Econ 121 MC Quiz, Ch. 1c



1.
"Game theory" is particularly appropriate to the analysis of _______ because __________.
A.
perfect competition, there is free entry to the "game"
B.
oligopoly, the relatively few firms in the market take actions that affect each other
C.
perfect competition, firms in those markets are interested solely in winning profits
D.
monopolistic competition, firms in those markets are interested solely in winning profits
E.
oligopoly, a firm in this market either earns maximum possible profits or perishes


2.
In the long run, the representative firm in monopolistic competition tends to have:
A.
excess capacity.
B.
economic profits.
C.
limited product differentiation.
D.
a perfectly elastic demand curve.


3.
"Monopoly power" is said to exist for firms in all types of markets, except in the case of
A.
perfect competition.
B.
monopoly.
C.
monopolistic competition.
D.
oligopoly.


4.
The "joint monopoly" output is
A.
0.
B.
500.
C.
250.
D.
1000.
E.
1250.


5.
The entry of new firms into an industry that is monopolistically competitive is:
A.
prevented by government.
B.
fairly easy in many instances.
C.
prevented by patent controls.
D.
prevented by complex technological know-how.
E.
generally easier than the entry of new firms into an industry that is perfectly competitive.


6.
The perfectly competitive output is
A.
1000.
B.
0.
C.
250.
D.
500.
E.
1250.


7.
A classic scene in gangster films shows the gang leaders gathered around a huge table to divide up the territory. Such an agreement is likely to be __________ because potential entrants face ________ start-up costs.
A.
stable, low
B.
unstable, low
C.
stable, high
D.
unstable, high


8.
Monopolistic competition leads to:
A.
less advertising than in perfect competition.
B.
overutilization of plants.
C.
underutilization of plants.
D.
lower prices than in perfect competition.
E.
efficient operations.


9.
The principle underlying the kinked demand curve model of oligopoly is that the demand curve facing one firm is more elastic when other firms in the industry:
A.
match the firm's price changes.
B.
hold price constant when the firm changes its prices.
C.
hold quantities constant when the firm changes its prices.
D.
change prices in the opposite direction when the firm changes its prices.


10.
After the innovation, the firm's maximum net profit per day is:
A.
$3,000.
B.
$0.
C.
$20.
D.
$1,500.
E.
 



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