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Multiple Choice Pre Quiz
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1

Under imperfect competition,
A)there is necessarily one producer.
B)individual sellers have no control over the price of the goods or services they produce.
C)individual sellers have control over the price of the goods or services they produce.
D)none of the above.
2

Under imperfect competition,
A)producers face a horizontal demand curve for their product.
B)producers face an upward sloping demand curve for their product.
C)producers face a downward sloping demand curve for their product.
D)none of the above.
3

What do economists call a market that has only one producer?
A)perfect competition
B)monopoly
C)monopolistic competition
D)oligopoly
4

If we were examining a market that had three producers, we would call that market a(n):
A)perfect competition
B)monopoly
C)monopolistic competition
D)oligopoly
5

Monopolistic competition occurs when we have a market with:
A)one producer.
B)many sellers who produce a homogeneous product.
C)a few sellers.
D)many sellers who produce differentiated products.
6

A natural monopoly is a market in which:
A)there is only one producer because the entire market's output can be produced most efficiently by that one firm.
B)there is only one producer because there are significant barriers to entry that keep other firms out of the market.
C)there are only a couple of firms.
D)none of the above.
7

Which of the following is not a barrier to entry?
A)high costs of entry
B)legal restrictions
C)advertising and product differentiation
D)price fixing
8

What do economists call the change in revenue associated with an additional unit sold?
A)marginal cost
B)marginal utility
C)marginal revenue
D)average revenue
9

If total revenue is $579 at 5 units of output and total revenue is $723 at 6 units of output, what is the marginal revenue associated with the sale of the 6th unit of output?
A)144
B)135
C)36
D)234
10

Marginal revenue becomes _______ when the demand curve becomes _______.
A)negative; elastic
B)negative; inelastic
C)positive; inelastic
D)none of the above.
11

In the elastic portion of the demand curve, an increase in price will result in a(n) _______ in TR because MR is _______ in that portion of the demand curve.
A)increase; positive
B)increase; negative
C)decrease; positive
D)decrease; negative
12

Under imperfect competition, the profit maximizing level of output occurs where:
A)TR=TC.
B)AR=AC.
C)MR=MC.
D)none of the above.
13

A profit-maximizing monopolist will charge the price:
A)that is equal to MR.
B)found on the demand curve at the level of Q where MR=MC.
C)found on the AC curve at the level of Q where MR=MC.
D)none of the above.
14

What do economists call the principle that states that individuals will maximize their incomes, profits, or utility by counting only the marginal costs and marginal benefits of a decision?
A)satiation principle
B)satisfaction principle
C)marginal principle
D)maximization principle.
15

At the profit maximization point,
A)the monopolist will have profit equal to zero.
B)the total revenue and total cost curves will have different slopes.
C)the perfectly competitive firm will have a marginal revenue that is not equal to marginal cost.
D)the total revenue and total cost curves will have the same slopes.





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