Question:

Market power is defined as

A.

the ability of a firm to charge any price it wants

B.

produce and sell as large a quantity as possible at high prices

C.

the ability of a seller or buyer to affect the market price of a good or service

D.

sell large a quantity at high prices

Answer» c. the ability of a seller or buyer to affect the market price of a good or service

Question:

The monopolist who is in

A.

Short run equilibrium will also be in long run equilibrium

B.

Long run equilibrium will also be in short run equilibrium

C.

Long run equilibrium may or may not be in short run equilibrium

D.

None of the above

Answer» b. Long run equilibrium will also be in short run equilibrium

Question:

The condition of perfect competition is fulfilled when

A.

Sellers are large in number

B.

Buyers are large in number

C.

Commodity produced is homogenous

D.

All the above

Answer» d. All the above

Question:

Which of the following is not related to commodity money

A.

All commodities were not uniform in quality

B.

It is difficult to store and prevent the loss of value

C.

They lacked portability

D.

There was no problem of coincidence of wants

Answer» c. They lacked portability

Question:

In the short run, a monopolist will shut down if it is producing a level of output wheremarginal revenue is equal to short-run marginal cost and price is

A.

greater than average total cost

B.

less than average total cost

C.

greater than average variable cost

D.

less than average variable cost

Answer» d. less than average variable cost

Question:

If price is equal to average cost, in the short-run, the competitivefirm can earn

A.

Only normal profit

B.

Super normal profit

C.

Loss

D.

All of the above

Answer» a. Only normal profit

Question:

Factors of production are:

A.

the coefficients in a production function

B.

the characteristics of a market that determine how much is produced

C.

the inputs used to produce goods and services

D.

the outputs from a production function

Answer» c. the inputs used to produce goods and services

Question:

Firms in monopolistic competition in long run equilibrium ________ than firms in perfectcompetition.

A.

produce less

B.

charge a lower price

C.

have bigger profits

D.

have lower costs

Answer» a. produce less

Question:

Price leadership can be in the form of

A.

Price leadership by a low cost firm

B.

Price leadership by a dominant firm

C.

A barometric price leadership

D.

All of the above

Answer» d. All of the above

Question:

The demand for the product of a monopoly firm is

A.

Inelastic

B.

Elastic

C.

Unitary elastic

D.

Perfectly inelastic

Answer» b. Elastic