1. if the government attempts to break up a natural monopoly to enforce competition in an industry
A. the average cost of producing the good will increase
B. the smallest firm will have a significant cost advantage over the larger, less efficient firms
C. the average cost of producing the good will decrease
D. the price paid by consumers will be expected to remain the same.
2. which statement is true?
A. the monopolistic competitor always makes a profit in the short run
B. the monopolistic competitor operates at peak efficiency
C. product differentiation takes place in the minds of the buyers
D. none of these statements is true
3. Price discrimination
A. occurs when a good or service is resold
B. is prohibited by law
C. occurs when a seller charges two or more prices for the same good or service
D. occurs when the seller charges different prices for different quality products
4. Monopolistic competition may lead to each of the following except
A. inefficiency
B. overdifferentiation
C. overcapacity
D. monopoly profits
5. In the long run in monopolistic competition
A. most firms are making a profit
B. the absence of entry barriers ensures that there are no profits
C. economies of scale ensure that there are no profits
D. most firms are losing money
6. Price discrimination means
A. charging different prices for identical goods that have identical production costs
B. paying wages according to race or sex rather than productivity
C. exploiting the working masses by charging the highest single price possible.
D. eliminating all costs so that only pure profits are realized
7. The definition of monopolistic competition includes
A. few firms and ease of entry and exit
B. few firms and barrieres to entry and exit
C. many firms and barriers to entry and exit
D. many firms and ease of entry and exit
8. Which statement is true?
A. there are many firms in a monopolistically competitive industry.
B. monopolistic competitors produce an identical product
C. in order for product differentiation to take place, there must be clear physical differences amont the products sold
D. none is true
9. Long-run equilibrium for firms in monopolistically competitive industries is similar to that for firms in perfect competition in that
A. price equals minimum possible average total cost
B. price equals marginal cost
C. marginal revenue equals average total cost
D. price equals average total cost
10. Which statement is false?
A. Oligopolies are illegal in most states
B. most oligopolies engage in outright collusion
C. Ford motor company is an oligopoly
D. none of these statements is false
