1. A patent is an example of
A. non-price competition.
B. a barrier to entry.
C. an economic promoter.
D. an economy of scale.
2. The short run is characterized by
A. fixed plant capacity.
B. zero fixed costs.
C. increasing but not diminishing returns.
D. plenty of time for firms to either enter or leave the industry.
3. Economists like purely competitive markets because they result in
A. productive and allocative efficiency.
B. economic efficiency only.
C. productive efficiency only.
D. allocative efficiency only.
4. When a firm is maximizing profit, it will necessarily be
A. minimizing total cost.
B. maximizing the difference between total revenue and total cost.
C. maximizing total revenue.
D. maximizing profit per unit of output.
5. Refer to the diagram above, which pertains to a purely competitive firm. Curve C represents
A. total revenue and marginal revenue.
B. total revenue and average revenue.
C. marginal revenue only.
D. average revenue and marginal revenue.
6. A computer program's ability to be used by a large number of consumers for a small cost for each
additional consumer is known as
A. multiple effect.
B. exclusive consumption.
C. network effect.
D. simultaneous consumption.
7. The long-run supply curve for an increasing cost industry
A. doesn't exist because long-run does not have a supply curve.
B. slopes upward as quantity is increased.
C. does not change slope.
D. slopes downward as quantity is increased.
8. Which of the following statements is correct?
A. In the long run, purely competitive firms and monopolistically competitive firms earn zero economic profits, while pure monopolies may or may not earn economic profits.
B. Purely competitive firms, monopolistically competitive firms, and pure monopolies all earn positive economic profits in the long run.
C. Monopolistically competitive firms earn zero economic profits in both the short run and the long run.
D. Purely competitive firms, monopolistically competitive firms, and pure monopolies all earn zero economic profits in the long run.
9. Why are economic profits not possible in the long run in a purely competitive market?
A. New firms will enter the market and drive prices down.
B. Each firm is too small to make a profit.
C. Profitable markets drive prices too high and consumers stop buying.
D. More firms will leave a profitable market, driving prices down.
10. Because the monopolist's demand curve is downsloping,
A. the elasticity coefficient will increase as price is lowered.
B. MR will equal price.
C. price must be lowered to sell more output.
D. its supply curve will also be downsloping.
11. Which of the following is a method to measure the concentration of certain industries?
A. Herfindahl index
B. Klinefelter ratio
C. Competitive ratio
D. Monopolistic measure
12. Which of the following production levels will maximize profits in the short run for a purely competitive firm?
A. MR=AVC
B. MR=MC
C. MC=ATC
D. MR
13. Assume a purely competitive, increasing-cost industry is in long-run equilibrium. If a decline in demand occurs, firms will
A. enter the industry and price and quantity will both increase.
B. leave the industry, price will decrease, and quantity produced will increase.
C. leave the industry and price and output will both decline.
D. leave the industry and price and output will both increase.
14. The mutual interdependence that characterizes oligopoly arises because
A. the products of various firms are differentiated.
B. the products of various firms are homogeneous.
C. each firm in an oligopoly depends on its own pricing strategy and that of its rivals.
D. the demand curves of firms are kinked at the prevailing price.
15. Refer to the diagram above for a purely competitive producer. If product price is P3,
A. the firm will earn an economic profit.
B. new firms will enter this industry.
C. the firm will maximize profit at point d.
D. economic profits will be zero.
16. What type of market structure has only one seller of a product or service?
A. Pure competition
B. Monopolistic competition
C. Oligopoly
D. Monopoly
17. The vertical distance between the total cost and the total variable cost curves differs by an amount that
A. is constant as output changes.
B. increases as output increases.
C. decreases as output increases.
D. initially increases, but then decreases, as output increases.
18. Focusing on the ability of a firm to get in or out of an industry entirely would focus on what type of
economic time frame?
A. Long run
B. Entry run
C. Short run
D. Production run
19. In the diagram above, the range of diminishing marginal returns is
A. 0 - Q1.
B. Q1- Q2.
C. Q1- Q3.
D. 0 - Q2.
20. Worker specialization is one benefit of what concept?
A. Diseconomies of scale
B. Average total cost
C. Minimum size ratio
D. Economies of scale
