Principles of Economics

What are the characteristics of a monopoly market?

• one seller and large number of buyers

• no close substitutes

• new market entry is impossible

• price maker

• all the 4 characteristics

I = MC, II=ATC, III = demand curve, IV = MR. How does a monopoly choose its profit maximizing output and price?

• Choose Q2 and P6 for which MR = MC and P = AR

• Choose Q2 and P4 for which MR = MC and P = ATC

• Choose Q1 and P5 for which MR = ATC and P = ATC

• Choose Q1 and P5 for which MR = ATC and P = ATC

• Choose Q3 and P5 for which MR = minimum of ATC and P = AR

One factor that distinguishes monopolistic competition from perfect competition is that:

• No barriers to entry/exist in monopolistic competition.

• Firms in monopolistic competition can set its own price and output.

• Firms in monopolistic competition make zero economic profit in the long run.

• Close substitutes are available in monopolistic competition.

Scarcity is a situation:

• where people’s needs exceed their resources.

• where people’s wants exceed their resources.

• where the quantity of resources is sufficient to meet all wants

• where people’s needs exceed other people’s resources.

• where the quantity of resources is sufficient to meet all needs.

Labour, land and capital are called:

• goods and services.

• entrepreneurship.

• outputs.

• factors of production.

what would reduce an economy's protection against the import of cars?

• a lower exchange rate

• a higher quotas imported cars

• a higher tariff on imported cars

• higher subsidy for domestic car producers

An import quota is a

• tax on import quantities above the legal limit.
• way to increase tariff revenues for the exporting country.
• legal limit on the amount of a good that can be imported into a country.
• legal incentive for members of WTO to increase their exports of a good or service.

A total ban on imported products is a .....

• Tariff

• Quota

• Embargo

• Subsidy

Net national product at factor cost is also known as:

• Net Domestic product

• Gross National product

• National Income

• Personal Income

GNP(MP) = GDP(MP) + ________ :

• Depreciation

• Indirect taxes

• NYFA

• Subsidy