Economics MCQs

Page No. 325

An oligopoly with a dominant price leader will produce a level of output ?


a equal to what a monopolist would choose in the same industry


b between that which would prevail under competition and that which a monopolist would choose in the same industry


c that would prevail under competition


dbetween that which would prevail under competition and that which a monopolistic competitor would choose in the same industry.



A group of firms that gets together to make price and output decisions is called ?


aa concentrated industry.


ba cartel


cprice leadership


dan oligopoly.


View Answer a cartel

Assume that firms in an oligopoly are currently colluding to set price and output to maximise total industry profit. If the oligopolists are forced to stop colluding, the price charged by the oligopolists will _________ and the total output produced will __________?


adecrease; decrease


b increase; decrease


cdecrease; increase


d increase; increase


View Answer decrease; increase

When one firm in the breakfast cereal market started an advertising campaign that stressed the nutritional value of its cereals, all other cereal manufacturers started similar advertising campaign This suggests that the breakfast cereal market is ?


amonopolistically competitive


b oligopolistic


cperfectly competitive


d indeterminate from this information


View Answer oligopolistic

A monopolistically competitive firm that is incurring a loss will produce as long as the price that the firm charges is sufficient to cover ?


a marginal costs


bfixed costs


c variable costs


dadvertising costs


View Answer variable costs

The long-run equilibrium outcomes in monopolistic competition and perfect competition are similar because in both market structures ?


athe efficient output level will be produced in the long run


bfirms will only earn a normal profit


cfirms realize all economies of scale


dfirms will be producing at minimum average cost



Monopolistic competition differs from perfect competition primarily because ?


ain monopolistic competition entry into the industry is blocked


bin monopolistic competition there are relatively few barriers to entry.


cin monopolistic competition, firms can differentiate their products


din perfect competition firms can differentiate their products



An industry that realizes such large economies of scale in producing its product that single-firm production of that good or service is most efficient is called ?


aa fixed cost monopoly


ba natural monopoly


ca government franchise monopoly


d a economies of scale monopoly


View Answer a natural monopoly

In a monopoly, marginal revenue is ?


a lower than price for all units other than the first


b less than price at low levels of output and greater than price at high levels of output


calways greater than price


dalways equal to price



The normal rate of profit for relatively risk-free firms will be _________ the interest rate on risk-free government bonds?


aapproximately one-half


b smaller than


clarger than


d approximately equal to



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