Unit 3: Market Structures - Practice Quiz

1 Which feature is associated with perfect competition?

2 Under perfect competition, the product sold by different firms is usually:

3 A firm under perfect competition is known as a:

4 Which condition is generally assumed in perfect competition?

5 For a perfectly competitive firm, average revenue is equal to:

6 A competitive firm maximizes profit where:

7 For a perfectly competitive firm, marginal revenue is equal to:

8 The industry supply curve under perfect competition is formed by adding the supplies of:

9 A monopoly market has:

10 A monopolist sells a product that has:

11 Which is a common barrier to entry under monopoly?

12 A monopolist is generally described as a:

13 A monopolist normally chooses output where:

14 After choosing its profit-maximizing output, a monopolist determines price from the:

15 For a monopolist facing a downward-sloping demand curve, marginal revenue is usually:

16 Monopolistic competition is characterized by:

17 Which is an example of product differentiation?

18 In the short run, a firm under monopolistic competition chooses output where:

19 In the long run, entry of new firms in monopolistic competition tends to:

20 An oligopoly is a market dominated by:

21 A firm in a perfectly competitive market can sell any quantity at the market price because:

22 Which situation most closely represents an assumption of perfect competition?

23 If a firm under perfect competition raises its price slightly above the market price, what is the most likely result?

24 A perfectly competitive firm has , , and the market price is at its current output. What should the firm do in the short run?

25 A competitive firm produces where . If the market price is and marginal cost reaches at 200 units, what is the profit-maximizing output?

26 In the short run, a perfectly competitive firm should shut down when:

27 Suppose demand increases in a perfectly competitive industry while firms are initially earning normal profit. What is the likely short-run effect?

28 Which condition is most likely to create a natural monopoly?

29 A monopoly is described as a price maker rather than a price taker because it:

30 Which example best illustrates a legal barrier to entry for a monopoly?

31 A monopolist faces demand and has constant marginal cost of . What output maximizes profit?

32 Using the demand function and the profit-maximizing output of 40 units, what price will the monopolist charge?

33 Why does a monopolist generally produce less and charge more than a perfectly competitive industry?

34 If a monopolist has total revenue of at 100 units and at 101 units, what is the marginal revenue of the 101st unit?

35 Which combination best describes monopolistic competition?

36 A restaurant in monopolistic competition gains some control over price mainly because:

37 In the short run, a monopolistically competitive firm maximizes profit by producing where:

38 In the long run, entry of new firms into a monopolistically competitive market usually causes each existing firm to experience:

39 A monopolistically competitive firm is in long-run equilibrium when its demand curve is tangent to its average total cost curve. What does this imply?

40 Why are firms in an oligopoly described as mutually interdependent?

41 A firm in a perfectly competitive industry faces a horizontal demand curve primarily because:

42 Which combination is most essential for long-run productive efficiency under perfect competition?

43 A competitive firm has and faces a market price of . What output maximizes profit in the short run, and what is the firm’s profit?

44 A competitive firm has . The firm’s shutdown price is:

45 In a constant-cost competitive industry, a permanent increase in demand will eventually cause:

46 If a competitive firm produces where while , which statement is correct?

47 A natural monopoly is most plausibly characterized by:

48 Which condition prevents a monopolist from charging an arbitrarily high price despite having no direct competitor?

49 A monopolist faces and has constant marginal cost . Ignoring fixed cost, its profit-maximizing price and quantity are:

50 For a monopolist with constant elasticity of demand , the Lerner index implies:

51 A monopolist’s demand is and total cost is . Compared with the socially efficient output, the monopoly output is:

52 A monopolist practicing perfect price discrimination will generally produce:

53 If a monopolist’s fixed cost increases while demand and marginal cost remain unchanged, the profit-maximizing price and quantity will:

54 In long-run equilibrium under monopolistic competition, a representative firm typically produces at:

55 Which feature distinguishes monopolistic competition from perfect competition most directly?

56 A monopolistically competitive firm has demand and total cost . Its short-run profit-maximizing output and price are:

57 Suppose advertising shifts a monopolistically competitive firm’s demand outward but also raises its average cost. Advertising is economically worthwhile if it:

58 The central analytical difficulty in oligopoly is that each firm’s optimal action depends primarily on:

59 In a Cournot duopoly with homogeneous output, inverse demand , and zero marginal cost, the symmetric Nash-equilibrium output of each firm is:

60 The kinked-demand model predicts price rigidity because a firm believes that rivals will: