ECONOMICS QUIZE MONOPOLY 1. Which of the following is true? A) B) C) D) E) Patents reduce a firm's incentive to develop new products.

Patents are given for new works of art or literature. Patents give a permanent exclusive right to produce a new good. Patents give a temporary exclusive right to produce a new good. Patents guarantee economic profits.

2. Patent laws promote technical progress in all of the following ways except one. Which is the exception? A) They allow other firms to copy successful products as soon as they are marketed. B) They prevent duplication of inventions. C) They provide a stimulus to innovation. D) They provide the inventor with a temporary monopoly. E) They increase a firm's incentive to incur the up-front costs of developing new products.

3. Which of the following could not bar entry into an industry? A) B) C) D) E) economies of scale diseconomies of scale patents licenses one firm's control of essential resources

4.Which of the following is not true of monopolists?

A)The entry of new firms is not a major concern. B)Monopolists seek to maximize profits. C)Monopolists can charge any price they want and make a profit. D)Monopolists can choose any point on the market demand curve. E)Monopolists can raise price more than 10 percent.

OLIGOPOLY 5.The key feature of an oligopoly is that: a) There are no barriers to entry. b) Firms sell a differentiated product. c) Firms are price takers. d) Firms are mutually interdependent. 6.Which of the following is always a characteristic of the oligopoly market structure? a. Many sellers, each small in size relative to the overall market. b. Few sellers. c. All sellers produce identical products. d. Easy, low-cost entry and exit.

PERFECT COMPETITION 7. In the long run, a perfectly competitive firm will achieve all but which of the following: A. Economic profit B. Allocative Efficiency C. Productive Efficiency D. Normal profit 8. Which of the following is NOT a characteristic of a perfectly competitive market? a. b. c. d. Firms are price takers. Firms have difficulty entering the market. There are many sellers in the market. Goods offered for sale are largely the same.

9. When firms are said to be price takers, it implies that if a firm raises its price, a. b. c. d. buyers will go elsewhere. buyers will pay the higher price in the short run. competitors will also raise their prices. firms in the industry will exercise market power.

10. The perfectly competitive market structure is defined with the help of various characteristics, including a. the assumption that there are so many buyers and so many sellers that no single person, acting alone, can influence the market price. b. the assumption that, in the minds of the buyers, all units of the good traded are identical, which makes it irrelevant who produced it. c. the assumption that all market participants are perfectly informed about all the factors that are relevant to their trading (prices, product quality, sources of supply, and so on). d. the assumption that new firms can enter the market easily, while existing firms can exit it just as easily. e. all of the above.

11. In a perfectly competitive market, a. a dissatisfied buyer, who leaves the market to buy something else, thereby drives the price down. b. a dissatisfied seller, who leaves the market to produce and sell something else, thereby drives the price up. c. the entry of a new buyer, by raising demand, thereby drives the price up. d. the entry of a new seller, by raising supply, thereby drives the price down. e. none of the above occurs.

12. Perfectly competitive firms respond to changing market conditions by varying their a. price b. output c. market share d. information e. advertising campaigns

13. Firms in perfect competition are price takers because a. all small firms must take the price set by the largest firm in the market b. firms take the price that government determines is a "fair" price c. each firm is small and goods are perfect substitutes for one another d. free entry and exit in the short run creates a constant market price in the long run e. high barriers to entry force firms to compete by charging lower prices than other firms in the industry

MONOPOLISTIC 14. The theory of monopolistic competition is built on the following assumptions: a. Each firm in the industry sells a product for which no close substitutes exist. b. There are many buyers and sellers because market entry is easy for all. c. Exit from the industry is extremely difficult and often illegal. d. All of the above. e. Each firm in the industry produces and sells an identical product.

15. Which of the following is NOT a characteristic of the monopolistic competition market structure? a. Many sellers, each small in size relative to the overall market. b. Few sellers. c. Differentiated product. d. Easy, low-cost entry and exit.