ECO5000 - Practices Question (Market Structure) without Answer

MARKET STRUCTURE

1. A price-taking firm faces a 

1. downward sloping average revenue curve.
2. downward sloping marginal revenue curve.
3. downward sloping supply curve.
4. horizontal demand curve.

2. For a perfectly competitive firm, marginal revenue 

1. is zero.
2. is positive but less than the price.
3. equals the price.
4. exceeds the price.

3. A firm maximizes profit by producing the output at which marginal cost equals 

1. marginal revenue.
2. average total cost.
3. average variable cost.
4. average fixed cost.

4. It pays a firm to shut down if price is

1. above minimum average variable cost.
2. below minimum average variable cost.
3. above maximum variable cost.
4. below maximum variable cost.

5.  A perfectly competitive firm's supply curve is made up of its marginal cost curve at all points above its minimum average 

1. total cost curve.
2. fixed cost curve.
3. price.
4. variable cost curve.

6.  If firms exit an industry, the

1. price of the product falls.
2. industry supply curve shifts leftward.
3. profits of the remaining firms decrease.
4. output of the industry increases.

7. Monopolists are able to practice price discrimination because

1. of differing elasticities of demand.
2. of differing elasticities of supply.
3. they have constant marginal cost.
4. they have constant average cost.

8.  A monopolistically competitive industry has

1. significant barriers to entry.
2. mutually dependent firms.
3. differentiated products.
4. a small number of large firms.

9. The kinked demand curve model of oligopoly predicts that

1. price wars are common.
2. prices never change.
3. price is insensitive to all changes in costs.
4. price is insensitive to small changes in costs

10 . Regulation refers to

1. the discipline of the marketplace.
2. rules administered by a government agency.
3. the formation of monopolies.
4. cartelization of a competitive industry.

11.  Comparing a monopoly and a competitive firm, the monopolist will

1.  produce more at a lower price
2. produce less at a lower price
3. produce less at a higher price
4. produce more at a higher price

12. Assume that a competitive industry is in equilibrium. If market demand increases (ceteris paribus), which of the following will occur?

1. market price will increase
2. firms will produce more output
3. firms will increase their profits 
4. all of the above
5. A and B

13. Monopolies

1. will set a higher price and a higher level of output than would be set under competition
2. will set a lower price and a lower level of output than would be set under perfect competition
3. will set a lower price and a higher level of output than would be set under perfect competition
4. will set a higher price and a lower level of output than would be set under perfect competition

14.  If the firms in an oligopolistic industry can establish an effective cartel, we expect the output and price to approximate those of—

1. a purely competitive producer 
2. a purely competitive industry
3. a pure monopoly 
4. a monopolistically competitive industry. 

15.  Perfect Competition describes a market with

1. many buyers and sellers
2. no barriers to entry
3. identical goods
4. all of the above
5. none of the above

16. Which of the following is not a barrier to entry?

1. Patents
2. licenses
3. inefficiency
4. ownership of essential resources
5. none of the above

17. Monopolistic competition shares all the conditions of pure competition except

1. many sellers 
2. identical product 
3. perfect and free information 
4. free entry and exit from the market 
5. none of the above

18.  The market for business education in Almaty is dominated by three schools. This market is best classified as

1. Perfect Competition
2. Monopoly
3. Oligopoly
4. Monopolistic Competition
5. none of the above

19.  OPEC is a good example of

1. Prisoner’s Dilemma
2. A cartel
3. A natural monopoly 
4. All of the above 
5. None of the above 

20.  What are the characteristics of monopolistic competition

1. Many firms, homogeneous product, and barriers to entry
2. Many firms, differentiated product, and barriers to entry.
3. Many firms, differentiated product and no barriers to entry.
4. Few firms, differentiated product, and no barriers to entry.
5. Few firms, homogeneous product, and barriers to entry