Questions:
1. Which of the following constitutes an implicit cost to the Johnston Manufacturing Company?
a. Payments of wages to its office workers
b. Rent paid for the use of equipment owned by the Schultz Machinery Company
c. Use of savings to pay operating expenses instead of generating interest income
d. Economic profits resulting from current production
2. To economists, the main difference between the short run and the long run is that
a. the law of diminishing returns applies in the long run, but not in the short run.
b. in the long run all resources are variable, while in the short run at least one resource is fixed.
c. fixed costs are more important to decision making in the long run than they are in the short run.
d. in the short run all resources are fixed, while in the long run all resources are variable.
3. Which of the following industries most closely approximates pure competition?
a. Agriculture
b. Farm implements
c. Clothing
d. Steel
4. A purely competitive seller is
a. both a "price maker" and a "price taker."
b. neither a "price maker" nor a "price taker."
c. a "price taker."
d. a "price maker."
5. Which of the following is a characteristic of pure monopoly?
a. Close substitute products
b. Barriers to entry
c. The absence of market power
d. "Price taking"
6. Confronted with the same unit cost data, a monopolistic producer will charge
a. the same price and produce the same output as a competitive firm.
b. a higher price and produce a larger output than a competitive firm.
c. a higher price and produce a smaller output than a competitive firm.
d. a lower price and produce a smaller output than a competitive firm.
7. Monopolistic competition means
a. a market situation where competition is based entirely on product differentiation and advertising.
b. a large number of firms producing a standardized or homogeneous product.
c. many firms producing differentiated products.
d. a few firms producing a standardized or homogeneous product.
8. The term oligopoly indicates
a. a one-firm industry.
b. many producers of a differentiated product.
c. a few firms producing either a differentiated or a homogeneous product.
d. an industry whose four-firm concentration ratio is low.
9. Which of the following is the best example of oligopoly?
a. Women's dress manufacturing
b. Automobile manufacturing
c. Restaurants
d. Cotton farming
10. If the four-firm concentration ratio for industry X is 80
a. the four largest firms account for 80% of total sales.
b. each of the four largest firms accounts for 20% of total sales.
c. the four largest firms account for 20% of total sales.
d. the industry is monopolistically competitive