36) The network effect in the TV broadcasting industry results in
A) a positive market feedback between the number of advertisers and the size of TV audience.
B) a negative market feedback between the number of advertisers and the size of TV audience.
C) a positive market feedback between the number of advertisers and the number of TV
channels.
D) a negative market feedback between the number of advertisers and the number of TV
channels.
37) In a two-sided market, the platform may offer different prices to different group of end users
due to
A) the budget constraints of end users.
B) substitution effects between the end users and the platform.
C) different network effects between groups of end users.
D) a lack of product differentiation in the products sold.
38) In the mobile device industry, an example of a platform firm is
A) a mobile apps developer.
B) a developer of mobile device operation systems.
C) a retailer of mobile device accessories.
D) a provider of wifi networks.
39) In a two-sided market with network effects, the platform will likely
A) charge a lower price for end users that are more affected by a positive market feedback.
B) charge a higher price for end users that are more affected by a positive market feedback.
C) charge a zero price for all end users regardless of the market feedback effects.
D) randomly charge end users.
40) Why would Apple subsidize developers of mobile applications that operate with its iPhone’s
operating system?
A) There is a positive market feedback from the mobile applications to consumer’s willingness to
buy iPhones.
B) Apple attempts to ensure that all developers of mobile applications are profitable.
C) Apple thinks iPhones are too cheap for consumers.
D) Applies attempts to create competition among developers of its mobile applications.
41) In industries in which strong network effects exist, which industry structure is likely to
emerge?
A) perfect competition
B) monopoly
C) monopolistic competition
D) oligopoly
42) Other things being equal, which market structure would produce the least output and the
highest average product price?
A) monopoly
B) oligopoly
C) monopolistic competition
D) perfect competition
43) Other things being equal, which market structure is most likely to yield the greatest industry
long-run economic profit?
A) monopolistic competition
B) oligopoly
C) monopoly
D) perfect competition
44) In which market structure does a firm have the LEAST influence over the market price?
A) monopoly
B) monopolistic competition
C) oligopoly
D) perfect competition
45) Product differentiation always exists in
A) perfect competition.
B) monopolistic competition.
C) oligopoly.
D) monopoly.
46) Firms face downward sloping demand curves in
A) monopolies only.
B) monopolies and oligopolies only.
C) monopolies and oligopolies that collude only.
D) all market structures except perfect competition.
47) If we observe firms earning zero economic profits in the short run, we know that
A) the industry must be perfectly competitive.
B) the industry must be either perfectly competitive or monopolistically competitive.
C) there must not be any barriers to entry.
D) any market structure is possible since firms under any market structure can earn zero profits
at some time.
48) The market structure of oligopoly is when
A) there are a small number of interdependent firms that constitute the entire market.
B) there is a single producer of a product.
C) there are many producers of a differentiated product.
D) there are many producers of a homogeneous product.
49) The market structure of monopoly exists when
A) there are a small number of interdependent firms that constitute the entire market.
B) there is a single producer of a product.
C) there are many producers of differentiated products.
D) there are many producers of a homogeneous product.
50) The market structure of monopolistic competition exists when
A) there are a small number of interdependent firms that constitute the entire market.
B) there is a single producer of a product.
C) there are many producers of differentiated products.
D) there are many producers of a homogeneous product.
51) The market structure of perfect competition exists when
A) there are a small number of interdependent firms that constitute the entire market.
B) there is a single producer of a product.
C) there are many producers of differentiated products.
D) there are many producers of a homogeneous product.
52) In which market structures is the firm able to earn long-run economic profits?
A) perfect competition and monopolistic competition
B) monopolistic competition and oligopoly
C) oligopoly and monopoly
D) monopolistic competition, oligopoly and monopoly
53) In which market structures does a firm have at least some ability to set the market price?
A) perfect competition and monopolistic competition
B) monopolistic competition and oligopoly
C) oligopoly and monopoly
D) monopolistic competition, oligopoly and monopoly
54) In which market structures do firms engage in nonprice competition?
A) perfect competition and monopolistic competition
B) monopolistic competition and oligopoly
C) oligopoly and monopoly
D) perfect competition and monopoly
55) In which market structures do firms earn long-term profits of zero?
A) perfect competition and monopolistic competition
B) monopolistic competition and oligopoly
C) oligopoly and monopoly
D) perfect competition and monopoly
56) In which market structures is there product differentiation?
A) perfect competition and monopolistic competition
B) monopolistic competition and oligopoly
C) oligopoly and monopoly
D) perfect competition and monopoly
57) Monopolistically competitive markets and oligopolies are similar in that
A) the number of firms is identical.
B) the kinked demand curve can be used to analyze the firms’ pricing decisions.
C) there is mutual interdependence amongst the firms.
D) nonprice competition is a tool used.
58) A market with many sellers, no influence over price, no barriers to entry, a homogeneous
product, and an absence of non-price competition is known as
A) perfect competition.
B) monopolistic competition.
C) oligopoly.
D) monopoly.
59) A market with many sellers, some influence over price, low barriers to entry, a differentiated
product, and non-price competition often taking the form of advertising is known as
A) perfect competition.
B) monopolistic competition.
C) oligopoly.
D) monopoly.
60) A market with few sellers, some influence over price, high barriers to entry, a differentiated
product, and non-price competition is known as
A) perfect competition.
B) monopolistic competition.
C) oligopoly.
D) monopoly.
61) A market with one seller, considerable influence over price, high barriers to entry, a
homogeneous product, and non-price competition to allow for price discrimination is known as
A) perfect competition.
B) monopolistic competition.
C) oligopoly.
D) monopoly.
62) Which is FALSE about perfect competition?
A) There are numerous sellers.
B) Market entry and exit is unrestricted.
C) There is no ability to set price.
D) There is considerable product differentiation.
63) All of the following are true regarding oligopoly EXCEPT
A) there are few sellers.
B) there is some ability to set price.
C) there is no competition.
D) entry and exit is partially restricted.
64) Which of the following is NOT a characteristic of pure monopoly?
A) many sellers
B) considerable price setting ability
C) restricted ability to enter market
D) long-run economic profits are possible
65) Long-run economic profits are possible under
A) perfect competition and oligopoly.
B) monopolistic competition and monopoly.
C) oligopoly and monopoly.
D) monopolistic competition and oligopoly.
66) Retail trade is an example of
A) perfect competition.
B) oligopoly.
C) monopoly.
D) monopolistic competition.
67) Agriculture is an example of
A) perfect competition.
B) oligopoly.
C) monopoly.
D) monopolistic competition.
68) The college textbooks market is an example of
A) perfect competition.
B) oligopoly.
C) monopoly.
D) monopolistic competition.
69) A local utility is an example of
A) perfect competition.
B) oligopoly.
C) monopoly.
D) monopolistic competition.
70) Unrestricted entry and exit into the market is found in
A) perfect competition and monopolistic competition.
B) perfect competition and oligopoly.
C) monopolistic competition and oligopoly.
D) perfect competition, monopolistic competition and oligopoly.
71) How does the presence of network effects in a two-sided market affects the pricing behavior
in the market?