Quiz #5

Description
Quiz #5 is on chapters 9 and 10. Please choose the best answer for each question. You may use your textbook, notes, and any other materials to assist you. There is no time limit but you may only take each quiz once. Make sure you have a reliable Internet connection.

This assessment is worth 25 points.

Note:  Correct answers appear in Blue.  Incorrect answers and skipped questions appear in Red after 'Your response'.

  1. Which market structure is characterized by a few interdependent firms?   (1 point)

    Your response:
    d. Oligopoly.       (You answered correctly!)

    Feedback : 

    Type: Definition Page: 216

    1  point awarded.

    The correct answer is:
    1. Monopoly.
    2. Perfect competition.
    3. Monopolist competition.
    4. Oligopoly.

  2. Which of the following may characterize oligopolistic behavior?   (1 point)

    Your response:
    d. All of the above.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 221

    1  point awarded.

    The correct answer is:
    1. Price leadership.
    2. Collusion.
    3. Retaliation.
    4. All of the above.

  3. Which of the following is the unique characteristic of natural monopolies that other monopolies do not share?   (1 point)

    Your response:
    a. Economies of scale over the entire range of market output.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 208

    1  point awarded.

    The correct answer is:
    1. Economies of scale over the entire range of market output.
    2. The marginal cost curve is always above the average total cost curve.
    3. It is to a natural monopolist's advantage to produce the output where MC equals price.
    4. All monopolies are natural monopolies.

  4. Oligopolists can limit competition by:   (1 point)

    Your response:
    d. All of the above.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 233

    1  point awarded.

    The correct answer is:
    1. Mergers and acquisitions.
    2. Supporting government regulation of international trade.
    3. Gaining control of distribution outlets.
    4. All of the above.

  5. Oligopolists will maximize total profits for all of the firms in the market at the rate of output where:   (1 point)

    Your response:
    d. MR = MC for the market.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 228

    1  point awarded.

    The correct answer is:
    1. TR = TC for the total market.
    2. AR = AC for each firm.
    3. MR = MC for the marginal firm.
    4. MR = MC for the market.

  6. Which of the following is a barrier to entry in a monopoly market?   (1 point)

    Your response:
    c. A patent on a new product.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 197

    1  point awarded.

    The correct answer is:
    1. Economic profits greater than zero for the monopolist.
    2. A rising long-run average total cost curve.
    3. A patent on a new product.
    4. All of the above.

  7. The Herfindahl-Hirshman Index:   (1 point)

    Your response:
    d. All of the above.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 238

    1  point awarded.

    The correct answer is:
    1. Is a measure of industry concentration.
    2. Takes into account the number of firms and size of each.
    3. Is used to identify cases worthy of antitrust concern.
    4. All of the above.

  8. Which of the following prohibits price discrimination, certain types of mergers, and interlocking boards of directors among competing companies?   (1 point)

    Your response:
    b. The Clayton Act.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 210

    1  point awarded.

    The correct answer is:
    1. The Sherman Act.
    2. The Clayton Act.
    3. The Federal Trade Commission Act.
    4. The Full Employment and Balanced Growth Act.

  9. The correct ranking of degree of market power (from highest to lowest) is:   (1 point)

    Your response:
    c. Monopoly, oligopoly, monopolistic competition, perfect competition.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 216

    1  point awarded.

    The correct answer is:
    1. Monopoly, monopolistic competition, perfect competition, oligopoly.
    2. Monopoly, monopolistic competition, oligopoly, perfect competition.
    3. Monopoly, oligopoly, monopolistic competition, perfect competition.
    4. Oligopoly, monopoly, monopolistic competition, perfect competition.

  10. Price leadership is a method by which oligopolies can:   (1 point)

    Your response:
    a. Increase prices without explicit price fixing.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 231

    1  point awarded.

    The correct answer is:
    1. Increase prices without explicit price fixing.
    2. Illegally raise prices.
    3. Maintain the "kink" in their demand curves.
    4. Encourage competition.

  11. Which of the following markets best illustrates the practice of price discrimination?   (1 point)

    Your response:
    a. The airline market.       (You answered correctly!)

    Feedback : 

    Type: Complex Understanding Page: 205

    1  point awarded.

    The correct answer is:
    1. The airline market.
    2. Wheat farming.
    3. The fast-food market.
    4. The personal computer market.

  12. The kinked-demand curve indicates:   (1 point)

    Your response:
    a. Why oligopoly prices might be sticky.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 223

    1  point awarded.

    The correct answer is:
    1. Why oligopoly prices might be sticky.
    2. How the current price is established.
    3. How the current output is established.
    4. All of the above.

  13. What is the most likely response by rivals when an oligopolist cuts its price to increase its sales?   (1 point)

    Your response:
    c. Cut their prices.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 224

    1  point awarded.

    The correct answer is:
    1. Raise their prices.
    2. Ignore the change.
    3. Cut their prices.
    4. Reduce their costs.

  14. The antitrust experts measure the contestability of a market on the basis of:   (1 point)

    Your response:
    b. The structure of a market.

    Feedback : 

    Type: Complex Understanding Page: 208

    0  points awarded.

    The correct answer is:
    1. Evidence of excessive economic profit.
    2. The structure of a market.
    3. The amount of output produced relative to what would occur in a competitive market.
    4. How high prices must go before there is entry.

  15. The creation of another antitrust agency besides the Justice Department was accomplished through:   (1 point)

    Your response:
    c. The Federal Trade Commission Act.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 211

    1  point awarded.

    The correct answer is:
    1. The Sherman Act.
    2. The Clayton Act.
    3. The Federal Trade Commission Act.
    4. Case decisions, such as those for AT&T and IBM.

  16. Any firm that has economies of scale will:   (1 point)

    Your response:
    d. All of the above.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 197

    1  point awarded.

    The correct answer is:
    1. Try to centralize production in one plant.
    2. Be able to produce at a lower unit cost as it increases production.
    3. Face a downward-sloping long-run average total cost curve.
    4. All of the above.

  17. Product differentiation is:   (1 point)

    Your response:
    c. Involves advertising unique product features.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 222

    1  point awarded.

    The correct answer is:
    1. Involves charging different prices to different customers.
    2. Commonly practiced in perfect competition and monopoly markets.
    3. Involves advertising unique product features.
    4. A rarely successful advertising campaign.

  18. The primary purpose of anti-trust policy in the United States is to:   (1 point)

    Your response:
    b. Encourage competition.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 210

    1  point awarded.

    The correct answer is:
    1. Issue patents.
    2. Encourage competition.
    3. Limit foreign competition.
    4. Regulate monopolies.

  19. The In the News article "Pentagon Opposes Ship Monopoly" discusses the proposed merger of two ship-building companies. The justice department opposed the merger because when industries become monopolized:   (1 point)

    Your response:
    d. All of the above.       (You answered correctly!)

    Feedback : 

    Type: Complex Understanding Page: 209

    1  point awarded.

    The correct answer is:
    1. Prices tend to rise.
    2. Quantity tends to decrease.
    3. Consumers typically have fewer choices.
    4. All of the above.

  20. The marginal revenue of a monopolist falls below price because the firm:   (1 point)

    Your response:
    d. Has an upward-sloping marginal cost curve.

    Feedback : 

    Type: Basic Understanding Page: 196

    0  points awarded.

    The correct answer is:
    1. Is not limited by market demand.
    2. Faces a market demand curve that is inelastic.
    3. Confronts a downward-sloping demand curve.
    4. Has an upward-sloping marginal cost curve.

  21. For a monopolist, the profit-maximizing rate of output occurs where:   (1 point)

    Your response:
    c. MR = MC.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 196

    1  point awarded.

    The correct answer is:
    1. MC = minimum ATC.
    2. P = MC.
    3. MR = MC.
    4. P = ATC.

  22. The concentration ratio measures the:   (1 point)

    Your response:
    c. Proportion of total output produced by the four largest producers in a specific market.       (You answered correctly!)

    Feedback : 

    Type: Definition Page: 217

    1  point awarded.

    The correct answer is:
    1. Number of plants owned by an oligopoly.
    2. Percentage of total profits made by a firm in a specific market.
    3. Proportion of total output produced by the four largest producers in a specific market.
    4. Relative size of a firm compared to other industries.

  23. Price discrimination allows a producer to:   (1 point)

    Your response:
    a. Reap the highest possible average price for the quantity supplied.       (You answered correctly!)

    Feedback : 

    Type: Basic Understanding Page: 204

    1  point awarded.

    The correct answer is:
    1. Reap the highest possible average price for the quantity supplied.
    2. Increase the elasticity of consumer demand.
    3. Minimize marginal costs.
    4. Decrease total costs.

  24. At equilibrium in a monopoly economic profits will most likely be:   (1 point)

    Your response:
    b. Zero.

    Feedback : 

    Type: Basic Understanding Page: 198

    0  points awarded.

    The correct answer is:
    1. Greater than zero.
    2. Zero.
    3. Normal.
    4. Negative.

  25. A gap in the marginal revenue curve results from:   (1 point)

    Your response:
    c. Price leadership.

    Feedback : 

    Type: Analytical Page: 229

    0  points awarded.

    The correct answer is:
    1. Price fixing.
    2. A kinked demand curve.
    3. Price leadership.
    4. Predatory pricing.

21 points out of 25 awarded. (84%)

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