WorksheetsRevision for Inclass test
Total questions: 50
Worksheet time: 36mins
Price elasticity of supply is the responsiveness of
demand to a change in price.
price to a change in supply.
quantity supplied to a change in price.
price to a change in supply.
What is not an advantage of a monopoly?
achieving economies of scale
high level of research and development
Producing a greater quantity at profit-maximizing level of output
higher prices and lower output
Which of the following is NOT a major barrier to entry for a monopolist?
control over a key input
patent protection
economies of scale
product differentiation
Monopolist can control
price
output
both
Which of the following is not a barrier to entry in a monopolized market?
The presence of many buyers and sellers in the market
The government gives a single firm the exclusive right to produce some good.
The costs of production make a single producer more efficient than a large number of producers.
A key resource is owned by a single firm.
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
A barrier to entry is
an economic term for economies of scale
illegal in most markets
anything that prevents new firms from entering the market
a factor that increases competition
If a monopolist wants to sell a larger quantity, it must
set a higher price
maintain the current price
set a lower price
implement new technology
A perfect competitive firm charges a price that is ____________.
different to other firms
higher than other firms
lower than other firms
similar to other firms
A change in the price of a good causes people to buy more or less of an item. This best describes the concept of
the demand curve
change in quantity demanded
change in demand
elasticity
Elasticity refers to
how producers of goods and services react to price changes
how consumers of goods and services react to price changes
how far a supply of scarce goods can be stretched
how often the price of a good or service changes when quantity demanded changes
Water has seen an increase in demand 8% this summer, while the price has decreased 12%
1.5 inelastic
1.5 elastic
.67 inelastic
.67 elastic
Hint: think of the soda market
Market failure arises whenever firms
make a loss
replace machines with workers
create externalities
reduce expenditure on research and development
Market failure results in a misallocation of resources. In some cases, this can be corrected by the government
restricting the manufacture of goods that generate positive externalities
Providing public goods
subsidising all loss-making firms
placing a tax on merit goods
In which of the following situations is market failure least likely to occur? A situation where;
externalities exist
many producers compete in the market
there is a sole producer in market
there is a very uneven distribution of income and wealth
Public goods, such as defence, are not supplied by the price system because;
the capital cost is too high
the benefits would - ceteris paribus - not be restricted to buyers but would be available to non-buyers as well
public goods are necessities and therefore cannot be left to the price system
monopolies would make supernormal profits
Which of the following is a characteristic of a merit good?
It could be provided by the free market, but not in sufficient quantities
It is always provided free to consumers
It tends to generate negative externalities, so governments restrict its consumption
Once the good has been supplied to one consumer, there is no additional cost in supplying it to others
A good which exhibits some, but not all, of the characteristics of a public good
non-excludable good
non-rival good
quasi-public good
