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WorksheetsEconomics: Chapter 7 Review
Total questions: 36
Worksheet time: 18mins
Name
Class
Date
1.
When there is a perfect competition, one seller emerges as the primary controller of price as it squeezes out its competitors.
a)
True
b)
False
2.
The monopoly market structure is the opposite of the perfect competition market structure.
a)
True
b)
False
3.
Barriers to entry in a monopolized market include legal restrictions, economies of scale, and control of an essential resource.
a)
True
b)
False
4.
Monopolies can lose money.
a)
True
b)
False
5.
Competition forces firms to be efficient.
a)
True
b)
False
6.
Because barriers to entry are high, firms in monopolistic competition can't enter or leave the market with ease.
a)
True
b)
False
7.
Firms in an oligopoly are independent; and one firm's price, output or advertising has no effect on the actions of its rivals.
a)
True
b)
False
8.
Antitrust laws try to prevent monopoly in those markets where competition seems desirable.
a)
True
b)
False
9.
All of the following are characteristics of monopolistic competition EXCEPT
a)
downward sloping demand curve for each firm.
b)
no market power among individual firms.
c)
slightly differentiated products.
d)
low entry barriers.
10.
An example of a commodity is
a)
a one-of-a-kind brand
b)
a copyrighted book
c)
a bushel of wheat
d)
an automobile
11.
Suppose the market for soybeans is perfectly competitive. What would happen if Farmer Brown raised the price for his soybeans?
a)
He would sell no beans.
b)
He would increase his profits.
c)
His supply curve for soybeans would shift to the right.
d)
His supply curve for soybeans would shift to the left.
12.
All of the following are features of perfect competition EXCEPT
a)
many buyers and sellers
b)
differentiated products
c)
buyers that are fully informed about price, quality, and availability of products.
d)
easy entry into & exit from the industry
13.
Farmers operate in a perfectly competitive market. Why?
a)
Farmers can control the output on their own land.
b)
Farmers can sell their produce directly to consumers.
c)
The amount one farmer sells has no affect on the market price.
d)
The amount one farmer sells affects the price another farmer can charge.
14.
A firm that can lower its average cost per unit by selling more is operating with
a)
efficiency
b)
diseconomies of scale
c)
collusion
d)
excess capacity
15.
Compared with competing firms, cartels usually
a)
produce more
b)
thrive more in the United States
c)
charge less
d)
earn more profit.
16.
An oligopoly is comprised of how many firms?
a)
A few
b)
many
c)
one
d)
most
17.
All of the following are problems with monopolies except
a)
resource waste
b)
increased consumer surplus
c)
inefficiencies in operations
d)
higher prices
18.
A joining of Ford, Daimler-Chrysler, and General Motors to form a single firm would be an example of
a)
a vertical merger
b)
a natural monopoly
c)
a horizontal merger
d)
a cartel
19.
In a market for a commodity, such as wheat, the demand curve facing an individual farmer would
a)
slope downward from left to right
b)
be vertical at the equilibrium quantity
c)
be horizontal at the market price
d)
slope upward from left to right
20.
What large US corporation was recently found to have a monopoly in one area of its business?
a)
General Motors
b)
Ford
c)
IBM
d)
Microsoft
21.
What large industry was deregulated by the federal government in 1978?
a)
the airline industry
b)
the auto industry
c)
the railroad industry
d)
the computer industry
22.
An example of a product that could be sold by an undifferentiated oligopoly is
a)
a computer printer
b)
a gallon of paint
c)
a barrel of oil
d)
a bar of soap
23.
All of the following could make a cartel collapse except
a)
attempts to block the energy of rival firms into the market
b)
technological change that erodes the cartel's market power
c)
widespread cheating by individual cartel members
d)
entry of rival firms into the market
24.
__ is a market structure with many fully informed buyers & sellers of an identical product and ease of entry.
a)
perfect competition
b)
monopoly
c)
oligopoly
d)
monopolistic competition
25.
A product that is standardized across sellers is a(n)
a)
commodity
b)
monopoly
c)
diseconomies
d)
merger
26.
A(n) __ is the sole supplier of a product with no close substitutes.
a)
monopoly
b)
oligopoly
c)
monopolistic competition
d)
perfect competition
27.
__ is the ability of a firm to raise its price without losing all sales to rivals.
a)
market power
b)
minimum efficient scale
c)
merger
d)
deregulation
28.
A monopolized market has high __ that make it difficult for a new firm to come into the industry.
a)
barriers to entry
b)
deregulation
c)
minimum efficient scale
d)
market power
29.
__ is a market structure with low entry barriers and many firms selling products differentiated enough that each firm's demand curve slopes downward.
a)
monopolistic competition
b)
perfect competition
c)
oligopoly
d)
monopoly
30.
The __ is the lowest rate of output at which a firm takes full advantage of economies of scale.
a)
minimum efficient scale
b)
barriers to entry
c)
deregulation
d)
market power
31.
__ attempts to prohibit efforts to monopolize markets in which competition is desirable.
a)
antitrust activity
b)
merge
c)
deregulation
d)
barriers to entry
32.
A(n) __ is the combination of two or more firms to form a single firm.
a)
merger
b)
deregulation
c)
monopolistic competition
d)
oligopoly
33.
___ reduces or eliminates government regulation.
a)
deregulation
b)
market power
c)
monopoly
d)
monopolistic competition
34.
A firm in perfect competition has no market power.
a)
True
b)
False
35.
Governments prevent new firms from entering a market by granting patents and licenses or by supplying the product itself.
a)
True
b)
False
36.
Collusion is an agreement among firms in the industry to divide the market and fix the price.
a)
True
b)
False
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