Unit 3 and 4 Economics

What is the goal of a firm?

• to make profits

• to maximize profits

• to maximize revenue

• none of the above

Which of the following is an example of a perfectly competitive firm?

• Farmer's market stand

• Fast food restaurant

• Cell phone service provider

• Local internet service provider

Which of the following is NOT a characteristic of perfectly competitive markets?

• Many buyers and sellers

• Homogeneous goods

• Free entry and exit

• Firms set their own prices

Which of the following statements correctly identifies a difference between perfect competition and monopolistic competition? 

• In perfect competition there are no barriers to entry, but there are strong barriers in monopolistic competition. 
• In perfect competition there are many firms, but in monopolistic competition there are only a few firms. 
• In perfect competition the firms all sell products that are exactly the same, but in monopolistic competition each firm sells a slightly differentiated product. 
• In perfect competition there are few consumers, but in monopolistic competition there are many consumers. 

In monopolistic competition producers....

• have a full ability to set prices

• have some ability to set prices

• have no ability to set prices

Which one of the following statements is not a characteristic of monopolistic competition?

• Ease of entry into the industry

• Product differentiation

• A relatively large number of sellers

• A homogenous product

What type of products will firms produce in monopolistic competition?

• Firms produce significantly differentiated products

• Firms produce slightly differentiated products

• Firms produce homogenous products with one modification

• Firms produce a variety of different products

Which of the following best describes an oligopoly?

• many monopolistically competitive firms

• a few firms sharing monopoly power

• a former monopoly that has been broken up by the government

• a government-granted franchise or monopoly

One of the requirements for a monopoly is that

• products are high priced

• there are several close substitutes for the product

• there is a unique product with no close substitutes

• the product cannot be produced by small firms

A monopoly is a market with

• many suppliers

• no barriers to entry

• many substitutes

• one supplier