1. _______ occurs when circumstances have allowed several large firms to have all or most of the sales in an in industry.

a) collusion

b) a cartel

c) a monopoly

d) an oligopoly

2. If a perfectly competitive firm raises its price, the quantity demanded of its product __________.

a) falls below marginal cost

b) diminishes temporarily in the short run

c) falls to zero

d) stays the same

3. The demand curve as perceived by a perfectly competitive firm is __________.

a) downward sloping

b) flat

c) upward sloping

d) hump shaped

4. Would raising the price for a product create a larger decline in quantity demanded for a monopolistic competitor than it would for a monopoly?

a) yes; consumers will buy from competitors offering lower priced substitutes

b) yes; but temporarily because price increases only create a short-run decline

c) no; a monopolistic competitor perceives demand as a price maker

d) no; conditions of imperfect competition means demand is constant

5. Which of the following represents a difference in the process by which a monopolistic competitor and a monopolist make their respective decisions about quantity and price?

a) only the monopolist competitor faces a downward-sloping demand curve

b) the monopolists perceived demand curve is market demand

c) the monopolist competitors perceived demand curve is market demand

d) a monopolist need not fear entry and also selection b above

6. When P> MC in a monopolistically competitive market, that industry will most likely produce _______ than would be found in a perfectly competitive industry. Benefits to society of proving additional quantity as measured by the price that people are willing to pay exceeds the marginal costs to society of producing those units.

a) a higher quantity of a good and charge a lower price

b) a lower quantity of a good and charge a higher price

c) the price people are willing to pay is not more

d) the price that people are willing to pay is lower