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WorksheetsPrinciples of Economics (5)
Total questions: 10
Worksheet time: 10mins
What are the characteristics of a monopoly market?
one seller and large number of buyers
no close substitutes
new market entry is impossible
price maker
all the 4 characteristics
Which of the following is correct?
I is marginal cost curve
II is average total cost curve
III is the demand curve (average revenue curve)
IV is the marginal revenue curve
all the four statements are correct.
I = MC, II=ATC, III = demand curve, IV = MR. How does a monopoly choose its profit maximizing output and price?
Choose Q2 and P6 for which MR = MC and P = AR
Choose Q2 and P4 for which MR = MC and P = ATC
Choose Q1 and P5 for which MR = ATC and P = ATC
Choose Q1 and P5 for which MR = ATC and P = ATC
Choose Q3 and P5 for which MR = minimum of ATC and P = AR
Which of the following is not the feature of monopoly market?
A single seller and price maker
No close substitute good and price discrimination
Price is higher than marginal cost or marginal revenue
No barriers to entry and/or exit
In monopolistically competitive markets, zero economic profit is associated with:
inefficient output and excess capacity.
efficient output and no excess capacity.
competitive equilibrium because other firms entered the market.
no deadweight loss
Which of the following is not true? Monopolistic competition is a structure in which:
A large number of firms compete.
Each firm differentiate product by quality, price, marketing and branding
A firm in monopolistic competition can set both its own price and output
Firms are not free to enter and exit the market.
Which of the following is not true?
In monopolistic competition, buyers pay a higher price than in perfect competition.
In monopolistic competition, buyers pay less than firm’s marginal cost.
Firms in the monopolistic competition market operate with excess capacity in the long run.
Monopolistically competitive firms make zero economic profit in the long run.
One factor that distinguishes monopolistic competition from perfect competition is that:
No barriers to entry/exist in monopolistic competition.
Firms in monopolistic competition can set its own price and output.
Firms in monopolistic competition make zero economic profit in the long run.
Close substitutes are available in monopolistic competition.
In monopolistic competition, each firm supplies a ……... part of the total industry output and its actions ……… the actions of the other firms.
Large; directly affect.
Small; do not directly affect.
Small; directly affect.
Large; do not directly affect.
Explain, using a diagram, why a monopolistically competitive firm is not efficient as a competitive firm even though both firms do not earn an economic profit in the long-run
It is not productively efficient because the ATC is not at the minimum
It is not allocative efficiency because the market price is higher than the marginal cost.
Both are essential parts of the answer.
