Economics MCQs

Page No. 322

A market is defined as perfectly contestable if ?


aentry to it and exit from it are both costless


bentry to it and exit from it are both costly


centry to it costless, but exit from it is costless


dentry to it is costly, but exit from it is costless



The kinked demand curve model of oligopoly assumes the elasticity of demand ?


a in response to a price increase is less elastic than the elasticity of demand in response to a price decrease


bis perfectly elastic if price increases and perfectly inelastic if price decreases


cis constant regardless of whether price increase of decrease.


d in response to a price increases is more elastic than the elasticity of demand in response to a price decrease



In which of the following circumstances would a cartel be most likely to work ?


a The market for copper, where there are very few producers and the product is standardized.


b The fast-food market where there are a large number of producers but the demand for fast food is inelastic


cThe coffee market where the product is standardized and there are a large number of coffee growers.


dThe automobile industry, where there are few producers but there is great product differentiation.



A price- and quantity-fixing agreement is known as?


a price leadership


bprice concentration


ccollusion


dgame theory,


View Answer collusion

An industry that has a relatively small number of firms that dominate the market is called ?


a a colluding industry


ba merged industry


c a concentrated industry


da natural monopoly



A form of industry structure characterized by a few firms, each large enough to influence market price is ?


aperfect competition


bmonopolistic competition


coligopoly


dmonopoly


View Answer oligopoly

Which of the following statements best describes the outcome under monopolistic competition ?


a It is efficient because the right amount of output is produced, but not efficient in that the output produced is produced at a cost above minimum average total cost


bIt is efficient because entry is free and economic profits are eliminated in the long run.


c It is not efficient because too little output is produced and the output that is produced is produced at a cost above minimum average total cost


dIt is not efficient because too little output is produced but is efficient in that the output produced is produced at minimum average total cost.



A firm in a monopolistically competitive industry ?


asells a fixed amount of output regardless of price.


b must raise price to sell more output


c can sell an infinite amount of output at the market-determined price


dmust lower price to sell more output.



In monopolistic competition firms achieve some degree of market power ?


a by producing differentiated products


bbecause of barriers to exit from the industry


cby virtue of size alone


dbecause of barriers to entry into the industry



In contestable markets, large oligopolistic firms, end up behaving like ?


aperfectly competitive firms


ba cartel


ca monopoly


dmonopolistically competitive firms.



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