1. A monopolistically competitive firm chooses the
A. price, but output is determined by cartel production quota.
B. quantity of output to produce and the price at which it will sell its output.
C. quantity of output to produce, but the market determines price.
D. price, but competition in the market determines the quantity.
2. Cooperation between the two prisoners in the prisoners' dilemma game is difficult to maintain, because
A. the prisoners are questioned separately.
B. criminals know they can't trust one another.
C. choosing the dominant strategy is individually rational.
D. cooperation is individually rational.
3. Assuming competitive markets, a worker's contribution to revenue is given by the
A. production function.
B. marginal product minus the marginal cost.
C. value of the marginal cost of labor.
D. value of the marginal product of labor.
4. Government laws that restrict cooperative agreements are called
A. cartel laws. C. tort laws.
B. antitrust laws. D. corporate laws.
5. The business-stealing externality associated with monopolistic competition arises because in monopolistically competitive markets, firms
A. always charge a price higher than marginal cost.
B. produce differentiated products.
C. are few barriers to entry.
D. produce at less than efficient scale.
6. Which of the following statements is correct?
A. If wages fall, profit-maximizing firms in competitive markets will increase employment, and the marginal product of labor will fall.
B. If wages fall, profit-maximizing firms in competitive markets will increase employment, and the marginal product of labor will rise.
C. If wages fall, profit-maximizing firms in competitive markets will decrease employment, and the marginal product of labor will rise.
D. If wages fall, profit-maximizing firms in competitive markets will decrease employment, and the marginal product of labor will fall.
7. The market for wine is likely to be characterized by which form of market structure?
A. Monopoly C. Perfect competition
B. Oligopoly D. Monopolistic competition
8. Which of the following statements is correct?
A. As the number of firms in an oligopoly increases, the oligopoly becomes more like a duopoly.
B. As the number of firms in an oligopoly increases, the oligopoly becomes more like a monopoly.
C. As the number of firms in an oligopoly increases, the oligopoly becomes more competitive.
D. As the number of firms in an oligopoly decreases, the oligopoly becomes more competitive.
9. A key determinant of recent labor productivity has been
A. family size. C. information technology.
B. equilibrium wages. D. an increase in product demand.
10. The deadweight loss that's associated with monopolistically competitive markets is a result of
A. operating in a constant-cost industry.
B. advertising costs.
C. pricing below marginal cost in order to increase market share.
D. pricing above marginal cost.
11. The practice of selling a product to retailers and requiring the retailers to charge a specific price for the product is called
A. fixed retail pricing. C. resale price maintenance.
B. unfair trade. D. cost-plus pricing.
12. When advertising fosters brand loyalty, critics claim that it
A. impedes competition.
B. lowers the quality of goods in the market.
C. alters a firm's supply curve.
D. increases competition in the market.
13. The profit-maximizing employment rule for a competitive firm ensures that
A. output price will equal marginal cost.
B. revenue will be maximized.
C. total costs will be minimized.
D. price will always exceed cost of production.
14. Which of the following statements is correct?
A. Over time, government has been less lenient toward advertising in order to enhance the ability of markets to allocate resources efficiently.
B. Over time, government has been more lenient toward advertising in order to enhance competition in markets.
C. Over time, government has been more lenient toward advertising in order to enhance brand loyalty.
D. Over time, government has been less lenient toward advertising in order to decrease elasticity of demand for specific products.
15. When the number of firms in a market is small, firms
A. generally organize as a cartel.
B. are less concerned about competitors' behavior, since there's always sufficient demand to keep all firms happy.
C. are guaranteed an economic profit.
D. must generally consider how competing firms respond to their decisions.
16. When a profit-maximizing firm makes a decision to employ a worker, that decision is based on
A. the individual contribution that the worker makes to the profit of the firm.
B. how much output the worker can produce.
C. the familial relationship between the employer and the employee.
D. the total output produced by the firm.
17. Why might it be rational to trust a brand name more than an unknown product?
A. Brand name products are lower-priced.
B. Brand name products are better quality.
C. Brand name companies have invested heavily in their reputations.
D. Greater market share means greater quality.
18. For a perfectly competitive firm to maximize profit, any rise in the market wage must be
A. offset by a decrease in the value of marginal product.
B. followed by an increase in employment.
C. followed by a decrease in the marginal product of labor.
D. followed by an increase in the marginal product of labor.
19. Markets that are characterized by a few sellers who sell similar or identical products are typically referred to as
A. aggressive markets. C. monopoly markets.
B. oligopoly markets. D. competitive markets.
20. Which of the following could decrease labor demand?
A. An increase in migrant workers
B. A decrease in demand for the final product produced by labor
C. A decrease in the labor supply
D. An increase in the marginal productivity of workers