Question 1

A firm engaging in successful price discrimination can reduce its total cost without increasing total revenue, thereby increasing total profit.

Accepted Answer

A) True 
 B)False  False

Question 2

A firm practicing price discrimination would charge a higher price to buyers with relatively elastic demand curves and a lower price to buyers with relatively inelastic demand curves.

Accepted Answer

A) True 
 B)False  False

Question 3

Monopolistically competitive firms tend to realize normal profits in the long run because

Accepted Answer

A)  barriers to entry into the industry are relatively low 
B)  firms produce under conditions of diseconomies of scale 
C)  advertising increases the firm's costs and thus decreases profits 
D)  sales promotion makes the firm's demand curve more inelastic 
A)  barriers to entry into the industry are relatively low 
B)  firms produce under conditions of diseconomies of scale 
C)  advertising increases the firm's costs and thus decreases profits 
D)  sales promotion makes the firm's demand curve more inelastic A

Question 4

The purpose of a cartel is to increase output and reduce price in order to increase the group profits of its members.

Accepted Answer

A) True 
 B)False

Question 5

Successful persuasive advertising by Coca Cola

Accepted Answer

A)  increases its demand and make it more elastic 
B)  increases its demand and makes it less elastic 
C)  decreases its demand and makes it more elastic 
D)  decreases its demand and makes it less elastic 
A)  increases its demand and make it more elastic 
B)  increases its demand and makes it less elastic 
C)  decreases its demand and makes it more elastic 
D)  decreases its demand and makes it less elastic

Question 6

Economic prosperity is an obstacle to the successful operation of a cartel.

Accepted Answer

A) True 
 B)False

Question 7

Batteries are considered to be a high-concentration industry, while bakeries are a low-concentration industry.

Accepted Answer

A) True 
 B)False

Question 8

If a market's concentration ratio is near zero, the market tends to be

Accepted Answer

A)  perfectly competitive 
B)  monopolistically competitive 
C)  oligopolistic 
D)  monopolistic 
A)  perfectly competitive 
B)  monopolistically competitive 
C)  oligopolistic 
D)  monopolistic

Question 9

If Microsoft is in a(n)_____ market for computer software, it will not behave as though it is a monopoly even though it is the only firm in the market.

Accepted Answer

A)  oligopolistic 
B)  monopolistically competitive 
C)  contestable 
D)  industrial 
A)  oligopolistic 
B)  monopolistically competitive 
C)  contestable 
D)  industrial

Question 10

In a long run, freedom of entry into a market forces a ______ to charge a price equal to average total cost, but average total cost exceeds its minimum level.

Accepted Answer

A)  perfectly competitive firm 
B)  monopolistically competitive firm 
C)  oligopolistic firm 
D)  pure monopoly 
A)  perfectly competitive firm 
B)  monopolistically competitive firm 
C)  oligopolistic firm 
D)  pure monopoly

Question 11

The merger of Ford Motors and General Motors would be an example of a vertical merger.

Accepted Answer

A) True 
 B)False

Question 12

The demand curve and marginal revenue curve of a monopolistically competitive firm are downward sloping because

Accepted Answer

A)  the firm is a price taker rather than a price maker 
B)  high barriers prevent potential competitors from entering the industry 
C)  the firm's product is differentiated 
D)  all consumers have identical tastes and preferences 
A)  the firm is a price taker rather than a price maker 
B)  high barriers prevent potential competitors from entering the industry 
C)  the firm's product is differentiated 
D)  all consumers have identical tastes and preferences

Question 13

The quantity sold by an oligopolist depends not only on that firm's product price, but also on the other firms' prices and quantities sold.

Accepted Answer

A) True 
 B)False

Question 14

In order for price discrimination to take place, the firm must be able to subdivide the market into groups of people with different price elasticities of demand.

Accepted Answer

A) True 
 B)False

Question 15

Oligopoly is the market structure that is closest to perfect competition.

Accepted Answer

A) True 
 B)False

Question 16

A monopolistically competitive firm hopes to

Accepted Answer

A)  make an economic profit, but realizes economic losses in the long run 
B)  make an economic profit, but realizes normal profits in the long run 
C)  minimize its losses in the short run, but realizes economic profits in the long run 
D)  minimize its losses in the short run, but realizes economic losses in the long run 
A)  make an economic profit, but realizes economic losses in the long run 
B)  make an economic profit, but realizes normal profits in the long run 
C)  minimize its losses in the short run, but realizes economic profits in the long run 
D)  minimize its losses in the short run, but realizes economic losses in the long run

Question 17

A fundamental characteristic of monopolistic competition is

Accepted Answer

A)  strong barriers to entry 
B)  that each firm considers its rivals reactions 
C)  product differentiation 
D)  the existence of just a few firms producing all the output 
A)  strong barriers to entry 
B)  that each firm considers its rivals reactions 
C)  product differentiation 
D)  the existence of just a few firms producing all the output

Question 18

Proponents of advertising maintain that advertising can eventually result in decreased unit costs of production by

Accepted Answer

A)  increasing the level of output, thus enabling firms to take advantage of economies of scale 
B)  increasing the level of output, which results in a downward shift in a firm's long-run average total cost curve 
C)  reducing sales, thus enabling firms to avoid diseconomies of scale 
D)  reducing sales, thus allowing firms to downsize their production operations 
A)  increasing the level of output, thus enabling firms to take advantage of economies of scale 
B)  increasing the level of output, which results in a downward shift in a firm's long-run average total cost curve 
C)  reducing sales, thus enabling firms to avoid diseconomies of scale 
D)  reducing sales, thus allowing firms to downsize their production operations

Question 19

Economies of scale can be a barrier to entry because

Accepted Answer

A)  if a firm gets too big, its average total costs start to rise 
B)  firms face competition from other industries producing similar products 
C)  they predominantly exist in perfectly competitive industries 
D)  small, entering firms typically have higher average total costs than the large, existing firms 
A)  if a firm gets too big, its average total costs start to rise 
B)  firms face competition from other industries producing similar products 
C)  they predominantly exist in perfectly competitive industries 
D)  small, entering firms typically have higher average total costs than the large, existing firms

Question 20

Barriers to entry include all of the following except

Accepted Answer

A)  control of raw materials 
B)  patents 
C)  high prices 
D)  product differentiation and advertising 
A)  control of raw materials 
B)  patents 
C)  high prices 
D)  product differentiation and advertising

A firm engaging in successful price discrimination can reduce its total cost without increasing total revenue, thereby increasing total profit.

A firm practicing price discrimination would charge a higher price to buyers with relatively elastic demand curves and a lower price to buyers with relatively inelastic demand curves.

Monopolistically competitive firms tend to realize normal profits in the long run because

The purpose of a cartel is to increase output and reduce price in order to increase the group profits of its members.

Successful persuasive advertising by Coca Cola

Economic prosperity is an obstacle to the successful operation of a cartel.

Batteries are considered to be a high-concentration industry, while bakeries are a low-concentration industry.

If a market's concentration ratio is near zero, the market tends to be

If Microsoft is in a(n)_____ market for computer software, it will not behave as though it is a monopoly even though it is the only firm in the market.

In a long run, freedom of entry into a market forces a ______ to charge a price equal to average total cost, but average total cost exceeds its minimum level.

The merger of Ford Motors and General Motors would be an example of a vertical merger.

The demand curve and marginal revenue curve of a monopolistically competitive firm are downward sloping because

The quantity sold by an oligopolist depends not only on that firm's product price, but also on the other firms' prices and quantities sold.

In order for price discrimination to take place, the firm must be able to subdivide the market into groups of people with different price elasticities of demand.

Oligopoly is the market structure that is closest to perfect competition.

A monopolistically competitive firm hopes to

A fundamental characteristic of monopolistic competition is

Proponents of advertising maintain that advertising can eventually result in decreased unit costs of production by

Economies of scale can be a barrier to entry because

Barriers to entry include all of the following except

Scarcity and Choice

Market Transactions: Demand and Supply Analysis

Demand and Supply Applications

Production and the Costs of Production

Competition and Monopoly: Virtues and Vices

Labor Markets

Government and Markets

The Mixed Economy of the United States

Gross Domestic Product and Economic Growth

The Business Cycle, Unemployment, and Inflation

Macroeconomic Instability: Aggregate Demand and Aggregate Supply

Fiscal Policy and the Federal Budget

Money and the Banking System

The Federal Reserve and Monetary Policy

The United States and the Global Economy

International Finance

Economic Systems and Developing Countries

Filters

Exam 6: Imperfect Competition

A firm engaging in successful price discrimination can reduce its total cost without increasing total revenue, thereby increasing total profit.

A firm practicing price discrimination would charge a higher price to buyers with relatively elastic demand curves and a lower price to buyers with relatively inelastic demand curves.

Monopolistically competitive firms tend to realize normal profits in the long run because

The purpose of a cartel is to increase output and reduce price in order to increase the group profits of its members.

Successful persuasive advertising by Coca Cola

Economic prosperity is an obstacle to the successful operation of a cartel.

Batteries are considered to be a high-concentration industry, while bakeries are a low-concentration industry.

If a market's concentration ratio is near zero, the market tends to be

If Microsoft is in a(n)_____ market for computer software, it will not behave as though it is a monopoly even though it is the only firm in the market.

In a long run, freedom of entry into a market forces a ______ to charge a price equal to average total cost, but average total cost exceeds its minimum level.

The merger of Ford Motors and General Motors would be an example of a vertical merger.

The demand curve and marginal revenue curve of a monopolistically competitive firm are downward sloping because

The quantity sold by an oligopolist depends not only on that firm's product price, but also on the other firms' prices and quantities sold.

In order for price discrimination to take place, the firm must be able to subdivide the market into groups of people with different price elasticities of demand.

Oligopoly is the market structure that is closest to perfect competition.

A monopolistically competitive firm hopes to

A fundamental characteristic of monopolistic competition is

Proponents of advertising maintain that advertising can eventually result in decreased unit costs of production by

Economies of scale can be a barrier to entry because

Barriers to entry include all of the following except

Scarcity and Choice

Market Transactions: Demand and Supply Analysis

Demand and Supply Applications

Production and the Costs of Production

Competition and Monopoly: Virtues and Vices

Labor Markets

Government and Markets

The Mixed Economy of the United States

Gross Domestic Product and Economic Growth

The Business Cycle, Unemployment, and Inflation

Macroeconomic Instability: Aggregate Demand and Aggregate Supply

Fiscal Policy and the Federal Budget

Money and the Banking System

The Federal Reserve and Monetary Policy

The United States and the Global Economy

International Finance

Economic Systems and Developing Countries

Filters