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| 1 | |
An industry in which a small number of large firms sell products that are either close or perfect substitutes is: |
| | A) | perfectly competitive. |
| | B) | monopolistically competitive. |
| | C) | an oligopoly. |
| | D) | a monopoly. |
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| 2 | |
Which of the following characteristics distinguishes an imperfectly competitive industry from a perfectly competitive industry? |
| | A) | The ability of firms to earn economic profit in the short run. |
| | B) | The ability of firms to innovate. |
| | C) | The ability of firms to change the quantity of production. |
| | D) | The ability of firms to set their own price. |
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| 3 | |
As a result of economies of scale, as output expands: |
| | A) | fixed costs are decreasing. |
| | B) | average total costs are decreasing. |
| | C) | marginal costs are increasing. |
| | D) | total costs are decreasing. |
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| 4 | |
Suppose when a firm produces 1,000 units their total costs equal $5 million. When they produce 2,000 units their total costs equal $9 million. Which of the following statements is true regarding this firm? |
| | A) | This firm is experiencing economies of scale. |
| | B) | This firm is experiencing constant returns to scale. |
| | C) | This firm is not experiencing economies of scale or constant returns to scale. |
| | D) | There is not enough information to determine whether this firm is experiencing economies of scale or otherwise. |
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| 5 | |
Use the following table representing a firm's demand to answer the following question.
Given the demand table above, the marginal revenue associated with selling the fifth quantity equals: |
| | A) | $45 |
| | B) | $9 |
| | C) | $5 |
| | D) | $0 |
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| 6 | |
Use the following table representing a firm's revenue and costs to answer the following question.
| Quantity | Marginal Revenue | Marginal Cost | Fixed Cost | | 1 | 400 | 200 | 200 | | 2 | 300 | 300 | 200 | | 3 | 200 | 400 | 200 | | 4 | 100 | 500 | 200 | | 5 | 0 | 600 | 200 |
The profit maximizing quantity for the firm above equals: |
| | A) | 2 |
| | B) | 3 |
| | C) | 4 |
| | D) | 5 |
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| 7 | |
Use the following diagram representing a single price monopolist to answer the following question.
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The profit maximizing quantity and price the monopolist shown in the diagram above respectively equal: |
| | A) | 200 and $6. |
| | B) | 400 and $8. |
| | C) | 200 and $12. |
| | D) | 200 and indeterminate. |
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| 8 | |
Use the following diagram to answer the following question.
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If the above diagram represents a single price monopolist, the output level equals ____. The socially optimal output level equals___. |
| | A) | 600; 700 |
| | B) | 900; 900 |
| | C) | 600; 900 |
| | D) | 600; 1400 |
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| 9 | |
Price discrimination occurs when: |
| | A) | a firm charges the same price to different consumers for essentially the same good or service. |
| | B) | a firm charges different prices to different consumers for essentially the same good or service. |
| | C) | a firm charges different prices to different consumers for different goods or services. |
| | D) | a firm charges different prices to the same consumer for different goods or services. |
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| 10 | |
As a result of the hurdle method of price discrimination: |
| | A) | the equilibrium quantity sold decreases. |
| | B) | producer surplus decreases. |
| | C) | consumer surplus increases. |
| | D) | economic surplus increases. |
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