1. Which industry is more highly concentrated: one with a Herfindahl index of 900 or one with a four-firm concentration ratio of 78 percent?

a) The one with a Herfindahl index of 900.

b) Both have the same concentration, just stated differently.

c) The one with a four-firm concentration ratio of 78 percent.

d) It%u2019s impossible to say.

2. The pizza market is divided as follows:

a) Pizza Hut 20.5 %

b) Domino's 17.5

c) Little Caesars 6.0

d) Pizza Inn/Pantera's 2.0

e) Round Table 2.0

f) All others 52.0

3. Assume that each of the remaining firms controls 1% of the market.
How would you describe its market structure?

a) Oligopolistic.

b) Perfectly competitive.

c) Monopolistic.

d)Cartels.

4. Predatory pricing:

a) will always work if markets are contestable.

b) is always successful because it produces profits in the long-run.

c) is never successful because it produces losses in the short-run.

d) is likely to be successful only if firms cannot enter an industry easily.

6. Suppose there are only four airlines that service the air route between two cities. If there is a barrier to entering the market (such as a limited number of gates), then the market is best characterized as:

a) a pure monopoly.

b) monopolistically competitive.

c) oligopolistic.

d) perfectly competitive.

7. A market structure in which there are a few interdependent firms is called:

a) monopolistic competition.

b) monopoly.

c) oligopoly.

d) perfect competition.

8. When a monopolistically competitive industry is in long-run equilibrium:

a) firms earn economic profits.

b) firms earn zero economic profits.

c) price equals minimum average total cost.

d) price equals marginal cost.

9. In the long-run equilibrium for a monopolistically competitive firm price:

a) exceeds marginal cost.

b) exceeds average total cost.

c) is equal to marginal revenue.

d) is equal to marginal cost.

10. Monopolistically competitive firms:

a) can earn economic profits or losses in both the short-run and the long-run.

b) can earn either profits or losses in the short-run, but earn zero economic profits in the long-run.

c) earn economic profits in the short-run but zero economic profits in the long-run.

d) earn zero economic profits in both the short-run and the long-run.

11. If the market for tires is monopolistically competitive, then:

a) the demand curve for each seller's product is perfectly elastic.

b) no seller can control the price of the product.

c) sellers can influence the market price of the product.

d) no firm has any monopoly power.

12. A cartel is:

a) legal in the United States as long as collusion is explicit.

b) a group of firms that collude to maximize group profits.

c) found in monopolistically competitive industries.

d) a group of fringe firms.