Question 1

The absence of freedom of entry and exit is key to fact that there is no pressure for economic profit to go to zero under

Accepted Answer

A) Perfect competition and monopolistic competition 
B) Oligopoly and monopoly 
C) Monopoly and Perfect competition 
D) Monopoly and monopolistic competition 
A) Perfect competition and monopolistic competition 
B) Oligopoly and monopoly 
C) Monopoly and Perfect competition 
D) Monopoly and monopolistic competition

Question 2

There are hundreds of companies in the business of providing natural gas to residential users. For the most part, these local gas companies each only serve their local community and so they buy in very competitive markets but sell locally and without competitors. The wholesale market is therefore likely to be

Accepted Answer

A) perfect competition. 
B) monopolistic competition. 
C) oligopoly. 
D) monopoly. 
A) perfect competition. 
B) monopolistic competition. 
C) oligopoly. 
D) monopoly.

Question 3

An industry which Herfindahl-Hershman Index of 1,000 would best be described as

Accepted Answer

A) perfect competition. 
B) monopolistic competition. 
C) oligopoly. 
D) monopoly. 
A) perfect competition. 
B) monopolistic competition. 
C) oligopoly. 
D) monopoly.

Question 4

Agricultural Products can be modeled best using the model of

Accepted Answer

A) monopolistic competition. 
B) perfect competition. 
C) oligopoly. 
D) monopoly. 
A) monopolistic competition. 
B) perfect competition. 
C) oligopoly. 
D) monopoly.

Question 5

Suppose you can get the typical cable channels (ESPN, MTV, Bravo, etc.)from a cable company, from DIRECTV, or from DISH Network. This market would be described by

Accepted Answer

A) perfect competition. 
B) healthy competition. 
C) oligopoly. 
D) monopoly. 
A) perfect competition. 
B) healthy competition. 
C) oligopoly. 
D) monopoly.

Question 6

Suppose there are 5 makers of tablet computers with market shares of 80%, 5%, 5%, 5%, and 5% respectively. The HHI is

Accepted Answer

A) 0. 
B) 20. 
C) 6,500. 
D) 10,000. 
A) 0. 
B) 20. 
C) 6,500. 
D) 10,000.

Question 7

Monopolistically competitive firms are

Accepted Answer

A) Price makers 
B) Price takers 
C) Price excluders 
D) Price includes 
A) Price makers 
B) Price takers 
C) Price excluders 
D) Price includes

Question 8

Suppose you can get broadband only from your cable company or your phone company. This market would be described by

Accepted Answer

A) perfect competition. 
B) monopolistic competition. 
C) oligopoly. 
D) monopoly. 
A) perfect competition. 
B) monopolistic competition. 
C) oligopoly. 
D) monopoly.

Question 9

Lumber Products can be modeled best using the model of

Accepted Answer

A) monopolistic competition. 
B) perfect competition. 
C) oligopoly. 
D) monopoly. 
A) monopolistic competition. 
B) perfect competition. 
C) oligopoly. 
D) monopoly.

Question 10

There will be short-run pressure on the price to fall whenever

Accepted Answer

A) P>ATC B) P=ATC C) PATC B) P=ATC C) P

Question 11

The assumption for perfect competition and monopolistic competition that enables economic profit to move towards zero is

Accepted Answer

A) Freedom of Entry and Exit 
B) Perfect Information 
C) Homogeneous products 
D) Government involvement 
A) Freedom of Entry and Exit 
B) Perfect Information 
C) Homogeneous products 
D) Government involvement

Question 12

-In Figure 5.6, a monopolist would charge which price?

Accepted Answer

A) The monopolist would shutdown so no price would be charged. 
B) P2 
C) P3 
D) P4 
A) The monopolist would shutdown so no price would be charged. 
B) P2 
C) P3 
D) P4

Question 13

If you drive on a rural stretch of highway and come upon an intersection in which there is only one gas station and you know it to be the only one for 100 miles, it is a

Accepted Answer

A) monopolist. 
B) perfect competitor. 
C) monopolistic competitor. 
D) oligopolist. 
A) monopolist. 
B) perfect competitor. 
C) monopolistic competitor. 
D) oligopolist.

Question 14

An indicator of the degree of competition in an industry is the concentration ratio. It measures

Accepted Answer

A) the percentage of sales in the industry by the largest firms. 
B) the percentage of profit in the industry by the smallest firms. 
C) the sales in the industry as a percentage of all consumption in the U.S. 
D) the profitability of the industry. 
A) the percentage of sales in the industry by the largest firms. 
B) the percentage of profit in the industry by the smallest firms. 
C) the sales in the industry as a percentage of all consumption in the U.S. 
D) the profitability of the industry.

Question 15

The typical firm in perfect competition is

Accepted Answer

A) An airline 
B) A farm 
C) A fast food restaurant chain 
D) An electrical power company 
A) An airline 
B) A farm 
C) A fast food restaurant chain 
D) An electrical power company

Question 16

When firms are in perfect competition the result is that firms charge a price that is always equal to its

Accepted Answer

A) Minimum ATC 
B) Minimum AVC 
C) MC 
D) AFC 
A) Minimum ATC 
B) Minimum AVC 
C) MC 
D) AFC

Question 17

The key difference(s)between monopoly and oligopoly is

Accepted Answer

A) that there are two in oligopoly rather than one competitor in a monopoly. 
B) there are no barriers to entry with oligopoly. 
C) there must be product differences in oligopoly. 
D) there are no differences between oligopoly and a monopoly. 
A) that there are two in oligopoly rather than one competitor in a monopoly. 
B) there are no barriers to entry with oligopoly. 
C) there must be product differences in oligopoly. 
D) there are no differences between oligopoly and a monopoly.

Question 18

The personal computer operating systems industry can be best modeled using the model of

Accepted Answer

A) monopolistic competition. 
B) perfect competition. 
C) oligopoly. 
D) Monopoly. 
A) monopolistic competition. 
B) perfect competition. 
C) oligopoly. 
D) Monopoly.

Question 19

The fast food industry can be modeled best using the model of

Accepted Answer

A) monopolistic competition. 
B) perfect competition. 
C) oligopoly. 
D) monopoly. 
A) monopolistic competition. 
B) perfect competition. 
C) oligopoly. 
D) monopoly.

Question 20

There are a quarter of a million dairy farmers in the country. The best model to analyze this market is

Accepted Answer

A) perfect competition. 
B) monopolistic competition. 
C) oligopoly. 
D) monopoly. 
A) perfect competition. 
B) monopolistic competition. 
C) oligopoly. 
D) monopoly.

Exam 5: Perfect Competition, Monopoly, and Economic Versus Normal Profit

The absence of freedom of entry and exit is key to fact that there is no pressure for economic profit to go to zero under

An industry which Herfindahl-Hershman Index of 1,000 would best be described as

Agricultural Products can be modeled best using the model of

Suppose you can get the typical cable channels (ESPN, MTV, Bravo, etc.)from a cable company, from DIRECTV, or from DISH Network. This market would be described by

Suppose there are 5 makers of tablet computers with market shares of 80%, 5%, 5%, 5%, and 5% respectively. The HHI is

Monopolistically competitive firms are

Suppose you can get broadband only from your cable company or your phone company. This market would be described by

Lumber Products can be modeled best using the model of

There will be short-run pressure on the price to fall whenever

The assumption for perfect competition and monopolistic competition that enables economic profit to move towards zero is

-In Figure 5.6, a monopolist would charge which price?

If you drive on a rural stretch of highway and come upon an intersection in which there is only one gas station and you know it to be the only one for 100 miles, it is a

An indicator of the degree of competition in an industry is the concentration ratio. It measures

The typical firm in perfect competition is

When firms are in perfect competition the result is that firms charge a price that is always equal to its

The key difference(s)between monopoly and oligopoly is

The personal computer operating systems industry can be best modeled using the model of

The fast food industry can be modeled best using the model of

There are a quarter of a million dairy farmers in the country. The best model to analyze this market is

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