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35. If your competitors will follow your price cuts and ignore price hikes, your firm:
A. faces perfect competition.
B. faces a kinked demand curve.
C. is the marginal price leader of an oligopoly.
D. must be the most efficient firm in the industry.

36. Sticky prices in oligopoly markets are:
A. represented by the kinked demand curve model.
B. typical of cartels.
C. most common for highly differentiated products.
D. a result of price discrimination.

37. Oligopoly is characterized by all of the following except:
A. some industries that produce identical products.
B. frequent price wars.
C. high barriers to entry.
D. prices that are above the minimum of the ATC curve.

38. Which statement is false?
A. A monopoly is both a firm and an industry.
B. A monopoly is an imperfect competitor.
C. There are monopolies in the United States at the regional and local levels.
D. None of these statements is false.

39. Each of the following is a legal barrier to entry into an industry except:
A. government licensing.
B. patents.
C. government franchising.
D. All of these choices are legal barriers.

40. Which one of these is not a natural monopoly?
A. A local electric company
B. A local natural gas company
C. A local cable TV company
D. All of these choices are examples of natural monopolies.

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019

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Related questions

A. A competitive firm

  1. can consider only its location in setting the price.
  2. must base its competitive price on product differentiation.
  3. has the ability to set its own price.
  4. must accept the price determined by the intersection of the market supply and demand curves.
  5. has no supply curve.

B. If a firm is making an economic profit, then

  1. the factors of production are being paid their opportunity costs.
  2. there will be no change in the number of firms if the industry is perfectly competitive.
  3. the factors of production are being paid less than their opportunity costs.
  4. the factors of production are being paid more than their opportunity costs.
  5. the firm will exit the industry

C. Along a downward-sloping monopoly demand curve,

  1. marginal revenue is greater than price.
  2. the elasticity of demand is constant.
  3. marginal revenue decreases when the price decreases.
  4. marginal revenue is equal to zero when the price is equal to zero

D. If, in the short run, a perfectly competitive firm is producing at a point where the total cost is greater than total revenue, then the firm should

  1. shut down because economic profits are negative.
  2. continue to produce as long as P > AVC.
  3. continue to produce because accounting profits are positive.
  4. set a higher price for its output.
  5. set a lower price for its output

E. For a perfectly competitive firm, the demand curve is

  1. the marginal revenue curve.
  2. perfectly inelastic.
  3. always equal to marginal cost.
  4. the same as the market demand curve

F. A firm in a(n) industry will have the most elastic demand curve

  1. monopolistic
  2. oligopolistic
  3. monopolistically competitive
  4. perfectly competitive

G. If the demand curve of a monopolist is in the inelastic range, then

  1. total revenue will fall if the price increases.
  2. total revenue will be unchanged if the price increases.
  3. total revenue will rise if the price increases.
  4. the total supply will increase by an equal amount if demand increases.
  5. the price will be unchanged if total revenue increases

H. Monopolistic competition and oligopoly are examples of

  1. monopoly.
  2. perfect competition.
  3. theories of consumer behavior.
  4. imperfect competition.
  5. the extreme cases on the market structure continuum

I. Under which market structure do firms face the flattest (most elastic) demand curve?

  1. perfect competition
  2. monopolistic competition
  3. oligopoly
  4. monopoly

J. At the point of long-run equilibrium for a perfectly competitive firm,

  1. economic profits are zero.
  2. TR > TC.
  3. TR < TC.
  4. P = AVC.
  5. normal profits are zero.

6. The Herfindahl index is calculated by (Points: 5)
a. adding the squared value of the market shares of all the firms in the industry.
b. multiplying the squared value of the market shares of all the firms in the industry.
c. adding the percentage of industry output produced by the largest four firms.
d. adding the percentage of industry output produced by the largest eight firms.


7. In December 2004, the oil-producing nations of OPEC began reducing output to keep prices above $40 per barrel. In doing this, OPEC was acting as a monopoly even though there was more than one producer. OPEC is a: (Points: 5)
a. cartel.
b. price taker.
c. producer in a contestable market.
d. producer in a monopolistically competitive market.


8. The difference between a perfectly competitive firm and a monopolistically competitive firm is that a monopolistically competitive firm faces a: (Points: 5)
a. horizontal demand curve and price equal the marginal cost in equilibrium.
b. horizontal demand curve and price exceeds the marginal cost in equilibrium.
c. downward-sloping demand curve and price equal the marginal cost in equilibrium.
d. downward-sloping demand curve and price exceeds the marginal cost in equilibrium.


9. Suppose an industry only has four firms and they each have 10 percent, 8 percent, 8 percent, and 6 percent of the market. The Herfindahl index of this market is closest to which of the following? (Points: 5)
a. 8
b. 32
c. 66
d. 264


10. A good which if supplied to one person is supplied to all and whose consumption by one individual does not prevent its consumption by another individual is known as (Points: 5)
a. a private good.
b. a public good.
c. an external good.
d. an internal good.


11. An effluent fee is: (Points: 5)
a. a fee requiring market participants to certify they have reduced total consumption-not necessarily their own individual consumption.
b. charges imposed by the government on the level of pollution created.
c. a fee paid by users of a public good.
d. charges imposed on the wealthy of our society to help pay for those less fortunate.

I have the following questions for my Managerial Economics course.

1.

A principal-agent problems occur when managerial decisions are not consistent with the firm's shareholders' interests.

A) True
B) False

2.

A firm making more than a normal profit may still be experiencing an economic loss.

A) True
B) False

3.

An inferior good is a good whose demand decreases as its prices decreases.

A) True
B) False

4.

Assuming that crude oil is an input to automobile tires as well as to gasoline, a reduction in the tariff on imported crude oil would likely result in an increase in the number of tires sold but tire prices may increase or decrease.

A) True
B) False

5.

Other things remaining unchanged, advertisement would likely make demand for a good more price elastic.

A) True
B) False

6.

The cross price elasticity demand for a good with respect to the price of a complementary good is negative.

A) True
B) False

7.

When the marginal product of labor is smaller than its average product, marginal cost will be smaller than average variable cost.

A) True
B) False

8.

With capital measured along the vertical axis and labor along the horizontal axis the slope of an isoquant is equal to the ratio between the price of capital over the price of labor.

A) True
B) False

9.

If the ratio between the price of labor and the price of capital (w/r) is smaller than the ration between the marginal product of labor and the marginal product of capital, the firm should hire more capital.

A) True
B) False

10.

Normally the ratio between the price of a variable input and the marginal product of that input is equal to marginal cost.

A) True
B) False

11.

When labor is a variable input the product of wage and marginal product of labor is equal to the profit-maximizing price.

A) True
B) False

12.

If the price falls below the average total cost the firm may not shut down in the short run.

A) True
B) False

13.

When a perfectly competitive firm is producing at its profit maximizing level of output, its MR is equal to price and its MC while it may or may not be making an economic profit.

A) True
B) False

14.

The price a profit maximizing monopoly charges is always greater than its marginal cost as well as it MR while it may not be greater than its ATC.

A) True
B) False

15.

As new firms enter a monopolistically competitive market, the demand faced by each competing firm becomes more inelastic.

A) True
B) False

16.

The long-run equilibrium of a monopoly is characterized by its price being equal to its MR but always greater than its ATC.

A) True
B) False

17.

A monopolistically competitive firm sets its price equal to its MR, while keeping it above MC.

A) True
B) False

18.

We say that the long-run equilibrium of a monopolistically competitive firm reflects excess capacity because its MC is not equal to its ATC.

A) True
B) False

19.

In a duopoly with a zero marginal cost, according to the Cournot model, at equilibrium the sum of the two firms' output would be more than 50 percent of the market demand at a zero price.

A) True
B) False

20.

In the kinked demand curve model it is assumed that the demand faced by an oligopoly is less elastic when it lowers the price but more elastic when it raises the price.

A) True
B) False

21.

A distinguishing characteristic of monopolistically competitive market is price discrimination.

A) True
B) False

22.

The general explanation for the relative price stability in an oligopolistic market is the existence of some degree of decision interdependency among the firms in the market.

A) True
B) False

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