Question 1

An oligopoly occurs when there

Accepted Answer

A)   are a large number of sellers in a market producing a variety of products.
B)   are a few sellers in a market.
C)   is only one seller in a market.
D)   are a large number of sellers producing similar products.

Question 2

Which of the following is most likely to be sold in a perfectly competitive market?

Accepted Answer

A)   Law School Admission Test (LSAT)  tutoring.
B)   Wheat.
C)   Fast food.
D)   Automobiles.

Question 3

Output  (Bushels of  Barley)   Marginal  Cost  (Dollars)  10 bushels $0.3020 bushels $0.6030 bushels $0.9040 bushels $1.20 Table 5.1\begin{array}{l}\begin{array} { c | c } \begin{array} { c } 	ext { Output } \	ext { (Bushels of } \	ext { Barley)  }\end{array} & \begin{array} { c } 	ext { Marginal } \	ext { Cost } \	ext { (Dollars)  }\end{array} \\hline 10 	ext { bushels } & \$ 0.30 \20 	ext { bushels } & \$ 0.60 \30 	ext { bushels } & \$ 0.90 \40 	ext { bushels } & \$ 1.20\end{array}\	ext { Table } 5.1\end{array} Output  (Bushels of  Barley)  ​10 bushels 20 bushels 30 bushels 40 bushels ​ Marginal  Cost  (Dollars)  ​$0.30$0.60$0.90$1.20​​ Table 5.1​  Refer to Table 5.1,which gives Farmer McColl's marginal cost function for barley.If the current market price for barley is $1.00 per bushel,how much barley should Farmer McColl produce?

Accepted Answer

A)   20 bushels.
B)   30 bushels.
C)   Between 30 and 40 bushels.
D)   More than 40 bushels.

Question 4

In perfect competition,a profit-maximizing business will expand until its marginal cost equals the market price.

Accepted Answer

A) True 
 B)False  True

Question 5

Why does perfect competition often lead to a market in which profits tend toward zero?

Accepted Answer

Perfect competition rewards the lowest-c...

Question 6

Marshall Field's and Sterns Department Stores are examples of low-cost producers in a perfect competition market.

Accepted Answer

A) True 
 B)False

Question 7

When businesses have market power,they are able to charge a price higher than the price charged by a business in perfect competition.Thus the market power equilibrium on a diagram will be

Accepted Answer

A)   higher and to the right of the perfect competition equilibrium.
B)   higher and to the left of the perfect competition equilibrium.
C)   lower and to the right of the perfect competition equilibrium.
D)   lower and to the left of the perfect competition equilibrium.

Question 8

Compared to businesses with market power,businesses in perfect competition will charge __________ prices and sell __________ output.

Accepted Answer

A)   higher; more
B)   higher; less
C)   lower; more
D)   lower; less

Question 9

In perfect competition,all buyers and sellers are price takers.

Accepted Answer

A) True 
 B)False

Question 10

A business with market power may

Accepted Answer

A)   be less innovative than businesses in perfect competition.
B)   force employees to work harder and longer.
C)   create new markets due to competitive forces.
D)   sometimes use high profits to research new technologies.

Question 11

Monopolistic competition is characterized by

Accepted Answer

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.

Question 12

AT&T is an example of a business that used market power to

Accepted Answer

A)   avoid government regulation.
B)   invest in important research benefiting society.
C)   minimize average costs of production.
D)   squash the competition.

Question 13

If two or more oligopolistic companies work together to keep their prices high and split the market between them,this is called

Accepted Answer

A)   occlusion.
B)   collusion.
C)   profit splitting.
D)   market sharing. B

Question 14

An example of an oligopoly is the

Accepted Answer

A)   airline industry.
B)   convenience store industry.
C)   car wash industry.
D)   photocopying services industry.

Question 15

In perfect competition,P = MC means

Accepted Answer

A)   Profit equals marginal cost.
B)   Price equals market cost.
C)   Price equals marginal cost.
D)   Profit equals market cost.

Question 16

Businesses will generally shut down if they lose money for one or two years.

Accepted Answer

A) True 
 B)False

Question 17

Market power is

Accepted Answer

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.

Question 18

Monopolies generally _____________ technology and globalization.

Accepted Answer

A)   grow with
B)   thrive with
C)   are reduced in number by
D)   are unaffected by

Question 19

A business can escape perfect competition by building a better,more innovative product.

Accepted Answer

A) True 
 B)False  True

Question 20

Microsoft's two main products,Windows and Office,could be examples of

Accepted Answer

A)   perfect competition.
B)   monopolistic competition.
C)   a natural monopoly.
D)   an oligopoly.

Exam 5: Competition and Market Power

An oligopoly occurs when there

Correct Answer
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Which of the following is most likely to be sold in a perfectly competitive market?

Correct Answer
verified

Correct Answer
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In perfect competition,a profit-maximizing business will expand until its marginal cost equals the market price.

Correct Answer
verified
True

Why does perfect competition often lead to a market in which profits tend toward zero?

Correct Answer
verified
Perfect competition rewards the lowest-c...
View Answer

Marshall Field's and Sterns Department Stores are examples of low-cost producers in a perfect competition market.

Correct Answer
verified

When businesses have market power,they are able to charge a price higher than the price charged by a business in perfect competition.Thus the market power equilibrium on a diagram will be

Correct Answer
verified

Compared to businesses with market power,businesses in perfect competition will charge prices and sell output.

Correct Answer
verified

In perfect competition,all buyers and sellers are price takers.

Correct Answer
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A business with market power may

Correct Answer
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Monopolistic competition is characterized by

Correct Answer
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AT&T is an example of a business that used market power to

Correct Answer
verified

If two or more oligopolistic companies work together to keep their prices high and split the market between them,this is called

Correct Answer
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B

An example of an oligopoly is the

Correct Answer
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In perfect competition,P = MC means

Correct Answer
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Businesses will generally shut down if they lose money for one or two years.

Correct Answer
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Market power is

Correct Answer
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Monopolies generally _____________ technology and globalization.

Correct Answer
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A business can escape perfect competition by building a better,more innovative product.

Correct Answer
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True

Microsoft's two main products,Windows and Office,could be examples of

Correct Answer
verified

Exam 5: Competition and Market Power

An oligopoly occurs when there

Correct AnswerverifiedShow Answer

Which of the following is most likely to be sold in a perfectly competitive market?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In perfect competition,a profit-maximizing business will expand until its marginal cost equals the market price.

Correct AnswerverifiedTrue

Why does perfect competition often lead to a market in which profits tend toward zero?

Correct AnswerverifiedPerfect competition rewards the lowest-c...View AnswerShow Answer

Marshall Field's and Sterns Department Stores are examples of low-cost producers in a perfect competition market.

Correct AnswerverifiedShow Answer

When businesses have market power,they are able to charge a price higher than the price charged by a business in perfect competition.Thus the market power equilibrium on a diagram will be

Correct AnswerverifiedShow Answer

Compared to businesses with market power,businesses in perfect competition will charge __________ prices and sell __________ output.

Correct AnswerverifiedShow Answer

In perfect competition,all buyers and sellers are price takers.

Correct AnswerverifiedShow Answer

A business with market power may

Correct AnswerverifiedShow Answer

Monopolistic competition is characterized by

Correct AnswerverifiedShow Answer

AT&T is an example of a business that used market power to

Correct AnswerverifiedShow Answer

If two or more oligopolistic companies work together to keep their prices high and split the market between them,this is called

Correct AnswerverifiedB

An example of an oligopoly is the

Correct AnswerverifiedShow Answer

In perfect competition,P = MC means

Correct AnswerverifiedShow Answer

Businesses will generally shut down if they lose money for one or two years.

Correct AnswerverifiedShow Answer

Market power is

Correct AnswerverifiedShow Answer

Monopolies generally _____________ technology and globalization.

Correct AnswerverifiedShow Answer

A business can escape perfect competition by building a better,more innovative product.

Correct AnswerverifiedTrue

Microsoft's two main products,Windows and Office,could be examples of

Correct AnswerverifiedShow Answer

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True

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Perfect competition rewards the lowest-c...
View Answer

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Compared to businesses with market power,businesses in perfect competition will charge prices and sell output.

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B

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True

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