Trivia Quiz: Economics Test For Students!

30 Questions | By Lynz143 | Updated: Mar 21, 2022 | Attempts: 321

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Are you undertaking microeconomics in school and think that you are well on your way to passing that economics test that is coming up? To help you better prepare for it, I have prepared a quick trivia that is designed to help you prepare adequately for it. Why don’t you try it out and see how well you will do?

Questions and Answers

1.

Which of the following is correct?
- A.
  
  Both purely competitive and monopolistic firms are "price takers."
- B.
  
  Both purely competitive and monopolistic firms are "price makers."
- C.
  
  A purely competitive firm is a "price taker," while a monopolist is a "price maker."
- D.
  
  A purely competitive firm is a "price maker," while a monopolist is a "price taker."
2.

Barriers to entering an industry:
- A.
  
  Are justified because they result in allocative efficiency.
- B.
  
  Are justified because they result in productive efficiency.
- C.
  
  Are the basis for monopoly.
- D.
  
  Apply only to purely monopolistic industries.
3.

The nondiscriminating pure monopolist's demand curve
- A.
  
  Is the industry demand curve
- B.
  
  Shows a direct or positive relationship between price and quantity demanded.
- C.
  
  Tends to be inelastic at high prices and elastic at low prices.
- D.
  
  Is identical to its marginal revenue curve.
4.

A monopolistic firm has a sales schedule such that it can sell 10 prefabricated garages per week at $10,000 each, but if it restricts its output to 9 per week it can sell these at $11,000 each. The marginal revenue of the tenth unit of sales per week is:
- A.
  
  -$1,000
- B.
  
  $9,000
- C.
  
  $10,000
- D.
  
  $1,000
5.

The pure monopolist's demand curve is:
- A.
  
  Identical with the industry demand curve
- B.
  
  Of unit elasticity throughout
- C.
  
  Perfectly inelastic
- D.
  
  Perfectly elastic
6.

The marginal revenue curve for a monopolist:
- A.
  
  Is a straight, upward sloping curve.
- B.
  
  Rises at first, reaches a maximum, and then declines.
- C.
  
  Becomes negative when output increases beyond some particular level.
- D.
  
  Is a straight line, parallel to the horizontal axis.
7.

When the pure monopolist's demand curve is elastic, marginal revenue:
- A.
  
  May be either positive or negative.
- B.
  
  Is zero.
- C.
  
  Is negative.
- D.
  
  Is positive.
8.

If a pure monopolist is operating in a range of output where demand is elastic:
- A.
  
  It cannot possibly be maximizing profits.
- B.
  
  Marginal revenue will be positive but declining.
- C.
  
  Marginal revenue will be positive and rising.
- D.
  
  Total revenue will be decling.
9.

A pure monopolist is selling 6 units at a price of $12. If the marginal revenue of the seventh unit is $5, then:
- A.
  
  Price of the seventh unit is $10.
- B.
  
  Price of the seventh unit is $11.
- C.
  
  Price of the seventh unit is greater than $12.
- D.
  
  Firm's demand curve is perfectly elastic.
10.

The MR = MC rule:
- A.
  
  Applies only to pure competition.
- B.
  
  Applies only to pure monopoly.
- C.
  
  Does not apply to pure monopoly because price exceeds marginal revenue.
- D.
  
  Applies both to pure monopoly and pure competition.
11.

Refer to the data for a nondiscriminating monopolist. This firm will maximize its profit by producing: Total Marginal Average MarginalOutput Price Revenue Total Cost Cost 1 100 100 100.00 302 90 80 63.00 263 80 60 52.67 324 70 40 49.50 405 60 20 49.60 506 50 0 50.00 527 40 -20 52.29 668 30 -40 55.75 809 20 -60 60.67 10010 10 -80 67.60 130
- A.
  
  3 units.
- B.
  
  4 units.
- C.
  
  5 units.
- D.
  
  6 units.
12.

Which of the following statements is incorrect?
- A.
  
  A monopolist's 100 percent market share ensures economic profits.
- B.
  
  The monopolist's marginal revenue is less than price for any given output greater than
- C.
  
  A monopolistic firm produces a product having no close substitutes.
- D.
  
  A pure monopolist's demand curve is the industry demand curve.
13.

Demand Data Cost DataPrice Qty Demanded Output Total Output5.50 3 3 5.005.00 4 4 6.004.50 5 5 6.503.85 6 6 7.503.35 7 7 9.002.90 8 8 11.002.50 9 9 14.00Refer to the above data. The profit-maximizing price for the monopolist will be:
- A.
  
  $5.00
- B.
  
  $2.90
- C.
  
  $3.35
- D.
  
  $3.50
14.

In the short run a pure monopolist's profit:
- A.
  
  Will be maximized where price equals average total cost.
- B.
  
  May be positive, zero, or negative.
- C.
  
  Are always positive.
- D.
  
  . will be zero.
15.

Monopolistic competition means:
- A.
  
  A market situation where competition is based entirely on product differentiation and advertising.
- B.
  
  A large number of firms producing a standardized or homogeneous product.
- C.
  
  Many firms producing differentiated products.
- D.
  
  A few firms producing a standardized or homogeneous product.
16.

Which of the following is not characteristic of monopolistic competition?
- A.
  
  Relatively large numbers of sellers
- B.
  
  Production at minimum ATC in the long-run
- C.
  
  Product differentiation
- D.
  
  Relatively easy entry to the industry
17.

A monopolistically competitive industry combines elements of both competition and monopoly. It is correct to say that the competitive element results from:
- A.
  
  A relatively large number of firms and the monopolistic element from product differentiation.
- B.
  
  Product differentiation and the monopolistic element from high entry barriers.
- C.
  
  A perfectly elastic demand curve and the monopolistic element from low entry barriers.
- D.
  
  A highly inelastic demand curve and the monopolistic element from advertising and product promotion.
18.

The price elasticity of a monopolistically competitive firm's demand curve varies:
- A.
  
  Inversely with the number of competitors and the degree of product differentiation.
- B.
  
  Directly with the number of competitors and the degree of product differentiation.
- C.
  
  Directly with the number of competitors, but inversely with the degree of product differentiation.
- D.
  
  Inversely with the number of competitors, but directly with the degree of product differentiation.
19.

In the short run a monopolistically competitive firm's economic profit:
- A.
  
  Will be maximized where price equals average total cost
- B.
  
  May be positive, zero, or negative.
- C.
  
  Are always positive.
- D.
  
  Will always be zero.
20.

Which of the following is not characteristic of long-run equilibrium under monopolistic competition?
- A.
  
  Price equals minimum average total cost
- B.
  
  Marginal cost equals marginal revenue
- C.
  
  Price is equal to average total cost
- D.
  
  Price exceeds marginal cost
21.

In the long run, new firms will enter a monopolistically competitive industry:
- A.
  
  Provided economies of scale are being realized.
- B.
  
  Even though losses are incurred in the short run
- C.
  
  Until minimum average total cost is achieved.
- D.
  
  Until economic profits are zero
22.

Demand Data Cost Data(1) (2) (3)Price Price Qty Output Total Cost11.00 10.00 6 6 61 9.99 8.85 7 7 629.00 8.00 8 8 648.00 7.00 9 9 677.10 6.10 10 10 726.00 5.00 11 11 795.15 4.15 12 12 86 Refer to the above data. If columns (1) and (3) of the demand data shown above are this firm's demand schedule, the profit-maximizing level of output will be:
- A.
  
  12 Units
- B.
  
  8 Units
- C.
  
  10 Units
- D.
  
  9 Units
23.

An important similarity between a monopolistically competitive firm and a purely competitive firm is that:
- A.
  
  Both face perfectly elastic demand schedules.
- B.
  
  Economic profit tends toward zero for both.
- C.
  
  Both realize productive efficiency
- D.
  
  Both realize allocative efficiency.
24.

The economic inefficiencies of monopolistic competition may be offset by the fact that:
- A.
  
  Advertising expenditures shift the average cost curve upward
- B.
  
  Available capacity is fully utilized.
- C.
  
  Resources are optimally allocated to the production of the product
- D.
  
  Consumers have a number of variations of the product from which to choose.
25.

The mutual interdependence that characterizes oligopoly arises because:
- A.
  
  The products of various firms are homogeneous.
- B.
  
  The products of various firms are differentiated.
- C.
  
  A small number of firms produce a large proportion of industry output.
- D.
  
  The demand curves of firms are kinked at the prevailing price.