Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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Monopolistic competition is characterized by
a. | a large number of sellers with a similar product. | b. | one seller with a
standard product. | c. | a limited number of sellers with a variety of
products. | d. | one seller with a variety of products. |
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2.
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If two or more oligopolistic companies work together to keep their prices high
and split the market between them, this is called
a. | occlusion. | b. | collusion. | c. | profit
splitting. | d. | market sharing. |
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3.
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In perfect competition, a profit-maximizing business will expand until its
_________ equals the market price.
a. | marginal product | b. | average cost | c. | marginal
revenue | d. | marginal cost |
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4.
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An example of a barrier to entry is
a. | plentiful natural resources. | b. | low-cost resources. | c. | lack of a key
resource. | d. | helpful government regulation. |
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5.
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The profit-maximizing rule says that a seller will expand output up to the
point
a. | Where marginal revenue equals price. | b. | Where marginal revenue equals marginal
cost. | c. | Where marginal revenue is less than the price. | d. | Where marginal cost
equals marginal revenue. |
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6.
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Market power is
a. | the combination of price and product. | b. | the balance between average and marginal
product. | c. | another term for equilibrium. | d. | the ability to raise prices above the prices
that would exist under perfect competition. |
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7.
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An example of an oligopoly is the
a. | airline industry. | b. | convenience store industry. | c. | car wash
industry. | d. | photocopying services industry. |
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8.
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A ___________ makes it more difficult for a competitor to enter a market.
a. | luxury product | b. | barrier to entry | c. | lower
price | d. | lower cost |
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9.
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In a market where businesses are earning high profits, new entrants will cause
the supply curve to shift to the _________ and the market price to _________.
a. | left; rise | b. | left; fall | c. | right;
rise | d. | right; fall |
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10.
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If a local diner can sell 50 burgers per day at a price of $5 each, but must
reduce the menu price to $4. 95 to sell one more burger, what is the marginal revenue of the 51st
burger?
a. | -$0. 05. | b. | $2. 45. | c. | $4.
95. | d. | $252. 45. |
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