12/15/2019
Quiz: Timed Final Exam
Timed Final Exam
Started: Dec 15 at 1:15am
Quiz Instructions
There are 40 multiple choice questions. You will have 90 minutes to complete the exam. The exam
will be available until Sunday, December 15 at 11:59pm. This time-span is given to account for
differences in your schedules. However, this is a timed exam that can only be submitted once, so
remember that once you begin you will only have a limited amount of time to complete it.
Good Luck!
Question 1
9 pts
For a perfectly competitive firm, the marginal cost curve is identical to the firm’s
________.
supply curve
average variable cost curve
demand curve
average total cost curve
Question 2
9 pts
________ refers to the additional revenue gained from selling one more unit.
Accounting profit
Marginal revenue
Economic profit
Question 3
9 pts
A perfectly competitive firm should shut down immediately in order to incur only
fixed costs whenever the price is:
lower than the average variable cost.
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Quiz: Timed Final Exam
higher than the average total cost.
higher than the average variable cost.
lower than the zero-profit point.
Question 4
9 pts
________ refers to the additional revenue gained from selling one more unit.
Economic profit
Accounting profit
Total revenue
Marginal revenue
Question 5
9 pts
Long-run equilibrium in perfectly competitive markets meets what two important
conditions?
productive efficiency
allocative efficiency
utility efficiency
Question 6
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9 pts
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Quiz: Timed Final Exam
Refer to the figure below. Total variable costs are:
$576
$720
$297
$432
Question 7
9 pts
If a firm's revenues do not cover its average variable costs, then that firm has
reached its ________.
shutdown point
opportunity margin
price-taking point
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Question 8
9 pts
Refer to the graph below. Total profit is:
$-48
$48
$-40
$-44
Question 9
9 pts
If marginal cost is rising in a competitive firm's short-run production process and
its average variable cost is falling as output is increased, then:
marginal cost is below average variable cost.
marginal cost is above average variable cost.
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average fixed cost is constant.
marginal cost is below average fixed cost.
Question 10
9 pts
Recall that in perfect competition a firm’s demand curve is a horizontal line
drawn at the market price level and that P=MR. With this in mind, based on the
figure below, total variable costs are:
$720
$660
$432
$576
Question 11
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9 pts
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Quiz: Timed Final Exam
Which one of the following is the most accurate description of a monopolist?
A firm that is very large relative to all its competitors within a narrow product class.
A sole producer of a product for which good substitutes are lacking in a market with high barriers
to entry.
A sole producer of a narrowly defined product class, such as brown, Grade A eggs produced in
Eagle County, Colorado.
A large, multinational firm that produces a single product in a narrow product class.
Question 12
9 pts
If the North American newsprint paper market has barriers to entry, then
surviving firms earn only a normal level of profit in the long run.
abnormally high profits will attract the entry of new firms.
the entry of new firms will eventually cause price to decline.
entry will be blocked even if firms are earning high profits.
Question 13
9 pts
A monopolist is a price:
maker.
taker.
blocker.
Question 14
9 pts
Select all of the following examples that are considered monopolies:
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airlines
U.S. postal service
electric utility companies
Question 15
9 pts
Which of the following are considered barriers to entry?
A popular but easily-copied family recipe.
Small economies of scale compared to market demand.
Heavy spend on advertising by established companies.
Question 16
9 pts
Which of the following denotes the typical shape of the monopolist's total cost
curve?
Total costs rise and grow steeper as output rises.
Total costs decrease and become flatter as output rises.
Total costs are typically constant and are shown by a straight horizontal line.
Question 17
9 pts
________ give(s) government the power to block certain mergers, and in some
cases, to break up large firms into smaller ones.
Restrictive practices
Market regulations
Nationalization policies
Antitrust laws
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Question 18
9 pts
If monopolists are able to produce fewer goods and sell them at a higher price
than they could under perfect competition, the result will be:
elimination of barriers to entry.
irregularly high unsustainable profits.
abnormally high sustained profits.
government deregulation.
Question 19
9 pts
The largest cattle rancher in a given region will be unable to have a ________
when sufficient numbers of smaller cattle ranchers provide sources of
competition.
monopoly
oligopoly
monopolistic competition
Question 20
9 pts
Following the assumption that firms maximize profits, how will the price and
output policy of an unregulated monopolist compare with ideal market
efficiency?
Output will be too large and its price too low.
Output will be too small and its price too low.
Output will be too small and its price too high.
Output will be too large and its price too high.
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Question 21
9 pts
Given the level of demand in the graph below, if Q = 5, total revenue =
50
100
0
60
Question 22
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9 pts
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Using the graph below, if Q = 10, Total Cost =
90
70
30
Question 23
9 pts
The sales of firms within a monopolistically competitive industry can depend
upon:
advertising for substitute products.
price.
intangibles like warrantees or return policies.
Question 24
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9 pts
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Quiz: Timed Final Exam
After determining its profit-maximizing quantity of output, how does a
monopolistic competitor choose its price?
The firm will look at the average cost curve to find out what it could charge for that quantity of
output.
The firm will look at the demand curve to find out what it could charge for that quantity of output.
The firm will look at the marginal revenue curve to find out what it could charge for that quantity of
output.
Question 25
9 pts
Through the process of exit, monopolistically competitive firms remaining in the
market
are no longer earning zero economic profits.
will each have ongoing negative earnings.
have positive earnings.
are no longer earning losses.
Question 26
9 pts
In the framework of monopolistic competition, advertising works because it
causes:
a steeper perceived demand curve.
the steeper perceived demand curve to become flatter.
perceived demand curve to shift to the left.
Question 27
9 pts
Total revenue equals ________ x ________.
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price, quantity
average revenue, quantity
demand, marginal revenue
Question 28
9 pts
Within a monopolistically competitive industry in the long-run, it would be
expected that:
productive efficiency is attained.
price is greater than marginal cost.
price is equal to marginal cost.
firms are not producing at the lowest possible average cost that technology allows.
Question 29
9 pts
How does a monopolistic competitor choose its profit-maximizing quantity of
output?
The firm will produce at a level of output where marginal revenue is less than marginal cost.
The firm will produce at a level of output where marginal revenue equals marginal cost.
The firm will produce at a level of output where marginal cost equals demand.
Question 30
9 pts
Perfect competition displays allocative efficiency because the social benefits of
additional production, as measured by the price that people are willing to pay,
are in balance with the ________ to society of that production.
marginal costs
total costs
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marginal revenues
Question 31
9 pts
Firms in an oligopoly typically act more like ________.
shareholders
business partners
competitors
Question 32
9 pts
How do oligopolies influence market inefficiencies?
Prices for these goods are artificially high.
Deadweight loss for society is increased.
The industry produces less output.
The industry makes higher profits.
Question 33
9 pts
Oligopolistic markets:
typically have higher barriers to entry.
are usually thought of as the most efficient market structures.
are characterized as having a small number of sellers.
Question 34
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9 pts
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Suppose circumstances have allowed several large firms to have all or most of
the sales in an industry. Which of the following may be happening?
cartel
perfect competition
oligopoly
Question 35
9 pts
Which of the following are advantages that firms could gain by working together
as if they were a monopoly?
Firms can increase industry productivity.
Firms can hold down industry output.
Firms can charge a higher price.
Question 36
9 pts
In 2007, five or six major pharmaceutical companies formed a group in order to
control the price of vitamins and adjust their production. Such an arrangement is
called a ________.
Monopoly
Duopoly
Cartel
Dominant strategy
Question 37
9 pts
Saudi Arabia, Venezuela, Qatar and others, are members of OPEC, which is
best described as which of the following?
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a cartel
an oligopoly
a monopoly
Question 38
9 pts
Which of the practices listed are illegal in the United States?
collusion
monopoly
oligopoly
Question 39
9 pts
Mary and Raj are the only two growers who provide organically grown corn to a
local grocery store. They know that if they cooperated and produced less corn,
they could raise the price of the corn. If they work independently, they will each
earn $100. If they decide to work together and both lower their output, they can
each earn $150. If one person lowers output and the other does not, the person
who lowers output will earn $0 and the other person will capture the entire
market and will earn $200. The table represents the choices available to Mary
and Raj. What is the best choice for Raj if he is sure that Mary will cooperate?
Mary Keeps Producing Mary Lowers Output
Raj Keeps Producing $100, $100
Raj Lowers Output
$0, $200
$200, $0
$150, $150
If Raj is sure Mary will cooperate, he should work independently.
If Raj is sure that Mary will cooperate, he should agree to work together.
If Raj is sure Mary will cooperate, he should cheat.
Question 40
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9 pts
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Quiz: Timed Final Exam
What is the greatest incentive for creating a oligopoly?
control the market
earn higher profits
provide innovative products
Quiz saved at 12:37pm
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