Unit 4: Market System, Business Organizations, Labor Market
Markets Matching Section
1. 2-5 companies
2. A Price Taker
3. American car companies
4. Has a perfectly elastic demand schedule
5. Best market type for consumers
6. Com Ed
7. Sprint & Verizon
8. Most difficult barriers to entry
9. McDonalds
10. Few barriers to entry
11. Infinite sellers & no barriers to entry
12. When legal, are government controlled
13. Very similar products
14. All goods supplied are identical
15. O.P.E.C.
16. Microsoft in the 1990s
17. The Federal Reserve
18. Product is the only one available
19. Many substitutes but with differences.
20. Small, privately owned restaurants.
21. Soft Drink industry
22. Ten or more companies.
23. The Market in Wheat Game could be an example.
24. Businesses or countries that act together as a single producer
25. United States Postal Service.
Honors Economics
A.
B.
C.
D.
E.
Oligopoly
Monopolistic Competition
Monopoly
Cartel
Perfect Competition
Multiple Choice Questions
26. The U.S. Military is the only buyer of military goods and supplies, making them a:
a. Monopoly
b. Oligopoly
c. Monopsony
d. Monopolistic
27. Angelo is a wholesale meatball distributor. He sells his meatballs to all the finest Italian restaurants in town.
Nobody can make meatballs like Angelo. As a result, his is the only business in town that sells meatballs to
restaurants. Assuming that Angelo is maximizing his profit, which of the following statements is true?
a. Meatball prices will be less than marginal cost.
b. Meatball prices will equal marginal cost.
c. Meatball prices will exceed marginal cost.
d. Meatball prices will exceed marginal profit.
28. Which of the following is an example of a barrier to entry?
(i) A key resource is owned by a single firm.
(ii) The costs of production make a single producer more efficient than a large number of producers.
(iii) The government has given the existing monopoly the exclusive right to produce the good.
a. (i) and (ii)
b. (ii) and (iii)
c. (i) only
d. All of the above are correct
29. In the Oligopoly Game, what was the best solution for an individual company?
a. Produce as much as possible each round.
b. Produce a safe amount each round.
c. Produce a small number, unless you had a low cost card.
d. Produce a small number when you had a low cost card, produce high if you didn’t.
30. What is the most important thing the government looks for in determining whether a company is acting as a
monopoly?
a. High prices
c. Control of supply
b. Control of pricing
d. Control of demand
31. What is the best argument why companies don’t collude?
a. There is just as big of an incentive to break the agreement.
b. They really don’t make much money.
c. It is against the law to collude.
d. They are worried their shareholders might find out.
32. Which one of the following describes how monopolies and perfect competition are polar opposites
a. In perfect competition you are a price taker in a monopoly you’re a price setter
b. There are huge barrier barriers to entry in perfect competition but not in monopolies
c. The number of competitors varies minimally between the two
d. Both are regulated by the Securities and Exchange Commission
33. Government often blocks mergers because:
a. Big companies are not good for consumers.
b. Mergers create less competition.
c. Mergers generally lead companies to raise their prices.
d. Mergers block innovation and other good affects.
34. Which of the following is NOT a trend in the Labor Market?
a. Shift from production to service type jobs
b. Widening gap between skilled and unskilled labor wages
c. Narrowing gap between CEOs and lower line workers
d. The number of temporary workers is increasing
35. A firm can increase its scale of operations in two ways: Internal growth or External growth (mergers &
acquisitions). The reductions in cost associated with expansion are called:
a. Sole Proprietorship
b. Elasticity of Demand
c. Economies of Scale
d. Oligopoly Market Structure
36. All of the following are examples of market regulation EXCEPT?
a. 2001 United States vs. Microsoft antitrust law case
b. Lending of sub-prime loans in the 2000s
c. The existence of government monopolies
d. DeBeers paying a $10 million fine for price fixing
37. Which one of the following is true about labor trends?
a. There is a positive relationship between education level and unemployment level
b. Degrees in the arts are not as desired by hiring companies than those in engineering
c. The higher the education will guarantee a higher salary
d. Service industry related jobs are declining in the U.S.
38. All of the following are considered part of the factors of production EXCEPT?
a. Land
b. Labor
c. Market
d. Capital
Business Ownership Matching Section:
39. Can be 2 or more people & there are three types (general, limited & limited liability)
40. Advantage is you keep all the profits
41. Business ceases to exist if the owner dies
A. Corporation
42. Double taxation
B. Partnership
43. Disadvantage is potential ownership conflicts
C. Proprietorship
44. Given protection from personal liability
45. If public, regulated by the SEC
Short Answer Section
46. Draw a diagram showing the order of more and less competition among: monopolies, cartels, perfect
competition, oligopolies and monopolistic competition.
47. Define “game theory” and explain how it applies to the optimal decisions in oligopolies and in the
Oligopoly Game. Be thorough and provide examples. (3 pts)