 |
| 1 | |
The social cost of monopoly power arises because: |
| | A) | marginal cost is set equal to marginal revenue. |
| | B) | price is less than marginal cost. |
| | C) | marginal consumer benefit is less than marginal revenue. |
| | D) | marginal cost is less than price and marginal consumer benefit. |
|
|
|
| 2 | |
Competition policy tries to enhance __________ by promoting or safeguarding competition. |
| | A) | efficiency |
| | B) | equity |
| | C) | profitability |
| | D) | concentration |
|
|
|
| 3 | |
If an inventor cannot privately appropriate the financial benefits of his work because of imitation, this is an example of: |
| | A) | market failure. |
| | B) | market efficiency. |
| | C) | market spillovers. |
| | D) | market saturation. |
|
|
|
| 4 | |
A locational externality occurs if a ______ costs are _______ by locating near similar firms. |
| | A) | person’s, increased |
| | B) | firm’s, reduced |
| | C) | person’s, reduced |
| | D) | firm’s, increased |
|
|
|
| 5 | |
Producer surplus (profit) is the excess of revenue over total costs. |
| | A) | True |
| | B) | False |
|
|
|
| 6 | |
If a buy chocolate at a price below what I would be prepared to pay for it, this is an example of: |
| | A) | producer surplus |
| | B) | consumer abundance |
| | C) | consumer surplus |
| | D) | producer inefficiency |
|
|
|
| 7 | |
Charging different consumers different prices for the same product is an example of ______ . |
| | A) | profiteering |
| | B) | unfairness |
| | C) | astute business |
| | D) | price discrimination |
|
|
|
| 8 | |
Monopolists are more likely to take advantage of scale economies than firms in a perfectly competitive market. |
| | A) | True |
| | B) | False |
|
|
|
| 9 | |
If the Royal Mail is opened up to competition and only the profitable parts of the business are sought after by new entrants, this is an example of _______ . |
| | A) | cream skimming |
| | B) | imperfect competition |
| | C) | externalities |
| | D) | adverse selection |
|
|
|
| 10 | |
In a conglomerate merger, the production activities of the two firms are _________. |
| | A) | related |
| | B) | unrelated |
| | C) | identical |
| | D) | congruent |
|
|
|
| 11 | |
Producer surplus is the excess of ____________ over ______________. |
| | A) | revenue, marginal cost |
| | B) | revenue, average cost |
| | C) | revenue, total cost |
| | D) | revenue, accounting cost |
|
|
|
| 12 | |
Perfect price discrimination allows a monopolist to produce the socially efficient output. |
| | A) | True |
| | B) | False |
|
|
|
| 13 | |
The overall cost of monopoly is equal to the sum of ____________ and ____________. |
| | A) | Monopoly profits, externalities |
| | B) | Social costs, deadweight burden |
| | C) | Monopoly profits, social costs |
| | D) | Producer surplus, consumer surplus |
|
|
|
| 14 | |
X-inefficiency arises as a result of __________. |
| | A) | inside information |
| | B) | lack of competition |
| | C) | weak government |
| | D) | patents |
|
|
|
| 15 | |
The Competition Commission in the UK starts with the presumption that monopoly is bad. |
| | A) | True |
| | B) | False |
|
|
|
| 16 | |
To achieve a takeover of another firm, the predator firm must buy the shares of the victim firm’s __________. |
| | A) | directors |
| | B) | managers |
| | C) | staff |
| | D) | shareholders |
|
|
|
| 17 | |
If two firms doing the same thing in the same industry join together, this is known as a ____________. |
| | A) | vertical merger |
| | B) | horizontal merger |
| | C) | conglomerate merger |
| | D) | hostile takeover |
|
|
|
| 18 | |
In the UK mergers can be referred to the Competition Commission if they create a firm with ___________ of the market. |
| | A) | 15% |
| | B) | 20% |
| | C) | 25% |
| | D) | 30% |
|
|
|
| 19 | |
In the UK the Restrictive Practices Court scrutinizes agreements between firms to consider if they are in the public interest. |
| | A) | True |
| | B) | False |
|
|
|
| 20 | |
Sunrise industries may require support because of: |
| | A) | imperfections in capital industries. |
| | B) | a shortage of skills. |
| | C) | the price of new products. |
| | D) | a and b. |
| | E) | b and c. |
|
|
|
| 21 | |
Firms may cluster together because:Incorrect - firms may cluster together because of all these points, see chapter 17. |
| | A) | risks of workers fall. |
| | B) | they can achieve economies of transport. |
| | C) | they can benefit from technology spillover. |
| | D) | all of the above. |
|
|
.