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Gillespie: Foundations of Economics
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Gillespie: Foundations of Economics

Unit 12

Instructions

Choose your answers from a-d by clicking the radio button next to each choice and then press 'Submit' to get your score.

Question 1

X inefficiency occurs when:

a) The price is greater than the marginal cost

b) The price is greater than the average cost

c) Costs are higher than they could be due to a lack of competitive pressure

d) There are external costs

Question 2

The marginal revenue curve in monopoly:

a) Equals the demand curve

b) Is parallel with the demand curve

c) Lies below and converges with the demand curve

d) Lies below and diverges from the demand curve

Question 3

In monopoly when abnormal profits are made:

a) The price set is greater than the marginal cost

b) The price is less than the average cost

c) The average revenue equals the marginal cost

d) Revenue equals total cost

Question 4

In monopoly in long run equilibrium:

a) The firm is productively efficient

b) The firm is allocatively inefficient

c) The firm produces where marginal cost is less than marginal revenue

d) The firm produces at the socially optimal level

Question 5

Barriers to entry do not include

a) Patents

b) Internal economies of scale

c) Mobility of resources

d) High investment costs

Question 6

In a monopoly which of the following is not true?

a) Products are differentiated

b) There is freedom of entry and exit into the industry in the long run

c) The firm is a price taker

d) There is one main seller

Question 7

In monopoly which of the following is true?

a) There are many buyers and sellers

b) There is one main buyer

c) There is one main seller

d) The actions of one firm do not affect the market price and quantity

Question 8

According to Schumpeter:

a) Monopolies are inefficient

b) Monopoly profits act as an incentive for innovation

c) Monopolies are alocatively efficient

d) Monopolies are productively efficient

Question 9

A welfare loss occurs in monopoly where:

a) The price is greater than the marginal cost

b) The price is greater than the marginal benefit

c) The price is greater than the average revenue

d) The price is greater than the marginal revenue

Question 10

In the UK the government:

a) Bans monopolies

b) Fines all monopolies

c) Prevents firms acquiring more than 25% of the market

d) Has the right to investigate monopolies and will assess each one on its own merits

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Oxford University Press, Online Resource Centre, Unit 12.