ECO 1100 MCQ Exercises

Which of the following is NOT a feature of monopolistic competition?

• Product differentiation

• Price-taking firms

• Many sellers and buyers

• Advertising

For a perfectly competitive seller, the price is equal to:

• Total revenue

• Average revenue

• 
  Marginal revenue
  divided by output

• All of the above

Due to the relationship between a perfectly competitive firm's demand curve and its marginal revenue curve, the condition for profit maximisation can be expressed as:

• P = MC

• P = MR

• P = AVC

• AR = MR

If firms in an industry differentiate their products and earn economic profits in the short run, what other factor would be crucial in determining whether the market is an oligopoly or monopolistic competition?

• Whether the product is a normal or inferior good

• The number of buyers in the market

• The number of firms in the market

• The number of close substitutes for the product

A monopolistically competitive firm maximises profit when:

• Price > Marginal Cost

• Marginal Revenue > Average Revenue

• Price = Marginal Revenue

• Total Revenue > Marginal Cost

In general, oligopolists compete:

• on price alone.

• 1. on many dimensions except for price.

• on nothing because there is no competition in oligopolistic industries.

• on price, R&D, and marketing and advertising.

In a monopolistically competitive industry where firms are currently earning economic profit, as the market moves to long-run equilibrium, the firms' demand curves will ________ and their economic profit will ________.

• shift leftward; decrease but remain greater than zero

• shift rightward; decrease to zero

• shift leftward; decrease to zero

• remain the same; decrease to zero

The oligopolistic model in which firms achieve the same outcome as if a single monopolist controlled the entire industry is known as the ________ model.

• Cournot

• Maximin strategy

• Price leadership

• Collusion

AirAsia is an example of a(n) ________ industry.

• Oligopolistic

• Monopolistic

• Perfectly competitive

• Monopolistically competitive

Which of the following industries is closest to a perfectly competitive market?

• Cable television services

• Agricultural products (e.g., wheat, corn)

• Airline industry

• Smartphone manufacturing