Econ 221 MC Quiz 10c WS04



1.
Which would make an individual firm's demand curve less elastic?
A.
the purchase of more efficient machinery
B.
a reduction in the price of the firm's product
C.
increased brand loyalty toward the firm's product
D.
a reduction in advertising expenditures by the firm


2.
The demand curve, which assumes that competitors will follow price decreases but not price increases, is called
A.
an industry demand curve.
B.
an inelastic demand curve.
C.
a kinked demand curve.
D.
a competitive demand curve.


3.
The demand curve faced by a monopolistically competitive firm:
A.
is more elastic than the monopolist's demand curve.
B.
is less elastic than the monopolist's demand curve.
C.
will shift outward as new firms enter the industry.
D.
is more elastic than the demand curve faced by the perfectly competitive firm.


4.
In which of these markets would the firms be facing the least elastic demand curve?
A.
perfect competition
B.
pure monopoly
C.
monopolistic competition
D.
oligopoly


5.
Between the extremes of perfect competition and monopoly are two types of markets described as "imperfectly competitive." The basis for that description is that
A.
there is more than one but fewer than "many" firms in each of those markets.
B.
there is a single firm in each of those markets.
C.
there is an extremely large number of firms in each of those markets.
D.
no new rivals are allowed to enter those markets.
E.
trade protection laws restrict competition from imported goods.


6.
If a firm finds that its marginal cost exceeds its marginal revenue, the maximum profit rule requires the firm to:
A.
increase its output in both perfect and imperfect competition.
B.
decrease its output in both perfect and imperfect competition.
C.
decrease its output in imperfect, but not necessarily in perfect competition.
D.
increase its output in perfect, but not necessarily in imperfect, competition.


7.
A monopolistically competitive firm is producing at a short-run output level where average total cost is $10.00, marginal cost is $5.00, marginal revenue is $6.00, and price is $12.00. In the short run, the firm should:
A.
decrease the level of output.
B.
increase the level of output.
C.
make no change in the level of output.
D.
increase product price.


8.
Advertising has been criticized by many economists on the grounds that it:
A.
is usually false.
B.
enhances artificial product differentiation among physically similar goods.
C.
reduces economies of scale.
D.
encourages excessive competition.
E.
results in shoddy merchandise.


9.
A monopolistically competitive industry is like a perfectly competitive industry in that:
A.
each industry produces a standardized product.
B.
nonprice competition is a feature in both industries.
C.
neither industry has significant barriers to entry.
D.
firms in both industries face a horizontal demand curve.


10.
The four-firm concentration ratio
A.
indicates the total profitability among the top four firms in an industry.
B.
is an indicator of the degree of monopolistic competition.
C.
indicates the presence and intensity of an oligopoly market.
D.
is used by the government as a basis for anti-trust cases.



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