1. In the Kinked Demand curve model, price tends to settle at the kink because
a. MR=MC rule does not appy
b. there is no unique MR curve
c. the demand curve is inelastic throughout the range
d. none of the above
2. Oligopolies tend to
a. allocate resources inefficiently
b. maximize employment
c. maximize social benefit
d. all of the above
3. Which of the following industries is most likely to represent the monopolistic competition market structure?
a. the agriculture industry
b. utility companies
c. health food stores
d. tobacco products
4. If the price elasticity of demand is 2, a 50% sale on a product will
a. decrease total revenue
b. increase total revenue
c. keep the total revenue constant
d. increase total revenue by 50%
5. The best defense of oligopolist in our economy is
a. new orders of consumer goods and materials
b. the rate of change in sensitive materials prices
c. investment in research and development
d. growth through merger
6. A price discriminating firm will charge the lowest price when the price elasticity of demand is
a. lowest
b. highest
c. equals to 1
d. zero
7. During recessionary periods, the sale of ground beef goes up. This indicates that
a. people have more time to make own hamburgers during recessionary times
b. people have more time to be outdoor and cook hamburgers during recessionary times
c. ground beef is an inferior good
d. ground beef is a normal good
8. Which function of management is most concerned with risk minimization?
a. cost minimization
b. human resource management
c. complying with government regulations
d. enterpreneurial
9. The main difference between perfect competition and monopolistic competition is
a. the number of sellers in the market
b. the ease of exit from the market
c. the difference in the firm's profits in the long run
d. the degree of product differentiation