1. All of the following can be barriers to entry except: 

economies of scale.
a firm's superior ability.
government antitrust policies.
patents.

2. Under monopolistic competition, there are: 
few barriers to entry.
only a small number of sellers in the market.
significant barriers to entry.
only a few buyers in the market.

3. A reduction in the demand for labor will cause wages to: 
decrease and employment to increase.
decrease and employment to decrease.
increase and employment to decrease.
increase and employment to increase.

4. The labor market is: 
the market in which labor supply and labor demand alone determine wages and employment.
a market in which social and political pressures are particularly strong.
a market in which the invisible hand operates unimpeded by other forces.
the market in which firms determine the supply of labor.

5. The demand curve for a perfectly competitive firm: 
is downward sloping.
is upward sloping.
is perfectly horizontal (i.e. elastic).
is perfectly vertical (i.e. inelastic).

6. If a monopolist is earning profits, then price is greater than 
average total cost.
marginal revenue.
average variable cost.
marginal cost.

7. Which of the following factors would most likely explain why a U.S. company would choose to operate in the U.S. despite much lower wages in Mexico? 
the low cost of transportation between the two countries
the lower productivity of Mexican workers
the absence of significant trade barriers
the presence of many Japanese companies in Mexico