JA Econ Ch 9 and 11

What characteristic of a purely competitive market does crude oil have?

• The product has no substitutes that are close to it in price.

• The product has an unlimited number of sellers.

• The product is always packaged in the same way.

• The product is the same no matter who produces it.

What is likely to be the MAIN barrier to entry into the business shown here?

• lack of government regulation

• limited consumer demand

• high cost of advertising

• complex technology

Which of the following industries is most likely to exist in a purely competitive market?

• shoes

• wheat

• bottled water

• personal computers

In the market represented in the graph above, if one of the firms doubled its output, what would happen to the price?

• The price would rise to meet the new demand.

• The price would fall to eliminate the surplus.

• The price would rise at first and then fall.

• The price would remain the same.

Which of the following is an example of a natural monopoly?

• an automobile manufacturer

• a supermarket chain

• a subway system

• a construction company

The main advantage of firms with economies of scale is that

• no matter how high their output rises, their average cost continues to fall.

• because of their greater level of efficiency, they have lower start-up costs.

• their average cost will begin to rise only after they reach maximum output.

• they can alter the price for their product as the cost of production changes.

This company has a monopoly on the service it provides because

• it is a technological monopoly; no other company has the technology necessary to provide this service.

• it is a patent monopoly; the government has given the company exclusive rights to provide this service.

• it is an industrial monopoly; it bought out all of its competitors that previously provided this service.

• it is a natural monopoly; it would not be efficient for more than one company to provide this service.

Which of these factors causes a monopolistically competitive firm to have little control over the price of its product?

• the influence of government price supports

• the general weakness of the currency

• the ready availability of substitutes

• the low marginal cost of production

Which two market structures have relatively high barriers to entry?

• pure competition and monopolistic competition

• monopolistic competition and oligopoly

• oligopoly and monopoly

• monopoly and monopolistic competition

Which of the following is the primary measure of a nation's income and output?

• national income

• the macroeconomy

• gross domestic product

• net national product