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Multiple Choice Quiz
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1
The demand curve for an imperfect competitor is:
A)perfectly elastic.
B)less than perfectly elastic.
C)has an elasticity of zero.
D)horizontal.
2
Which of the following is not a characteristic of monopolistic competition?
A)many firms
B)similar products
C)price takers
D)no barriers to entry
3
The crucial determinant of market structure is:
A)minimum efficient scale.
B)government legislation.
C)barriers to entry.
D)price elasticity of demand for the product.
4
The 4-firm concentration ratio measures the:
A)number of industries with four or fewer competitors.
B)market share of the four largest firms in an industry.
C)number of cities with at least four major employers.
D)the total output of the four largest firms in each province.
5
Globalization has __________ the scale of some Canadian firms and ________ competitive pressure in the domestic market.
A)decreased; decreased
B)decreased; increased
C)increased; decreased
D)increased; increased
6
Monopolistic competition is similar to perfect competition in the long run in that representative firms in both industries:
A)produce at minimum average cost.
B)have perfectly elastic demand curves.
C)make no supernormal profits.
D)set price equal to marginal benefit.
7
Bombardier spends money on research and development to remain competitive with Embraer even though R&D spending reduces profit. This can be explained from:
A)game theory.
B)rent-seeking activity.
C)government regulation.
D)diminishing marginal product.
8
A Nash Equilibrium in game theory refers to:
A)a situation where every player acts in their own best interest.
B)the outcome when each player chooses the best strategy given the strategies of the other players.
C)BC native and two-time NBA MVP Steve Nash.
D)an outcome resulting from all players ending in a tie.
9
In game theory, a dominant strategy exists when:
A)there is no possible outcome that could make all players better off.
B)one player is guaranteed to win.
C)when each player must consider the strategy of the other players.
D)each player’s best strategy is independent of the other players.
10
In repetitive games, “cheating” in one period leads to:
A)punishment in the next period only.
B)punishment in several future periods.
C)the threat of punishment in the next period.
D)cheating in each subsequent period.
11
In the Cournot duopoly model, each firm:
A)acts as one of two monopolies.
B)makes a profit-maximizing decision based solely upon their own cost structures.
C)makes a profit-maximizing decision based upon the other firm’s output.
D)practises price discrimination.
12
A reaction function shows:
A)the optimal output of one firm given the output of the other firm.
B)the price charged by one firm given the price charged by the other firm.
C)the level of advertising of one firm given the level of advertising of the other firm.
D)something that only chemists understand.
13
Which of the following economists is not associated with game theory?
A)Joseph Bertrand
B)John Nash
C)Adam Smith
D)Augustine Cournot
14
A market that is characterized as having free entry and exit is known as:
A)contemptible.
B)contestable.
C)corruptible.
D)conditional.
15
Wal-Mart’s barrier to entry is a result of:
A)a large labour force willing to work for minimum wage.
B)its ability to build stores in choice locations.
C)a very large advertising budget.
D)its tremendous buying power.





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