FIN 320 Week 7 Quiz – Strayer

ECO 405 Week 7 Quiz – Strayer

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Quiz 6 Chapter 8 and 9

The Economics Of Monopoly Power: Can Markets Be Controlled?


Multiple Choice Questions

1. Imperfect Competition Can Best Be Described As A Situation In Which
A. A Few Large Firms Produce And Sell A Particular Product
B. Many Firms Produce And Sell A Product
C. Only One Firm Produces And Sells A Product
D. Firms Exercise Some Monopoly Power
E. Both (A) And (D)

2. The Monopoly Power Of A Firm Can Be Measured By The Firm's
A. Profits Relative To Other Firms In The Industry
B. Control Over The Demand For Its Product
C. Revenues As A Percent Of Industry Revenues
D. Prices Compared To Average Prices In The Industry
E. Control Over The Market Supply Of Its Product

3. Which Of The Following Is Likely To Have The Most Monopoly Power?
A. Ford Motor Corporation
B. Your Local Water Company
C. Mobil Oil Corporation
D. Avon Products (Cosmetics)
E. A Fast Food Restaurant

4. Concentration Ratios Are Used To Measure The
A. Potential Monopoly Power Within An Industry
B. Strength Of The Demand For An Industry's Product
C. Potential Monopoly Power Of A Firm
D. Degree Of Competition Between Firms In Different Markets
E. Level Of Perfection In A Competitive Market


5. Suppose The U.S. Auto Industry Sells 1,000 Autos Per Year. Of This, Gm Sells 400, Ford 300, And Dodge 250. Given This Information, The Four-Firm Concentration Ratio Of The Industry Must Be At Least
A. 95%
B. 5%
C. 50%
D. 100%
E. Cannot Tell Without Further Information

 Questions 06 - 08 Refer To The Table Below.
   
6. The 4-Firm Concentration Ratio In This Industry Is
A. 0.5
B. 0.6
C. 0.7
D. 0.8
E. 0.9

7. The 6-Firm Concentration Ratio In This Industry Is
A. 0.6
B. 0.7
C. 0.8
D. 0.9
E. 1.0


8. Assume That No Firm In This Industry Accounts For Less Than 5% Of Industry Sales. What Is The Largest Number Of Firms That Could Be In This Industry?
A. 6
B. 7
C. 8
D. 9
E. 10

9. Which Of The Following Would Cause An Industry's Concentration Ratio To Make It Appear Less Competitive Than It Really Is?
A. Firms In The Industry Are Located In One Area Of The Country
B. Transporting The Industry's Output Is Very Easy
C. Foreign Firms Export The Industry's Product To The United States
D. High Barriers To Entry
E. All Of The Above

10. A Pure Monopoly Industry Has A 4-Firm Concentration Ratio Equal To
A. 0
B. 0.25
C. 050
D. 0.9
E. 1.0

11. To Maximize Profits, A Monopolist Produces The Output Level At Which
A. Its Total Receipts Are Greatest
B. Its Total Costs Are Minimum
C. Its Marginal Cost Equals Its Marginal Revenue
D. Its Total Costs Equal Its Total Receipts
E. None Of The Above


12. To Maximize Profits, A Competitive Firm Produces The Output Level At Which
A. Its Total Receipts Are Greatest
B. Its Total Costs Are Minimum
C. Its Marginal Cost Equals Its Marginal Revenue
D. Its Total Costs Equal Its Total Receipts
E. None Of The Above

13. One Difference Between A Competitive Seller And A Monopolistic Seller Is That The
A. Competitive Firm Faces A Horizontal Supply Curve
B. Monopolist Tries To Maximize Profit
C. Monopolist Has Some Price Setting Ability
D. Competitive Firm Is Free To Vary Output
E. Market Demand Curve Is Positively Sloped For A Monopoly

14. Monopoly Refers To
A. A Large Firm
B. A Firm That Is One Of A Few Firms In An Industry
C. A Single Seller Of A Product For Which There Are No Good Substitutes
D. A Firm That Refuses To Lower Its Price
E. All Of The Above

15. In A Competitive Market, The Single Firm
A. Competes With Other Firms For Its Share Of The Market
B. Is Unable To Raise The Price Of The Product
C. Can Increase Its Sales By Advertising
D. Can Increase Its Sales By Lowering Its Price
E. Is All Of The Above

16. A Major Objective Of Firms In All Types Of Market Structures Is
A. Output Restriction
B. Output Maximization
C. To Raise Prices
D. Profit Maximization
E. To Maximize Revenues


17. A Firm's Total Revenue Equals Its
A. Income Minus Expenses
B. Pre-Tax Net Income
C. Income For Tax Purposes
D. Quantity Times Price
E. Quantity Times Costs

18. Profit Equals
A. Total Revenue Minus Total Cost
B. Marginal Revenue Minus Marginal Cost
C. Quantity Times Price
D. Marginal Cost Minus Marginal Revenue
E. Income Minus Opportunity Cost

19. Profits And Losses In A Private Enterprise Economic System
A. Contribute Toward A Breakdown Of The System
B. Lead To A Monopolization Of The Industries In Which They Occur
C. Show Where Productive Capacity Should Be Expanded And Where It Should Be Contracted
D. Do All Of The Above
E. Do Both (A) And (B)

20. For A Firm, At The Output Level At Which Marginal Revenue Equals Marginal Cost,
A. Profits Are Highest
B. There Is Neither Unemployment Nor Inflation
C. Output Is Maximized
D. Revenues Are Maximized
E. Costs Are Minimized

21. The Most Common Forms Of Nonprice Competition Are
A. Profit Maximization And Loss Minimization
B. Monopolization And Output Restriction
C. Advertising And Changes In Product Quality And Design
D. Inflation And Unemployment
E. None Of The Above


Questions 22-26 Refer To The Following Graph. For Each Question, Disregard Any Irrelevant Lines.
 

22. Suppose The Market Is Competitive. Equilibrium Market Price And Output Will Be
A. P1, X2
B. P2, X3
C. P3, X1
D. P1, X4
E. P3, X2

23. Now Suppose The Same Market Is Monopolized. Equilibrium Market Price And Output Would Be
A. P3, X1
B. P3, X2
C. P2, X3
D. P1, X2
E. P1, X4


24. The Area Of The Triangle Abc Reflects The
A. Dead-Weight Welfare Loss Due To Monopoly
B. Increase In Production Costs Due To Monopoly
C. Increase Price To The Consumer Due To Monopoly
D. Impact Of Barriers To Entry On The Market
E. Effect Of Monopoly On Income Distribution

25. If This Industry Changes From Pure Competition To Monopoly, Output Changes From
A. X4 To X1
B. X4 To X2
C. X2 To X4
D. X3 To X2
E. X2 To X3

26. If This Industry Changes From Pure Competition To Monopoly, Price Changes From
A. P3 To P2
B. B. P3 To P1
C. C. P2 To P1
D. D. P1 To P3
E. E. P2 To P3

27. If The Demand Curve Faced By A Firm Is Downward Sloping And The Market Price Of The Product Is Above Marginal Cost Of Production, Which Of The Following Is Correct?
A. Not Enough Of The Economy's Resources Are Being Allocated To Producing The Good
B. Too Much Of The Economy's Resources Are Being Allocated To Producing The Good
C. The Firm Is In A Competitive Market
D. The Firm Is Making Profits
E. The Firm Is Losing Money

28. A Monopoly Is Not Efficient Because
A. Price Exceeds Marginal Cost
B. Entry Into The Market Is Blocked
C. Output Is Too Large
D. Monopoly Is Illegal
E. Price Is Too Low


29. The Dead-Weight Welfare Loss Due To Monopoly Is
A. Too Small To Be Important
B. About 10% Of Gdp Per Year
C. Unable To Be Determined In A Complex Economy Such As Our Own
D. About 1% Of Gdp Per Year
E. About .01% Of Gdp Per Year

30. The Dead-Weight Welfare Loss Due To Monopoly
A. Results From The Monopolist's Tendency To Reduce Output Below The Competitive Level
B. Is A Measure Of The Cost To Society From The Monopolistic Misallocation Of Resources
C. Is Estimated To Be About 1% Of Gdp Per Year
D. Is A Loss To Consumers Not Offset By Anyone Else's Gain
E. All Of The Above

31. Monopolization Of A Previously Competitive Market Leads To
A. Reduced Production And Product Quality And Increased Costs And Prices
B. Increased Production And Higher Prices
C. Increased Production, Product Quality And Prices
D. Government Regulation
E. None Of The Above

32. Patents And Copyright Laws
A. Are Governmental Barriers To Market Entry
B. Encourage Orderly Market Entry
C. Discourage Research And Development
D. Reduce Monopoly Power
E. Do All Of The Above

33. When Firms Earn Profits,
A. They Will Likely Expand
B. New Firms Will Have An Incentive To Enter The Market
C. They Are Providing A Good Or Service That Consumers Want More Of
D. The Market Is Signaling More Firms To Enter
E. All Of The Above


34. In A Competitive Market In The Short Run, Firms
A. May Earn Profits Or Losses
B. Always Break Even
C. Earn Neither Profits Nor Losses
D. Must Be Free To Enter Or Exit The Market
E. Charge A High Price And Produce A Low Quantity

 Questions 35 - 39 Refer To The Graph Below, Which Is For A Firm In A Competitive Market.
 

35. Since This Is A Competitive Market, The Firm's Marginal Revenue Is
A. $5
B. $7
C. $20
D. $100
E. $150


36. The Profit-Maximizing Price And Quantity For This Competitive Firm Are
A. $5 And 100
B. $5 And 150
C. $7 And 100
D. $7 And 150
E. $7 And More Than 150

37. Equilibrium Price And Quantity In The Market Are
A. $5 And 100
B. $5 And 150
C. $7 And 150
D. $7 And More Than 150
E. None Of The Above

38. The Firm's Total Revenue Is
A. $5
B. $7
C. $100
D. $150
E. $500

39. If The Firm Has A Total Cost Of $400, It Is Earning A
A. Profit Of $0
B. Profit Of $100
C. Loss Of $100
D. Loss Of $200
E. Loss Of $500


 Questions 40 - 44 Refer To The Graph Below, Showing A Monopoly Market.
 

40. For The Firm Shown On The Graph, Profit Maximization Occurs At What Price And Quantity?
A. $20 And 50
B. $15 And 70
C. $15 And 50
D. $10 And 50
E. $10 And 70

41. At The Profit Maximizing Quantity, The Firm's Total Revenue Equals
A. $10
B. $15
C. $20
D. $1,000
E. $1,400


42. If The Firm Has Total Costs Of $1,200 At The Profit Maximizing Output, Then It Is Earning A
A. Profit Of $0
B. Profit Of $100
C. Profit Of $200
D. Loss Of $100
E. Loss Of $200

43. If This Were A Perfectly Competitive Market, Equilibrium Price And Quantity Would Be
A. $20 And 50
B. $15 And 70
C. $15 And 50
D. $10 And 50
E. $10 And 70

44. Monopolization Of This Market Leads To A Deadweight Loss Equal To
A. $0
B. $50
C. $100
D. $150
E. Cannot Be Determined

45. If A Firm Sells 100 Units Of Output At A Price Of $5 And Each Unit Costs $3 To Produce, The Firm Is Earning A
A. Profit