Micro Economics Mcq Essay

2107 Words Dec 4th, 2011 9 Pages
1. Which of the following is true under monopoly?
A. Profits are always positive
B. P > MC
C. P = MR
D. All of the above are true for monopoly Answer: B
2. In a competitive industry with identical firms, long run equilibrium is characterized by
A. P = AC
B. P = MC
C. MR = MC
D. All of the statements associated with this question are correct
Answer: D
3. Which of the following is true?
A. A monopolist produces on the inelastic portion of its demand
B. A monopolist always earns an economic profit
C. The more inelastic the demand, the closer marginal revenue is to price
D. In the short run a monopoly will shutdown if P < AVC Answer: D
4. Which of the following is true under monopoly?
A. Profits are always positive
B.
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Local utility industry in a small town
C. Newspaper industry in New York City
D. Bread industry in New York City
Answer:
10. Differentiated goods are a feature of a:
A. Perfectly competitive market
B. Monopolistically competitive market
C. Monopolistic market
D. Monopolistically competitive market and monopolistic market
Answer:
11. Firms have market power in:
A. Perfectly competitive markets
B. Monopolistically competitive markets
C. Monopolistic markets
D. Monopolistically competitive markets and monopolistic markets
Answer:
12. The source(s) of monopoly power for a monopoly may be:
A. Economies of scale
B. Economies of scope
C. Patents
D. All of the statements associated with this question are correct
Answer:
13. Which of the following is a correct representation of the profit maximization condition for a monopoly?
A. P = MR
B. MC = MR
C. P = ATC + MR
D. MR = MC + ATC Answer:
14. The Cournot theory of oligopoly assumes rivals will
A. Keep their output constant
B. Increase their output whenever a firm increases its output
C. Decrease output whenever a firm increases its output
D. Follow the learning curve
Answer:
15. Bertrand model of oligopoly reveals that
A. Capacity constraints are not important in determining market performance
B. Perfectly competitive prices can arise in markets with only a few firms
C. Changes in marginal cost do not affect prices
D. All of the statements associated with this question

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