WorksheetsIB chapters 12 and 13
Total questions: 12
Worksheet time: 6mins
Price takers ...
set their price according to their consumers wishes
can set the price but not the quantity
have market power
accept the market price
Products are homogeneous in ...
monopolistic competition
perfect competition
monopoly
oligopoly
In perfect competition, the PED of the firms is ...
lower than 1
equal to 0
equal to infinity
equal to 1
What are the two assumptions that make firms in perfect competition have normal profits in the long run?
no barriers to entry and perfect knowledge
rational behaviour and perfect knowledge
barriers to entry and rational behaviour
imperfect knowledge and no barriers to entry
In monopolistic competition, in the long run, firms produce where:
AC = MC
MC = AR
MC = MR
all of the above
In monopolistic competition, consumers are worse off than in perfect competition
True
False
Which of the following is NOT an economy of scale?
bulk buying
division of labour
brand loyalty
large machines
Which of the following is NOT a problem associated with monopolies?
they are productively and allocatively inefficient
they can choose who to sell their products to
they can charge a higher price for a lower level of output
they can exercise anti-competitive behaviour
oligopolies produce...
all the answers are correct
almost identical products
highly differentiated products
slightly differentiated products
Monopolies make abnormal profits
always
in the short run
in the long run
when AC < AR
collusive oligolopolies charge the same prices for their products
True
False
Markets where firms have excesive monopoly power must always be intervened by the government
True
False
