Perfect competition is (Points : 1) not an abstraction from reality; it is reality. an "ideal type"—that is, a model or guidepost for comparison. the only market structure in the United States. the best of all possible worlds. found in the U.S. steel industry. Question 2. 2. Monopolistic competition and oligopoly are examples of (Points : 1) monopoly. perfect competition. theories of consumer behavior. imperfect competition. the extreme cases on the market structure continuum. Question 3. 3. All but which one of the following are true of monopolistic competition? (Points : 1) MR = MC P>MC AR = MR The demand curve the firm faces slopes downward. Entry is easy. Question 4. 4. If the demand curve of a monopolist is in the inelastic range, then (Points : 1) total revenue will fall if price increases. total revenue will be unchanged if price increases. total revenue will rise if price increases. total supply will increase by an equal amount if demand increases. price will be unchanged if total revenue increases. Question 5. 5. Which of the following is NOT an essential characteristic of monopolistic competition? (Points : 1) a small number of sellers differentiated products relatively easy entry short-run profits a very elastic demand curve Question 6. 6. If a monopoly firm is selling its seventy-fifth unit of output at a price of $30, then in order for the firm to sell 80 units of output, it is likely that average revenue would have to be (Points : 1) $30. greater than $30. equal to marginal revenue. less than $30. equal to marginal cost. Question 7. 7. A monopolist faces (Points : 1) a perfectly elastic demand curve. a portion of the market demand curve. an upward-sloping demand curve. no demand curve, because demand is not important to the monopolist. the market demand curve. Question 8. 8. The greater the price elasticity of the demand curve that the firm faces in monopolistic competition, (Points : 1) the higher the degree of competition in the industry. the lower the degree of competition in the industry. the fewer substitutes for the good produced. the easier it is for the firm to raise its price. the less sales the firm will gain from a price decrease. Question 9. 9. A firm in a monopolistically competitive industry faces a downward-sloping demand curve because (Points : 1) the product is homogeneous. the product is differentiated. nonprice competition is missing. barriers to entry are high. Question 10. 10. If a monopoly firm observes an increase in total revenue following a price increase, which of the following must be true? (Points : 1) MR > 0 MR < 0 MR = 0 MR = TR  |
