Microeconomics Test 2 example #14168

1 March 2023
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question
Which market model is characterized by many firms, differentiated products, and relatively easy entry?
answer
Monopolistic Competition
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Which market model has the least number of firms?
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Pure Monopoly
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There would be a unique product for which there are few close substitutes under which market model?
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Pure Monopoly
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There would be some control over price within rather narrow limits in which market model?
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Monopolistic Competition
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Mutual Interdependence tends to limit control over price in which market model?
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Oligopoly
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Which idea is inconsistent with pure competition?
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Product Differentiation
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Electric and Gas utilities would best be described by which market model?
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Pure Monopoly
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The retail trade for clothing would be an example of which market model?
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Monopolistic Competition
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The production of agricultural products such as wheat or corn would best be described by which market model?
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Pure Competition
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The steel and automobile industries would be examples of which market model?
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Oligopoly
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There is no control over price by firms in:
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Pure Competition
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Price is constant or given to the individual firm selling in a purely competitive market because:
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Each seller supplies a negligible fraction of supply
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A purely competitive firm does not try to sell more of its product by lowering its price below the market price because:
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It can sell all it wants to at the market price
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Sam owns a firm that produces tomatoes in a purely competitive market. The demand curve is:
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A horizontal Line
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If the demand curve facing a firm is perfectly elastic then:
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Its marginal revenue will equal price
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Which phrase would be most characteristic of pure monopoly?
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Single Seller
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Which is most characteristic of pure monopoly?
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The firm produces a good or a service for which there are no close substitutes.
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One feature of pure monopoly is that the monopolist:
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A price taker
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Under conditions of pure monopoly, entry is:
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blocked
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One major barrier to entry under pure monopoly arises from:
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ownership of essential resources
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Barriers to entry can result from:
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government regulation
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What is a barrier to entry?
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Patent
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A monopoly is most likely to emerge and be sustained when:
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economies of scale are larger than market demand
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One feature of pure monopoly is that the demand curve:
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Slopes downward
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The demand curve confronting a nondiscrimination pure monopolist is:
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The same as the industry's demand curve
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A non-discriminating monopolist will find that marginal revenue is less than:
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Average revenue or price
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Many people believe that monopolies charge any price they want to without affecting sales. Instead the output level for a profit maximizing monopoly is determined by:
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marginal cost= marginal revenue
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Pure monopolists sell where:
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P > MC
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When compared with the purely competitive industry with identical costs of production a monopolist will produce:
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Less output, higher price
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Allocative inefficiency criticism is when"
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A monopolist fails to expand output to the level where the consumer's valuation of an additional unit is just equal to its opportunity cost (invisible hand)
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Which is a characteristic of monopolistic competition? Easy...
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Relatively easy entry
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A monopolistically competitive industry is like a purely competitive industry in that:
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Neither industry has significant barriers to entry
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The goal of product differentiation and advertising in monopolistic competition is to make:
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Price less of a factor and product differences more of a factor in consumer purchases.
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One difference between monopolistic competition and pure competition is that there is some control:
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over price in monopolistic competition
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The demand curve faced by a monopolistic competitive firm is:
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More elastic than the monopolists demand curve
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Which would make an individual firm's demand curve less elastic?
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Increased brand loyaltry
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In monopolistic competition a firm has a limited degree of price-making ability. This means that the firm will:
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Set price above marginal cost
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If monopolistically competitive firms in a industry are making an economic profit, then:
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New firms will enter the industry and demand will decrease for the existing firms
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Firms in an industry will not earn long-run economic profits if:
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There is free entry and exit of firms in the industry
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The characteristic most closely associated with oligopoly is a few:
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large producers
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An oligopolistic market is consistent with firms making:
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economic profits, a small number of firms, existence of barriers to entry
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A unique feature of an oligopolistic industry is:
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Mutual Interdependence
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In a duopoly, if one firm increases its price, then the other firm can:
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Keep its price constant and thus increase its market share