Archives: Quiz

1. In 2015, the total income of all U.S. residents was about a. $10 billion. b. $16 billion. c. $10 trillion. d. $16 trillion. ANSWER: d DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.008 – Analyze the markets for the factors of production. […]

True / False 1. A firm’s demand for labor is derived from its decision to supply a good in another market. a. True b. False ANSWER: True DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.008 – Analyze the markets for the factors of […]

Subjective Short Answer 1. Why are the actions of firms interdependent in an oligopoly market but not in a monopolistically competitive market? ANSWER: Because there are only a few firms in an oligopoly market, their actions are interdependent. There are […]

1. The story of the prisoners’ dilemma shows why a. predatory pricing is clearly not in society’s best interest. b. economists are unanimous in condemning resale price maintenance, since it inevitably reduces competition. c. oligopolies can fail to act independently, […]

1. From society’s standpoint, cooperation among oligopolists is a. desirable, because it leads to less conflict among firms and a wider variety of products for consumers. b. desirable, because it leads to an outcome closer to the competitive outcome than […]

ANSWER: d DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.183 – Given a payoff matrix, identify the dominant strategy, if present, for each player. TOPICS: Game theory Nash equilibrium KEYWORDS: BLOOM’S: Comprehension CUSTOM ID: 117.17.2 – MC – MANK08 118. The players in […]

KEYWORDS: BLOOM’S: Application CUSTOM ID: 062.17.2 – MC – MANK08 63. Lori and Maya are competitors in a local market. Each is trying to decide if it is better to advertise on TV, on radio, or not at all. If […]

1. When firms are faced with making strategic choices to maximize profit, economists typically use a. the theory of monopoly to model their behavior. b. the theory of aggressive competition to model their behavior. c. game theory to model their […]

c. increases, the market approaches the competitive market outcome. d. increases, the market approaches the monopoly outcome. ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.299 – Identify if an attribute is a characteristic of oligopolies. TOPICS: Oligopolies KEYWORDS: BLOOM’S: Analysis CUSTOM […]

DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.299 – Identify if an attribute is a characteristic of oligopolies. TOPICS: Collusion Oligopolies KEYWORDS: BLOOM’S: Application CUSTOM ID: 061.17.1 – MC – MANK08 62. Refer to Table 17-7. Assume there are two profit-maximizing internet radio […]

1. A distinguishing feature of an oligopolistic industry is the tension between a. profit maximization and cost minimization. b. cooperation and self interest. c. producing a small amount of output and charging a price above marginal cost. d. short-run decisions […]

1. Which of the following statements about oligopolies is not correct? a. An oligopolistic market has only a few sellers. b. The actions of any one seller can have a large impact on the profits of all other sellers. c. […]

True / False 1. The essence of an oligopolistic market is that there are only a few sellers. a. True b. False ANSWER: True DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.094 – Examine the behavior of oligopolists. TOPICS: Oligopolies KEYWORDS: BLOOM’S: Knowledge […]

Subjective Short Answer 1. Which market structure(s) is(are) imperfectly competitive? ANSWER: oligopoly monopolistic competition DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.023 – Classify an imperfectly competitive firm as an oligopoly or a monopolistically competitive firm. TOPICS: Monopolistic competition KEYWORDS: BLOOM’S: Comprehension CUSTOM […]

1. Which market structure(s) is(are) imperfectly competitive? ANSWER: oligopoly monopolistic competition DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.023 – Classify an imperfectly competitive firm as an oligopoly or a monopolistically competitive firm. TOPICS: Monopolistic competition KEYWORDS: BLOOM’S: Comprehension CUSTOM ID: 001.16.4 – […]

41. Television advertisements aired during major sporting events are very expensive. A theory asserting that people buy a product simply because it is advertised would suggest that information on the high cost of advertising a. enhances the effectiveness of the […]

1. Some firms have an incentive to advertise because they sell a a. homogeneous product and charge a price equal to marginal cost. b. homogeneous product and charge a price above marginal cost. c. differentiated product and charge a price […]

KEYWORDS: BLOOM’S: Comprehension CUSTOM ID: 227.16.2 – MC – MANK08 228. Monopolistic competition is an a. inefficient market structure because there is deadweight loss. b. inefficient market structure because price exceeds marginal cost. c. efficient market structure because free entry […]

187. Suppose for some firm that average total cost is minimized at Q1 units of output. For a monopolistically competitive firm in long-run equilibrium, Q1 a. is also the level of output at which marginal cost equals average total cost. […]

8 $77 8 $12 124. Refer to Table 16–6. What is the profit-maximizing output for Beatrice’s Birthday Cakes? a. 3 cakes b. 4 cakes c. 5 cakes d. 6 cakes ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.161 – Given a […]

DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.161 – Given a graph of a monopolistically competitive market, derive the profit-maximizing price and quantity. TOPICS: Monopolistic competition KEYWORDS: BLOOM’S: Application CUSTOM ID: 067.16.2 – MC – MANK08 68. Refer to Figure 16–4. What price […]

1. A downward-sloping demand curve a. is a feature of all monopolistically competitive firms. b. means that the firm in question will never experience a zero profit. c. causes marginal revenue to exceed price. d. prohibits firms from earning positive […]

ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.094 – Examine the behavior of oligopolists. TOPICS: Oligopolies KEYWORDS: BLOOM’S: Comprehension CUSTOM ID: 052.16.1 – MC – MANK08 53. One way in which monopolistic competition differs from oligopoly is that a. there are […]

1. A typical firm in the US economy would be classified as a. perfectly competitive. b. imperfectly competitive. c. a duopolist. d. an oligopolist. ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 – Apply basic, economic principles of individual decision making […]

1. The market for novels is a. perfectly competitive. b. a monopoly. c. monopolistically competitive. d. an oligopoly. ANSWER: c DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.058 – Determine if a market attribute is a characteristic of a competitive market or a […]

True / False 1. There are four basic types of market structure. a. True b. False ANSWER: True DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 – Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: […]

Subjective Short Answer 1. What are the three main sources of barriers to entry for monopolies? ANSWER: monopoly resources government regulation the production process DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.003 – Analyze the behavior and market effects of monopolies. TOPICS: Monopolies […]

1. Which of the following strategies is not an effective strategy to reduce monopoly inefficiency? a. antitrust laws b. price discrimination c. doing nothing d. breaking up a natural monopoly into more than one firm ANSWER: d DIFFICULTY: Moderate LEARNING […]

1. Which of the following is the preferred strategy for the government to follow to remedy the inefficient allocation of resources associated with monopolies? a. preventing mergers through antitrust laws b. regulating the prices that monopolies can charge c. doing […]

1. Price discrimination a. is illegal in the United States and Europe. b. can occur in both perfectly competitive and monopoly markets. c. is illogical because it does not maximize profits. d. can maximize profits if the seller can prevent […]

1. Monopolies are inefficient because they (i) eliminate barriers to entry. (ii) price their product at a level where marginal revenue exceeds marginal cost. (iii) restrict output below the socially efficient level of production. a. (i) and (ii) only b. […]

DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.034 – Compare the welfare effects of allowing a monopolist to engage in price discrimination against standard monopoly pricing. TOPICS: Monopolies KEYWORDS: BLOOM’S: Application CUSTOM ID: 054.15.4 – MC – MANK08 Scenario 15–10 Vincent operates a […]

ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.003 – Analyze the behavior and market effects of monopolies. TOPICS: Monopolies KEYWORDS: BLOOM’S: Application CUSTOM ID: 132.15.2 – MC – MANK08 133. Refer to Table 15-7. Sally will maximize her profits by selling […]

71. Refer to Figure 15–3. Which panel could represent the demand curve facing a soybean farmer? a. Panel A b. Panel B c. Panel C d. Panel D ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.003 – Analyze the behavior and […]

1. Which of the following statements is (are) true of a monopoly? (i) A monopoly has the ability to set the price of its product at whatever level it desires. (ii) A monopoly’s total revenue will always increase when it […]

KEYWORDS: BLOOM’S: Comprehension CUSTOM ID: 051.15.1 – MC – MANK08 52. Drug companies are allowed to be monopolists in the drugs they discover in order to a. allow drug companies to charge a price that is equal to their marginal […]

1. A competitive firm a. and a monopolist are price takers. b. and a monopolist are price makers. c. is a price taker, whereas a monopolist is a price maker. d. is a price maker, whereas a monopolist is a […]

1. Monopolists can achieve any level of profit they desire because they have unlimited market power. a. True b. False ANSWER: False DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.003 – Analyze the behavior and market effects of monopolies. TOPICS: Monopolies KEYWORDS: BLOOM’S: […]

Subjective Short Answer 1. If a firm can influence the market price of the good it sells, then it is said to have __________. ANSWER: market power DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.092 – Examine firms in competitive markets. TOPICS: Perfect […]

DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.172 – Given a graph of the firm’s production costs, determine the shutdown price in the short run for a perfectly competitive firm. TOPICS: Perfect competition Short run KEYWORDS: BLOOM’S: Analysis CUSTOM ID: 217.14.2 – MC […]

ANSWER: d DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.171 – Given a graph of the firm’s production costs and the market price of a good, indicate the area that represents the firm’s profit. TOPICS: Perfect competition Short run KEYWORDS: BLOOM’S: Analysis CUSTOM […]

c. $250 d. $450 ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.284 – Given the market price and the firm’s production costs, determine the profit-maximizing outcome of a perfectly competitive firm. TOPICS: Perfect competition Short run KEYWORDS: BLOOM’S: Analysis CUSTOM ID: […]

ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.284 – Given the market price and the firm’s production costs, determine the profit-maximizing outcome of a perfectly competitive firm. TOPICS: Perfect competition KEYWORDS: BLOOM’S: Application CUSTOM ID: 062.14.2 – MC – MANK08 63. […]

1. If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then a. a one-unit increase in output will increase the firm’s profit. b. a one-unit decrease in output will increase the […]

a. $12. b. $4. c. $3. d. $1. ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.285 – Given the market price of a good, compute a competitive firm’s average revenue at various quantities. TOPICS: Perfect competition KEYWORDS: BLOOM’S: Application CUSTOM ID: […]

1. A key characteristic of a competitive market is that a. government antitrust laws regulate competition. b. producers sell nearly identical products. c. firms minimize total costs. d. firms have price setting power. ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.092 […]

1. A firm has market power if it can a. maximize profits. b. minimize costs. c. influence the market price of the good it sells. d. hire as many workers as it needs at the prevailing wage rate. ANSWER: c […]

True / False 1. For a firm operating in a perfectly competitive industry, total revenue, marginal revenue, and average revenue are all equal. a. True b. False ANSWER: False DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.092 – Examine firms in competitive markets. […]

1. Adam Smith used a famous example of what type of firm to illustrate economies of scale? a. Apple b. a pin factory c. a lumber mill d. a British university ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 – Apply […]

DIFFICULTY: Difficult LEARNING OBJECTIVES: ECON.MANK.170 – Given a graph of the average-total-cost curve in the long run, identify the regions that represent economies of scale, constant returns to scale, and diseconomies of scale. TOPICS: Producer theory Production costs Long run […]