Economics -- Chapter Five

15 Questions | By Melkinsey2000 | Updated: Mar 21, 2022 | Attempts: 220

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Final april 30, 2012 at 8:00 am

Questions and Answers

1.

Agricultural Products can be modeled best using the model of
- A.
  
  Monopolistic competition
- B.
  
  Perfect competition
- C.
  
  Oligopoly
- D.
  
  Monopoly
2.

The fast food industry can be modeled best using the model of
- A.
  
  Monopolistic competition
- B.
  
  Perfect competition
- C.
  
  Oligopoly
- D.
  
  Monopoly
3.

The soft drink (colas in particular) industry can be best modeled using the model of
- A.
  
  Monopolistic competition
- B.
  
  Perfect competition
- C.
  
  Oligopoly
- D.
  
  Monopoly
4.

The local residential electrical power industry can be best modeled using the model of
- A.
  
  Monopolistic competition
- B.
  
  Perfect competition
- C.
  
  Oligopoly
- D.
  
  Monopoly
5.

An industry in which there are many competitors with specific marketing niches is likely to be characterized by
- A.
  
  Monopoly
- B.
  
  Monopolistic competition
- C.
  
  Oligopoly
- D.
  
  Perfect competition
6.

An indicator of the degree of competition in an industry is the concentration ratio. It measures
- A.
  
  The percentage of sales in the industry by the largest firms
- B.
  
  He percentage of profit in the industry by the smallest firms
- C.
  
  The sales in the industry as a percentage of all consumption in the U.S
- D.
  
  The profitability of the industry
7.

Local telephone service was once an area in which consumers had no choices. Many young people no longer use "land lines" preferring instead to use their cellular phones. This means that the market has moved toward
- A.
  
  Monopoly
- B.
  
  Oligopoly
- C.
  
  Perfect competition
- D.
  
  Monopsony
8.

If MR>MC then when an additional unit is sold the firm's
- A.
  
  Profit will be positive
- B.
  
  Profit will be negative
- C.
  
  Profit will increase
- D.
  
  Profit will decrease
9.

In a diagram of perfect competition, the marginal revenue line moves up and down when there is exit and entry, respectively, because
- A.
  
  The market demand for the good rises and falls when there is exit and entry, respectively
- B.
  
  The market demand for the good rises and falls when there is entry and exit, respectively
- C.
  
  The market supply for the good rises and falls when there is exit and entry, respectively
- D.
  
  The market supply for the good rises and falls when there is entry and exit, respectively
10.

Normal Profit is what a firm
- A.
  
  Usually makes
- B.
  
  Needs to make to maintain the incentive to remain in the industry
- C.
  
  Is zero in the long run
- D.
  
  A and B
11.

Under perfect competition, the supply curve is
- A.
  
  The marginal cost curve for all price quantity combinations
- B.
  
  The marginal cost curve, but only that portion that is downward sloping
- C.
  
  The marginal cost curve, but only that portion that is upward sloping
- D.
  
  The marginal cost curve, but only that portion that is above the minimum of average variable cost
12.

The usefulness and relative simplicity of the supply and demand model is often used
- A.
  
  Because nearly every major industry in the U.S. is governed by perfect competition
- B.
  
  Because nearly every major industry in the U.S. is governed by monopoly
- C.
  
  Even though, strictly speaking, few industries in the U.S. are governed by perfect competition
- D.
  
  Even though it has no connection to economic reality
13.

Whether a firm stays in business or shuts down depends heavily on the concept of
- A.
  
  Economic profit
- B.
  
  Actual profit
- C.
  
  Market share
- D.
  
  Concentration ratios
14.

Economic theory would suggest that the profitability of an industry would be
- A.
  
  Directly related to the number of firms competing in the industry
- B.
  
  Inversely related to the number of firms competing in the industry
- C.
  
  Unrelated to the number of firms competing in the industry
- D.
  
  Zero in the long run, regardless of market structure
15.

An industry in which there are just a few large firms is likely to be characterized by
- A.
  
  Monopoly
- B.
  
  Monopolistic competition
- C.
  
  Oligopoly
- D.
  
  Perfect competition