Topic 8 Group Competition Quiz

Which of the following best describes consumer surplus?

• The price consumers are willing to pay for a unit.

• The cost of providing a unit.

• The profits made by a firm.

• The difference between the price a consumer actually pays for an item and the price he/she/they is willing to pay for it.

Monopoly power in a market is likely to:

• increase consumer surplus.

• increase community surplus.

• lead to higher producer surplus.

• lead to lower prices and lower output.

In a monopoly market structure, which of the following is TRUE?

• There are many buyers and sellers.

• There is one main buyer.

• There is one main seller.

• The actions of one firm do not affect the market price and quantity.

In a monopoly, which of the following is not true?

• Products are unique.

• There is freedom of entry and exit into the industry in the long run.

• The firm is a price maker.

• There is one main seller.

If a firm sells its output on a market that is characterised by many sellers and buyers, a differentiated product, and each firm has a fairly small share of the market, then the firm is

• a monopolist.

• an oligopolist.

• a perfect competitor.

• a monopolistic competitor.

In Game Theory:

• Firms are always assumed to act independently.

• Firms are always assumed to cooperate with each other.

• Firms always collude as part of a cartel.

• Firms consider the actions of others before deciding what to do.

Firms in a monopolistically competitive market have _______ unit costs than would occur in a perfectly competitive market.

• higher

• equal

• lower

• no

For a monopolist, profit maximising output levels are determined where:

• MC = MR

• MC > MR

• MC ≠ MR

• MC < MR

Deadweight loss refers to the

• amount of social surplus that is created when the market operates at a price and output level that is different from the competitive market equilibrium.

• amount of social surplus that is destroyed when the market operates at a price and output level that is different from the competitive market equilibrium.

• amount of social surplus that is destroyed when the market operates at a price and output level that is the same as the competitive market equilibrium.

• amount of social surplus that is created when the market operates at a price and output level that is equal to the competitive market equilibrium.

Firms in a situation of monopolistic competition face a MR curve that

• lies above the demand curve.

• lies below the demand curve.

• lies equal to the demand curve.

• lies vertical to the demand curve.