1.Which of the following industries comes closest to the model of perfect competition? (Points : 4)

 Automobile industry

 Information technology industry

 Aerospace industry

 Agriculture

Question 2.2. A feature of perfect competition is ________. (Points : 4)

use of non-price competition by firms

mutual interdependence among firms

 unique products

 standardized products

Question 3. Which of the following characteristics is most important in differentiating between perfect competition and all other types of markets? (Points : 4)

Whether or not the product is standardized

 Whether or not there is complete market information about price

 Whether or not firms are price takers

 All of the above are equally important.

Question 4.Demand facing an individual, perfectly competitive firm is ________. (Points : 4)

 perfectly inelastic at the quantity the firm chooses to produce

 perfectly inelastic at the quantity determined by market forces

 perfectly elastic at the price the firm chooses to charge

 perfectly elastic at the price determined by market forces

Question 5.According to the shutdown rule, a firm should produce no output in the short run if ________. (Points : 4)

the price is below minimum average total cost

the price is above minimum average total cost

the total revenues are lower than total fixed costs

the price is below minimum average variable costs

Question 6.If a perfectly competitive firm incurs an economic loss, it should ________. (Points : 4)

shut down immediately

 try to raise its price

 shut down in the long run

 shut down if this loss exceeds fixed cost

Question 7.A monopolist sells 100 units at $10 per unit and 90 units at $15 per unit. The marginal revenue from the tenth unit is ________. (Points : 4)

 $1000

 $1350

 $100

 $350

Question 8.Which of the following correctly completes this statement? 
  The monopolist's marginal revenue will be ________. (Points : 4)

  greater than price

   less than price

   equal to price

   greater than total revenues

Question 9.When MR = MC, ________. (Points : 4)

 marginal profit is maximized
   total profit is maximized

   marginal profit is positive

   total profit is zero

Question 10.In the short run, a firm should shut down if it cannot ________. (Points : 4)

       make normal profits

       make economic profits

       cover its variable costs

       cover its fixed costs

Question 11.Which of the following industries is most likely to represent the monopolistic competition market structure? (Points : 4)

       Automobile

       Tobacco

       Restaurant

       Farm equipment

Question 12.Which of the following represents a good example of an oligopoly? (Points : 4)

       The agriculture industry

       A public utility

       The automobile industry

       The restaurant industry

Question 13.Mutual interdependence means that ________. (Points : 4)

       all firms are price takers
       each firm sets its own price based on its anticipated reaction by its competitors
       all firms collaborate to establish one price
       all firms are free to enter or leave the market

Question 14.The Herfindahl-Hirschman Index (HHI) is used to measure ________. (Points : 4)

       the degree of non-price competition

       the degree of market concentration in an industry

       the extent of price leadership

       None of the above

Question 15.The existence of a kinked demand curve under oligopoly conditions may result in ________. (Points : 4)

       price flexibility

       price rigidity

       competitive pricing

       None of the above.
.

Question 16.Porter's "Five Forces Model" is based on ________. (Points : 4)

       the laws of supply and demand

       the law of diminishing returns

       the Structure-Conduct-Performance model

       the key factors affecting demand

Question 17.In the long run, the most helpful action that a monopolistically competitive firm can take to maintain its economic profit is to ________. (Points : 4)

       continue its efforts to differentiate its product
       raise its price
       lower its price
       do nothing, because it will inevitably experience a decline in profits

Question 18.The demand curve, which assumes that competitors will follow price decreases but not price increases, is called ________. (Points : 4)

       an industry demand curve

       an inelastic demand curve

       a kinked demand curve

       a competitive demand curve

Question 19.The four-firm concentration ratio ________. (Points : 4)

       indicates the total profitability among the top four firms in an industry

       is an indicator of the degree of monopolistic competition

       indicates the presence and intensity of an oligopoly market

       is used by the government as a basis for anti-trust cases

Question 20. When a company is faced by a kinked demand curve, the marginal revenue curve will be ________. (Points : 4)

       upward sloping

       horizontal

       zero at the quantity produced

       discontinuous