Economics Quiz - The main difference between perfect

Economics Quiz

QUESTION 1

1. The main difference between perfect competition and monopolistic competition is:

the profit maximization principle MR=MC

growth through merger

the difference in the firm's profits in the long run.

the degree of product differentiation.

 

2 points  

 

QUESTION 2

1. Which of the following industries is most likely to represent the monopolistic competition market structure?

The Agriculture industry

Utility Companies

Restaurants services

Tobacco products

 

2 points  

 

QUESTION 3

1. If firms are earning economic profit in a monopolistically competitive market, which of the following is most likely to happen in the long run?

Some firms will leave the market.

Firms will join together to keep others from entering.

New firms will enter the market, thereby eliminating the economic profit.

Firms will continue to earn economic profit.

2 points  

 

QUESTION 4

1. In the Kinked Demand curve model, price tends to settle at the kink because

MR=MC rule does not apply

there is no unique MR curve

the demand curve is inelastic throughout the range

none of the above

 

2 points  

 

QUESTION 5

1. A Cartel is defined to be:

Any oligopolistic industry with fewer than 4 firms.

A form of oligopoly in which firms agree to sell at different prices like in monopolistic competition.

A form of oligopoly in which firms formally agree to establish a common price, in effect acting like a monopoly.

A form of oligopoly in which firms agree to compete with each other on an equal basis.

 

2 points  

 

QUESTION 6

1. Which of the following is the best example of a product or service that provides a benefit externality?

the construction of a private road that allows vehicles if a toll is paid

a public library

a bookstore that is open 24 hours

the construction of a golf course in a private hotel

 

2 points  

 

QUESTION 7

1. An example of a cost externality occurs when a mining company:

dumps waste in river upstream from a popular fishing spot

produces coal that is not in demanded in a recession

underpays its employees

overwork its employees

 

2 points  

 

QUESTION 8

1. Which of the following may change the supply curve?

Taste of consumers

Income of consumers

Technology

Price of related goods

 

2 points  

 

QUESTION 9

1. X and Y are substitute goods. X is put on sale "buy one get one free". This will lead to

an increase in demand for Y

a decrease in demand for Y

an increase in demand for X and Y

a decrease in demand for X and Y

 

2 points  

 

QUESTION 10

1. Economic surplus is

demand price less equilibrium price

supply price above market price

consumer's surplus plus producer's surplus

none of the above

 

2 points  

 

QUESTION 11

1. A monopsony is a market with

one seller

one employer

one buyer and one seller

two to eight sellers

 

2 points  

 

QUESTION 12

1. A bilateral monopoly is a condition characterized by

a perfect competition firm facing a monopsony

a monopolistic firm facing a monopoly

an oligopoly facing a monopsony

a monopsony facing a union

 

2 points  

 

QUESTION 13

1. A price discriminating firm will charge the lowest price when price elasticity of demand is

lowest

highest

equal to 1

zero

 

2 points  

 

QUESTION 14

1. P = MC holds for

all firms

monopoly

oligopoly

perfect competition

 

2 points  

 

QUESTION 15

1. Oligopolies tend to

minimize social loss

maximize employment

maximize social benefit

allocate resources inefficiently

 

2 points  

 

QUESTION 16

1. In the short run, a monopolist may

attract other firms into the industry

upgrade technology

incur loss

charge the lowest price possible to attract buyers

 

2 points   

 

QUESTION 17

1. The best defense of oligopolist in our economy is

they are the main source of consumer goods and services

they promote social justice

they invest in research and development

they promote equity in global markets

 

2 points  

QUESTION 18

1. During recessionary periods, the sale of ground beef goes up. This indicates that

people have more time to make their own hamburgers during recessionary times

people have more time to be outdoor and cook hamburgers during recessionary times

ground beef is an inferior good

ground beef is a normal good

 

2 points  

 

QUESTION 19

1. In both monopolistic competition and oligopoly market structures

firms may enter and exit the industry easily

consumers perceive differences among the products of various competitors

economic profits may be earned in the short run and long run

producers collude tacitly

 

2 points  

 

QUESTION 20

1. In the short run, a monopolistically competitive firm

always earns profit

earns profit higher than an oligopolistic firm

earns profit higher than a perfectly competitive firm

may or may not earn profit

 

2 points  

 

QUESTION 21

1. If the price elasticity of demand is 1.56, a 50% sale on a product will

decrease total revenue

increase total revenue

keep total revenue constant

increase total revenue by 50%

 

2 points  

 

QUESTION 22

1. When estimated, exponents of the Cobb-Douglas production function indicates

maximum profits that can be earned

minimum cost that can lead to efficient production

input elasticites

different price elasticities in different markets

 

2 points  

 

QUESTION 23

1. The cross-price elasticities of X and Y are -.67. X was put on sale for two weeks, and it is no longer on sale. This will indicate

demand for Y will not change

demand for X will go up

demand for X and Y will go up

demand for Y will go down

 

2 points  

 

QUESTION 24

1. Most industries in our economy exhibit decreasing returns to scale because of

Scarcity of resources

Law of diminishing marginal utility

Law of diminishing marginal returns

Government regulation

 

2 points  

 

QUESTION 25

1. Labor unions are able to secure higher than market wage for their members by

negotiation only

restricting supply and negotiation

resorting to strike for an indefinite period

law suits

 

2 points  

 

QUESTION 26

1. Panel consensus is an example of

time series forecasting

quantitative forecasting

qualitative forecasting

global forecasting

 

2 points  

 

QUESTION 27

1. A monopolistically competitive firm maintains its market share through

artificial product differentiation

relying on brand loyalty

non-price competition

all of the above

 

2 points  

 

QUESTION 28

1. When two or more explanatory variables are highly correlated, the condition is known as

serial correlation

multiple correlation

spurious correlation

multicollinearity

 

2 points  

 

QUESTION 29

1. When a multiple regression equation is estimated, the F-test indicates

how many variables were statistically significant

how many variables were not statistically significant

if the estimated equation was statistically significant

if the intercept was statistically significant

 

2 points  

 

QUESTION 30

1. Suppose a demand equation was estimated using the Regression technique. The explanatory variables included in the equation were price of own good, price of substitute good, income of consumers and expected future price. What test will be used to test if each of the explanatory variables were statistically significant?

the F-test

the correlation test

the t-test

the multicollinearity test

 

2 points  

 

QUESTION 31

1. A 50% reduction of price of X led to a 75% decrease in demand of Y. This indicates

X and Y are complementary goods

X is a normal good, Y is an inferior good

X and Y are independent goods

X and Y are substitute goods

 

2 points  

 

QUESTION 32

1. Compared to competition, a monopolist

produces more and charges a higher price

produces less and charges a lower price

produces less and charges a higher price

may produce more and may charge a higher price

 

2 points  

 

QUESTION 33

1. Most public utilities in our economy enjoy a good degree of monopoly because of

government regulation

decreasing returns to scale

increasing returns to scale

constant returns to scale

 

2 points  

 

QUESTION 34

1. The long run ATC is flatter in shape because

all inputs are fixed

there is a greater degree of substitution between inputs

input elasticity is limited

the long run is undefined

 

2 points  

 

QUESTION 35

1. Which function of management is most concerned with risk minimization?

cost minimization

human resource management

complying with government regulations

entrepreneurial

 

36 . When the price of X was $80, total  number of Y sold in a store was 100. The store reduced the price of X by 50%. As  a result, sale of Y increased to 150.

(a) Calculate cross price elasticity of demand of X and Y.

(b). What type of goods are X and Y.

Show your work in this space

 

QUESTION 37

1. Assume the following demand and supply equations:

Qd: 11.5- 12.5p

Qs: 5.5 + 7.5p

(a). If a seller charges a price of .5 per unit, what will happen?

(b). At what price, there will be no shortage and no surplus? Prove your answer.

 

Show your work in this space

 

38. Assume the following inverted demand function of a firm in the short run: P = 100 - 5Q which yields the MR function as 100 - 10 Q. Now assume the total cost function of this firm  is : TC = 100 + 160Q - 20Q2

The above cost function yields the MC function as  160 - 40Q

(a) What is the amount of short-run profit or loss? Explain fully.

(b)  Is this firm earning a profit or incurring a loss?

Show your work in this space?