Question 1

Historical note: Because of its military importance, the U.S. government exercised monopoly control over which one of the following goods before World War II?

Accepted Answer

A)   iron
B)   steel
C)   helium
D)   hydrogen
E)   coalF) All of the above
G) A) and B)

Question 2

Price elasticity of demand is a useful tool for classifying firms that exist within the same market.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following represents a serious barrier to entry?

Accepted Answer

A)   high fixed cost
B)   low fixed cost
C)   easy access to acquiring resources
D)   no history of patents in the industry
E)   very elastic demand for the goodF) B) and C)
G) All of the above

Question 4

When considering the definition of "monopolistic competition," it is wise to place emphasis upon the first word as it most nearly describes market performance within this industry structure.

Accepted Answer

A) True 
 B)False

Question 5

Imagine that you own a firm that operates in a perfectly competitive industry. What will happen to the market price in your industry if you decide to triple your output?

Accepted Answer

Since each firm's market share...

Question 6

Perfect competitors produce goods that are

Accepted Answer

A)   highly differentiated
B)   differentiated by firm
C)   poor substitutes for each other
D)   identical
E)   uniqueF) B) and C)
G) A) and D)

Question 7

Natural monopolies result from the peculiar relationship between

Accepted Answer

A)   government regulation and the ownership of scarce resources
B)   threats to potential entrants and the price of the product
C)   the size of market demand and the firm's cost structure
D)   product differentiation and the ownership of patents
E)   the firm's advertising campaigns and its labor policiesF) A) and E)
G) A) and D)

Question 8

Cross elasticity among goods in a perfectly competitive market is infinite.

Accepted Answer

A) True 
 B)False

Question 9

One very important feature of a monopoly is the size of the firm.

Accepted Answer

A) True 
 B)False

Question 10

Market structure is determined mainly by the size of firms.

Accepted Answer

A) True 
 B)False

Question 11

An economic consultant recently reported to Sam Snerd that the cross-price elasticitybetween his product and another firm's scooters is 4.5. From this information Sam canconclude that

Accepted Answer

A)   his firm's market is smaller
B)   his firm is a monopolist
C)   his firm's product has few substitutes
D)   there is at least one other firm in his relevant market
E)   scooters are complimentary to his firm's productF) D) and E)
G) B) and C)

Question 12

Which of the following serves to protect a monopoly structure?

Accepted Answer

A)   appearance of close substitute goods
B)   creation of technologies that serve to break down barriers to entry
C)   continuing exclusive access to resources required to produce the good
D)   easier access to resources required to produce the good
E)   diseconomies of scaleF) None of the above
G) C) and D)

Question 13

Beanie Babies are popular stuffed animals sold by the Ty Corporation. Explain whether or not Ty is a monopoly.

Accepted Answer

Since there are many substitut...

Question 14

The single most important factor that determines market structure is

Accepted Answer

A)   location
B)   firm size
C)   number of firms in the industry
D)   price
E)   complementarity of the goodsF) C) and D)
G) A) and B)

Question 15

In the long run, monopolistic competition

Accepted Answer

A)   results in a monopoly
B)   ends up with one firm, that is, competition transforms to monopoly
C)   ends up with many firms in the industry
D)   has zero barriers to entry
E)   has no product differentiationF) A) and B)
G) B) and D)

Question 16

The firm's demand curve and the industry's demand curve are identical in the _________market structure(s) .

Accepted Answer

A)   monopoly
B)   oligopoly
C)   monopolistic competition
D)   perfect competition
E)   perfect competition and monopolisticF) D) and E)
G) None of the above

Question 17

The big labels in the music industry, such as Sony, Time-Warner, and Universal, are churning out thousands of CD albums each year that compete against each other for your dollar. But, considering the CD industry only, they also compete against

Accepted Answer

A)   records
B)   cassette tapes
C)   used CDs
D)   stereos
E)   used textbooksF) B) and C)
G) D) and E)

Question 18

The justification for the patent system is that it

Accepted Answer

A)   protects desirable monopolies
B)   encourages innovation
C)   discourages the development of substitute goods
D)   guarantees high profit for the monopolies so that they can use the profit as a source for research and development
E)   discourages competitionF) C) and D)
G) B) and C)

Question 19

A unique characteristic of oligopolies is their

Accepted Answer

A)   differentiated products
B)   profit-maximizing behavior
C)   advertising campaigns
D)   ability to overcome barriers to entry
E)   mutual interdependenceF) D) and E)
G) A) and D)

Question 20

Entry into a monopolistically competitive industry is

Accepted Answer

A)   easy, but exiting is difficult
B)   difficult, but exiting is easy
C)   difficult, but not impossible
D)   impossible
E)   easier than entry into oligopolyF) A) and B)
G) A) and C)

Exam 10: Identifying Markets and Market Structures

In the long run, monopolistic competition

Correct AnswerverifiedShow Answer

Which of the following serves to protect a monopoly structure?

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The firm's demand curve and the industry's demand curve are identical in the _________market structure(s) .

Correct AnswerverifiedShow Answer

Historical note: Because of its military importance, the U.S. government exercised monopoly control over which one of the following goods before World War II?

Correct AnswerverifiedShow Answer

Natural monopolies result from the peculiar relationship between

Correct AnswerverifiedShow Answer

Cross elasticity among goods in a perfectly competitive market is infinite.

Correct AnswerverifiedShow Answer

The single most important factor that determines market structure is

Correct AnswerverifiedShow Answer

Imagine that you own a firm that operates in a perfectly competitive industry. What will happen to the market price in your industry if you decide to triple your output?

Correct AnswerverifiedSince each firm's market share...View AnswerShow Answer

One very important feature of a monopoly is the size of the firm.

Correct AnswerverifiedShow Answer

Price elasticity of demand is a useful tool for classifying firms that exist within the same market.

Correct AnswerverifiedShow Answer

Beanie Babies are popular stuffed animals sold by the Ty Corporation. Explain whether or not Ty is a monopoly.

Correct AnswerverifiedSince there are many substitut...View AnswerShow Answer

Entry into a monopolistically competitive industry is

Correct AnswerverifiedShow Answer

Which of the following represents a serious barrier to entry?

Correct AnswerverifiedShow Answer

An economic consultant recently reported to Sam Snerd that the cross-price elasticitybetween his product and another firm's scooters is 4.5. From this information Sam canconclude that

Correct AnswerverifiedShow Answer

Market structure is determined mainly by the size of firms.

Correct AnswerverifiedShow Answer

A unique characteristic of oligopolies is their

Correct AnswerverifiedShow Answer

When considering the definition of "monopolistic competition," it is wise to place emphasis upon the first word as it most nearly describes market performance within this industry structure.

Correct AnswerverifiedShow Answer

Perfect competitors produce goods that are

Correct AnswerverifiedShow Answer

The justification for the patent system is that it

Correct AnswerverifiedShow Answer

The big labels in the music industry, such as Sony, Time-Warner, and Universal, are churning out thousands of CD albums each year that compete against each other for your dollar. But, considering the CD industry only, they also compete against

Correct AnswerverifiedShow Answer

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Since each firm's market share...
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Since there are many substitut...
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