Econ 001 - Principles of Microeconomics » Summer 2019 » Quiz 11

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Question #1
If each of two competing monopolists undertakes equally successful advertising efforts to attract consumers away from the other, the total result is ________.
A.   they will simply neutralize one another's efforts
B.   they will both improve their industrial position
C.   they will both increase market share
Question #2
A successful advertising campaign results in ________.
A.   the firm’s perceived demand curve to become more inelastic, so demand increases
B.   the firm charging a lower price for its product but selling more units
C.   the firm’s perceived demand curve to become more elastic, leading to more variability in pricing
Question #3
In the short-run, the firm will operate (not shut down) as long as revenue is more than enough to cover:
A.   fixed costs
B.   total costs
C.   marginal cost
D.   variable costs
Question #4
If the firm is producing at a quantity of output where marginal revenue is less than marginal cost, then,
A.   the firm's perceived demand will shift to the right.
B.   each marginal unit adds profit by bringing in less cost than its revenue.
C.   the firm should reduce production.
Question #5
Perfect competition displays allocative efficiency because the social benefits of additional production, as measured by the price that people are willing to pay, are in balance with the ________ to society of that production.
A.   marginal revenues
B.   marginal costs
C.   total costs
Question #6
The demand curve faced by a perfectly competitive firm is:
A.   Slightly downward-sloping–somewhat elastic
B.   Downward-Sloping–market demand
C.   Flat–perfectly elastic
Question #7
In the competitive market for figure skate blades, manufacturers offer an array of products that are
A.   at opposite ends of the competition spectrum.
B.   distinctly similar in a particular way.
C.   distinctly different in a particular way.
D.   virtually identical on the competition spectrum.
Question #8
Shopping malls typically lease retail space to a large number of clothing stores. When this group of retailers competes to sell similar but not identical products, they engage in what economists call ________.
A.   perfect competition
B.   monopolistic competition
C.   a cartel
D.   collusion
Question #9
Monopolistic competition is different from perfect competition in that monopolistically competitive markets:
A.   allows for positive economic profits in the long-run.
B.   involves competition that is all about efficiency: minimizing average cost.
C.   allows for positive economic profits in the short-run.
D.   involves non-price competition in the form of variety.
Question #10
The typical slope of the demand curve as perceived by a monopolistic competitor will
A.   show less of a decline in demand than would a monopoly that raised its prices.
B.   be steeper than the demand curve perceived by a monopolist.
C.   reflect that firm's ability raise its price without losing all of its customers.
D.   be reflective of a perfectly competitive firm and all of the above.
Question #11
If a perfectly competitive market moved toward monopolistic competition, we might expect:
A.   a greater range of product innovation and a lower price.
B.   a smaller range of product differentiation, but a lower price.
C.   a greater range of product differentiation, but a higher price.
D.   less advertising.
Question #12
In monopolistic competition, the end result of entry and exit is that firms end up with a price that lies
A.   at the very bottom of the AC curve.
B.   on the upward-sloping portion of the average cost curve.
C.   on the downward-sloping portion of the average cost curve.
D.   at the very top of the AC curve.

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