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| 1.
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The correct sequence of market structures from most to least
competitive is |
| | A) | pure monopoly, oligopoly, perfect competition, monopolistic
competition. |
| | B) | oligopoly, pure monopoly, perfect competition, imperfect
competition. |
| | C) | perfect competition, monopolistic competition, oligopoly, pure
monopoly. |
| | D) | perfect competition, imperfect competition, pure monopoly. |
| | E) | perfect competition, monopolistic competition, pure monopoly,
oligopoly. |
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| 2.
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A firm that emerges as the only seller in an industry with economies of scale is a(n) |
| | A) | monopoly. |
| | B) | oligopoly. |
| | C) | monopsony. |
| | D) | natural oligopoly. |
| | E) | natural monopoly. |
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| 3.
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The profit maximizing rule MR = MC applies to |
| | A) | all firms. |
| | B) | monopolists only. |
| | C) | perfect competitors only. |
| | D) | monopolistic competitors only. |
| | E) | both pure monopolists and perfect competitors. |
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| 4.
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Given the total cost function, TC = a + bQ with (a,b) > 0, average
costs will |
| | A) | be approximately constant over most of the output range. |
| | B) | fall at first and then rise as output rises. |
| | C) | fall over the entire range of output. |
| | D) | rise at first and then fall as output rises. |
| | E) | rise over the entire range of output. |
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| 5.
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If a firm triples all its inputs and output triples as a result,
then the firm |
| | A) | has increasing returns to scale. |
| | B) | has economies of scale. |
| | C) | has constant returns to scale. |
| | D) | will have lower total costs. |
| | E) | will have lower average total costs. |
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| 6.
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If the monopolist's demand curve is P = 70 - 14Q, then the slope of the marginal revenue curve is |
| | A) | -28. |
| | B) | -14. |
| | C) | -7. |
| | D) | -1. |
| | E) | insufficient information is provided to determine the slope. |
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| 7.
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Suppose a competitive firm and a monopolist are both charging €5 for their respective outputs. One can infer that |
| | A) | marginal revenue is €5 for both firms. |
| | B) | marginal cost is €5 for the competitive firm & less than €5 for
the monopolist. |
| | C) | marginal revenue is less than €5 for both firms. |
| | D) | the competitive firm is charging too much and the monopolist too little. |
| | E) | both firms are earning profits. |
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| 8.
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Network economies are |
| | A) | Confined to sectors such as telecommunications and energy |
| | B) | Something that explains how competition between suppliers can result in one, or a small number of suppliers surviving |
| | C) | Something that more or less guarantees a supplier of freedom from the threat of competition |
| | D) | Something that rquires taking affected industries into state ownwership for efficiency reasons |
| | E) | Something that benefit producersbut not consumers |
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| 9.
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Cost plus regulation |
| | A) | Creates incentives for regulated firms to increase costs |
| | B) | Creates incentives for firms to innovate |
| | C) | Holds down prices because firms are not allowed to reduce cost price margins |
| | D) | Means that firms will cut corners on quality to reduce costs |
| | E) | all of the above |
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| 10.
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Price discrimination |
| | A) | Reduces economic efficiency because it raises the average price paid for goods |
| | B) | Reduces economic efficiency because it increases profits |
| | C) | Increases economic efficiency because it reduces deadweight loss |
| | D) | Increases economic efficiency because it brings price closer to marginal cost |
| | E) | C) and D) |
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