price.                          

C. An increase in wages.               

D. The expectation that the market price will fall in the future.

10. For a competitive firm, the marginal cost curve:         

A. Is the short-run supply curve.               

B. Shifts to the right when new firms enter the market.                 

C. Shifts upward when wages decrease.                

D. Is the short-run demand curve.

11. If the cost of production rises for all the firms in a perfectly competitive industry:

A. Each firm will supply less output at any given price.                    

B. Total revenue increases.                         

C. The marginal cost curve shifts downward.                      

D. Total profit increases.

12. The segment of the firm's marginal cost curve that:                  

A. lies above the average total cost is its supply curve.                    

B. is rising is equal to rising marginal physical product.   

C. Lies above the market price is equal to per unit profit.                               

D. lies above the average variable cost is its supply curve.

13.The market supply curve is calculated by:       

A. Summing the marginal cost curves of all firms.                              

B. Averaging the individual supply curves.                            

C. Summing the prices from individual supply curves.     

D. Averaging the individual marginal cost curves below ATC.

14. In a competitive market, in the long run, economic profits will cause:               

A. New firms to enter the market.                           

B. Existing firms to leave the market.                      

C. Supply to decrease.                  

D. Demand to decrease.

15. In a perfectly competitive industry, firms are likely to:                             

A. Exit when there are economic profits because they know the profits will not last.                         

B. Reduce the level of production when there are economic profits.                         

C. Enter when there are economic profits.

D. Enter when price is equal to the minimum average total cost.

Answer 1

(1) (C)

Monopolist is the only seller in the market which can influence the market by being a price setter.

(2) (A)

Monopolist is the only seller in a market.

(3) (C)

Monopoly (1 seller) > Oligopoly (few large firms) > Monopolistic competition (Many firms with price setting power) > Perfect competition (Many firms with no market power)

(4) (A)

A duopoly is an olgopoly with 2 sellers.

(5) (A)

Each firm sells identical goods so no firm has any market power, and they accept market price as their own price.

(6) (C)

(7) (A)

In perfect competition, demand curve is horizontal meaning no firm has market power and each firm is a price taker.

(8) (B)

(9) (A)

Improved technology lowers production cost, so firms increase production and market supply increases, shifting supply curve rightward.

(10) (A)

(11) (A)

At higher production cost, all firms will lower production and decrease supply.

(12) (D)

Firm supply curve is the portion of its MC curve that lies above the minimum point of the AVC curve.

(13) (A)

Market supply curve is the horizontal summation of individual supply curves.

(14) (A)

Since entry is free, economic profit will attract new entry.

(15) (C)