Questions:
1. In San Francisco there are many retail clothing stores. Each store is slightly different from every other store. Retail clothing stores are an example of what market structure?
perfect competition
monopolistic competition
oligopoly
monopoly
2. Which one of the following is NOT a source of market failure?
externalities.
public goods.
imperfect information.
price ceilings.
3. In a monopolistically competitive industry,
firms are large relative to the total market.
firms are small relative to the total market.
firms can be either large or small relative to the total market.
there is only one firm.
4. The restaurant industry is an example of a(n) ________ industry.
perfectly competitive
monopolistic
monopolistically competitive
oligopolistic
5. Firms with market power must decide all of the following EXCEPT
how much to supply in each input market.
how much to produce.
how to produce it.
what price to charge for their output.
6. A ________ system is one in which all possible trades that make some societal members better off without making others worse off have been exhausted.
Pareto maximized
Pareto optimal
market
general equilibrium
7. Tacit collusion
is legal under the U.S. antitrust laws.
occurs when firms engage in formal agreements to reduce output and increase prices in their industry.
is more likely to be successful in increasing industry profits when there are a few, similar firms in the industry.
is more likely to effectively raise prices in the industry when demand is elastic.
8. Imperfect competition
means there is no competition in the market.
results in less efficient market outcomes.
should always be regulated by the government
is a major cause of externalities in the market.
9. A monopolistically competitive firm that is incurring a loss will shut down if
marginal revenue is less than marginal cost.
revenues are less than variable costs.
price is less than average total cost.
price is less than marginal cost.
10. In a monopoly, the market demand curve is
the same as the demand curve facing the firm.
the summation of all the individual firm's cost curves.
nonexistent.
the marginal cost curve above minimum average variable cost