Problem 1. Price discrimination is _____.
- illegal in most economically developed nations
- very rare in a market economy
- common, and evidence of monopoly
- all of the above
Problem 2. Market power is the ability _____.
- to set prices and quantities sold
- of capitalists to exploit the working classes
- to set prices
- all of the above
Problem 3. Which of the items below are examples of monopolistic competition, also known as imperfect competition?
- patent, copyright, and trademark
- professional licensing and labor unions
- local shops and restaurants
- all of the above
- none of the above
Problem 4. In what kind of market is a firm unable to influence the price of its output? (Points: 4)
- price maker
- monopoly
- imperfect monopoly
- perfectly competitive
Problem 5. When the quantity sold of a good changes significantly in response to changes in price, its demand is _____.
- identical to his supply curve
- identical to marginal cost
- highly elastic
- highly inelastic
Problem 6. Different individuals can earn different incomes because _____.
- they are discriminated against, based on ethnicity, gender, race, or other traits
- they have different levels of education and experience
- they live in different geographic areas with different employment opportunities
- any or all of the above could be reasons
Problem 7. When a firm's revenues rise more quickly than its costs, _____.
- it is operating below its optimal capacity
- it is operating above its optimal capacity
- it is operating at its optimal capacity
- all of the above
Problem 8. The primary goal of a firm is to _____.
- minimize cost
- maximize revenue
- maximize profit
- all of the above
Problem 9. Which of the following most nearly approximates a perfectly competitive market?
- products with brand names that are sold in many different stores
- commodities, like wheat, rice, and gold
- products that are very close substitutes for each other, like Coke and Pepsi
- all of the above
Problem 10. Profit equals _____.
- total revenue minus total cost
- total revenue minus marginal cost
- marginal revenue minus marginal cost
- gross revenue minus depreciation
Problem 11. Marginal cost is _____.
- a small cost that does not affect a firm's profit significantly
- the cost of increasing the margin between cost and price
- the cost of producing the next unit of output
- all of the above
Problem 12. A good that can be reproduced and distributed at a zero marginal cost is an example of _____.
- public good
- commodity
- oligopoly good
- monopoly good
Problem 13. The "Prisoner's Dilemma" illustrates:
- The lack of cooperation among firms in a competitive market
- The lack of cooperation among firms in a monopolistic market
- The lack of cooperation between a monopoly and its customers
- why, in an oligopoly market, cooperation is difficult to achieve even when it is mutually beneficial
Problem 14. A very large advertising budget is typically a sign of _____.
- public good
- perfect competition
- oligopoly
- monopoly