Economics Today and Tomorrow

Chapter 9: Competition and Monopolies

Competition and Monopolies

1
In order for perfect competition to exist, all of the following conditions must be met EXCEPT for __________
A)easily attainable information.
B)easy entry and exit.
C)a large market selling similar products.
D)a single seller who controls the price of a good or service.
2
Agriculture is an example of perfect competition because __________
A)the costs of renting farmland is relatively high, making entry into the market difficult.
B)demand for some agricultural products, such as wheat, is inelastic.
C)demand for some agricultural products, such as wheat, is elastic.
D)individual farmers exert control over the market prices of their goods.
3
Perfect competition benefits society in all the following ways EXCEPT __________
A)society enjoys efficient allocation of productive resources.
B)the price the consumer pays is a correct signal about the value of the product.
C)the advertising that differentiates the products provides information for consumers.
D)intense competition forces prices down.
4
A pure monopoly is a market structure that has all of the following characteristics EXCEPT __________
A)there is no adequate substitute for the good or service.
B)the market is protected by barriers to entry.
C)the market price of the good or service is controlled by competition.
D)a single seller controls the supply and the market price of a good or service.
5
A form of imperfect competition in which a few companies with nearly identical products compete is called ___________
A)monopolistic competition.
B)a geographic monopoly.
C)a government monopoly.
D)an oligopoly.
6
Which of the following is NOT a characteristic of monopolistic competition?
A)identical products
B)nonprice competition
C)relatively easy entry into the market
D)numerous sellers
7
An "interlocking directorate" occurs when ___________
A)a corporation sells the same goods to different buyers at different prices.
B)some members of the boards of directors of competing corporations are the same.
C)competing corporations have completely separate and distinct boards of directors.
D)one corporation joins with another corporation.
8
The purposes of government antitrust legislation are all of the following EXCEPT ___________
A)to break up trusts that already exist.
B)to prevent new trusts from forming.
C)to encourage corporate mergers.
D)to force monopolies to act more competitively.
9
In general, the effect of government deregulation of the 1980s and 1990s was to ___________
A)decrease competition and increase consumer prices.
B)decrease competition and decrease consumer prices.
C)increase competition and increase consumer prices.
D)increase competition and decrease consumer prices.
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