Question:

A monopolized market is in long-run equilibrium when

A.

zero economic profit is earned by the monopolist

B.

production takes place where price is equal to long-run marginal cost and long-run average cost

C.

production takes place where long-run marginal cost is equal to marginal revenue and price is not below long-run average cost

D.

All of the above are correct

Answer» c. production takes place where long-run marginal cost is equal to marginal revenue and price is not below long-run average cost

Question:

There are only a few sellers under

A.

Perfect Competition

B.

Monopolistic competition

C.

Monopoly

D.

Oligopoly

Answer» d. Oligopoly

Question:

If the long run average cost curve for a typical firm in an industry is downward sloping to the right it becomes difficult to sustain the assumption of

A.

Diminishing returns

B.

Perfect competition

C.

Ceteris paribus

D.

Rising marginal costs in the short run

Answer» b. Perfect competition

Question:

If MPC = 4/5, then value of the multiplier is:

A.

20

B.

5

C.

0.80

D.

1.25

Answer» b. 5

Question:

A monopoly is a ________, therefore the demand curve it faces is ________

A.

price taker, downward-sloping

B.

price taker, horizontal

C.

price setter, downward-sloping

D.

price setter, horizontal

Answer» c. price setter, downward-sloping

Question:

For a giffen good, when price falls

A.

demand increases at a faster rate

B.

demand decreases

C.

demand remains constant

D.

demand curve has a negative slope

Answer» b. demand decreases

Question:

Which of the following is an anti-deflationary monetary policy

A.

Purchase of government securities from commercial banks and from the public

B.

Sale of government securities from commercial banks and from the public

C.

Raising the cash reserve ratio

D.

All of the above

Answer» a. Purchase of government securities from commercial banks and from the public