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Review for final exam

Economist would describe the U.S. automobile industry as:

an oligopoly

In which of the following market structures is there clear-cut mutual interdependence with respect to price-output policies?

oligopoly

Economists use the term imperfect competition to describe:

those markets which are not purely competitive.

A one-firm industry is known as:

pure monopoly.

An industry comprised of a very large number of sellers producing a standardized product is known as:

pure competition.

An industry comprised of a small number of firms, each of which considers the potential reactions of its rivals in making price-output decisions is called:

oligopoly

A purely competitive seller is:

a "price taker."

Which of the following is not a characteristic of pure competition?

price strategies by firms.

If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue:

will also be $5

For a purely competitive seller, price equals:

A. average revenue.
B. marginal revenue.
C. total revenue divided by output.

The answer is D. All of these.

Which of the following statements is correct?

The demand curve for a purely competitive firm is perfectly elastic, but the demand curve for a purely industry is
downsloping.

Pure monopoly means:

a single firm producing a product for which there are no close substitutes.

A pure monopolist is:

a one-firm industry.

Which of the following best approximates a pure monopoly?

the diamond market.

Which of the following is not a barrier to entry?

X-efficiency

What do economies of scale, the ownership of essential raw materials, and patents have in common?

they are all barriers to entry.

A non-discriminating pure monopolist's demand curve:

lies above its marginal revenue curve.

With respect to the pure monopolist's demand curve it can be said that:

the price exceeds marginal revenue at all outputs greater than 1.

Price exceeds marginal revenue for the pure monopolist because the:

demand curve is down-sloping.

The marginal revenue curve for a monopolist:

becomes negative when output increases beyond some particular level.

Which of the following is characteristic of a pure monopolist's demand curve?

It is the same as as the market demand curve.

For a pure monopolist marginal revenue is less than price because:

when a monopolist lowers price to sell more output, the lower price applies to all units sold.

Which of the following conditions is not price discrimination?

Buyer with different elasticities must by physically separate from each other.

A price discriminating pure monopolist will attempt to charge each buyer (or group of buyers):

the maximum price each would be willing to pay.

Monopolistic competition means:

many firms producing differentiated products.

Monopolistic competition is characterized by a:

large number of firms and low entry barriers.

Which of the following is not a basic characteristic of monopolistic competition?

recognized mutual interdependence.

A Monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from:

product differentiation.

The monopolistic competition model assumes that:

firms will engage in non-price competition.

The term oligopoly indicates:

a few firms producing either a differentiated or homogeneous product.

The automobile, household appliance, and automobile tire industries are all illustrations of:

differentiated oligopoly.

Barriers to entry in oligopolistic industries may consist of:

ownership of essential resources.

Oligopolistic industries:

may produce either standardized or differentiated products.

The kinked-demand curve of an oligopolist is based on the assumption that:

competitors will follow a price cut but ignore a price increase.

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