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Social Studies
11th -
University
AP Microeconomics Market Structure Review
58 questions
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- 1. Multiple ChoiceThe graph shows a(n):oligopsonymonopolymonopsonyperfectly competitive factor market and firm
- 2. Multiple Choice
What does marginal mean in the language of economics?
Additional
Less
Satisfaction
I can't believe it's not Butter.
- 3. Multiple Choice
What does utility mean in the language of economics?
Additional
Less
Satisfaction
I can't believe it's not Butter.
- 4. Multiple Choice
If every consumers needs are being met perfectly and every good that is being made is being sold, what type of efficiency is being achieved?
Productive Efficiency
Allocative Efficiency
- 5. Multiple Choice
When there is only one seller of a good or service, they are said to have a?
Monopoly
Oligarchy
Monopolistic Competition
Perfect Competition
- 6. Multiple Choice
When there are only a few sellers of a type of produce, like Smart phones, there is said to be an?
Monopoly
Oligopoly
Monopolistic Competition
Perfect Competition
- 7. Multiple Choice
When there is lots of competition in a market because the barriers to entry are low and there are many substitutes that exist, this is called?
Monopoly
Oligopoly
Monopolistic Competition
Perfect Competition
- 8. Multiple ChoicePrice fixing and collusion often occur in this type of market structuremonopolyoligipolyperfect competitionmonopolistic competition
- 9. Multiple ChoiceIn this market structure there are many buyers and sellers with identical productsperfect competitionmonopolistic competitionmonopolyoligopoly
- 10. Multiple Choice
Which of the following is true about an imperfectly competitive firm’s marginal revenue (MR) curve if it has a linear and downward-sloping demand curve?
MR decreases at an increasing rate.
MR increases at first, then decreases.
MR is constant.
MR decreases and is less than demand.
MR is greater than demand.
- 11. Multiple Choice
For the graph shown here, what quantity will this firm produce and what price will it charge?
Q2 ; P2
Q2 ; P3
Q1 ; P1
Q1 ; P2
Q1 ; P4
- 12. Multiple ChoiceA single-price monopolist is currently producing in the inelastic portion of its market demand curve. In order to maximize profits, the monopolist should change the price and quantity in which of the following ways?P=Increase; Q=IncreaseP=Increase; Q=DecreaseP=Decrease; Q=DecreaseP=No Change; Q=Increase
- 13. Multiple ChoiceThe profit-maximizing combination of output and price for a single-price monopoly is:Q1 & P1Q2 & P3Q1 & P4Q3 & P2
- 14. Multiple ChoiceIf the monopolist could engage in perfect price discrimination, the monopolist’s total output and the price charged for the last unit of output sold would be:Q1 & P1Q2 & P3Q1 & P2Q3 & P2
- 15. Multiple ChoiceA firm with market power engages in price discrimination to:earn a higher profit
increase consumer surplus
decrease deadweight loss
make its demand more elastic - 16. Multiple ChoiceCompared to a perfectly competitive industry with the same demand and cost curves, a monopoly’s price and quantity will be which of the following?P=Higher; Q=SameP=Lower; Q=SameP=Lower; Q=HigherP=Higher; Q=Lower
- 17. Multiple ChoiceFor the firm shown in the graph above, the short- run, profit-maximizing strategy would be to set output at:Q1, price at P3, and earn an economic profitQ1, price at P1, and suffer a lossQ2, price at P2, and earn an economic profitQ2, price at P2, and earn only a normal profit
- 18. Multiple ChoiceThis monopoly will maximize profits at what price?ABCR
- 19. Multiple ChoiceEconomic profits for this monopoly are represented by area:0CGE0AJEAJHBBAJN
- 20. Multiple ChoiceTotal costs for this monopoly are represented by area:BKL0CGE0AJE0BHE0
- 21. Multiple ChoiceTotal revenue for this monopoly is represented by area:0CGE0AJEAJHBBAJH
- 22. Multiple ChoiceFor this monopolist, what is the area of consumer surplus?ABHJAJGCARJARJE
- 23. Multiple ChoiceThis perfect competitor will maximize profits at what output level?ABCD
- 24. Multiple ChoiceThis perfect competitor will shut down below which price/output relationship?KMLR
- 25. Multiple ChoiceAt output level C, total variable cost is represented by the area of which rectangle?0GKCFGKJ0EHC0FJC
- 26. Multiple Choice
Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 25th haircut?
zero
$5
$7
$5.50
- 27. Multiple Choice
Roxie's Movie Theatre is the only one in town. The table above gives the demand schedule for movies. If Roxie's is a single-price monopoly and the marginal cost of a movie is $6, Roxie's will charge ________ a movie and will sell ________ movie tickets a week.
$15; 100
$12; 200
$6; 400
$9; 300
- 28. Multiple Choice
For the unregulated, single-price monopoly shown in the figure above, when its profit is maximized, output will be
4 units per year and the price will be $6.
4 units per year and the price will be $4.
6 units per year and the price will be $4.
None of the above answers is correct.
- 29. Multiple Choice
Sue's Surfboards is the sole renter of surfboards on Big Wave Island. Sues demand and marginal revenue curves are illustrated in the figure above. Sue's Surfboards currently rents 15 surfboards an hour. Sue's total revenue from the 15 surfboards is
$300
$220
$150
$100
- 30. Multiple ChoiceMonopolistically competitive firms are considered inefficient in allocating society’s resources for which of the following reasons?In long-run equilibrium, the marginal benefit exceeds the price charged by the firms.In long-run equilibrium, the price is greater than the marginal cost.In long-run equilibrium, average total costs are minimized.In long-run equilibrium, the firm is earning economic profits.
- 31. Multiple ChoiceWhich of the following market structures results in allocative efficiency?MonopolyMonopolistic CompetitionPerfect CompetitionOligopoly
- 32. Multiple ChoiceWhich of the following is true of a monopolistically competitive firm in long-run equilibrium?Price equals marginal cost and average total cost.Price equals average total cost but is greater than marginal cost.Price equals marginal cost and is greater than average total cost.The firm earns positive economic profits by producing at minimum average cost.
- 33. Multiple ChoiceThe graph shows a monopolistically competitive firm:making a profit in the short-runincurring a loss in the short-runmaking a profit in the long-runbreaking even in the long-run
- 34. Multiple ChoiceLet P = price, MR = marginal revenue,
MC = marginal cost, and ATC = average total cost. In monopolistic competition, which of the following most accurately describes the long-run equilibrium conditions for a firm?P>ATC, MR=MC, and P>MCP=ATC, MR=MC, and P=MCP=ATC, MR=MC, and P>MCP=ATC, MR>MC, and P>MC - 35. Multiple ChoiceA monopolistically competitive firm advertises in order to:shift the demand curve for its product to the leftmake its product more similar to its competitors’reduce the industry’ s barriers to entrymake the demand for its product less price elastic
- 36. Multiple ChoiceA market structure in which a few large firms dominate a marketPerfect CompetitionMonopolistic CompetitionOligopoly
- 37. Multiple Choice
Define collusion
When two cars collide on the road
a secret agreement between two competing firms to sell their similar products at the same price
- 38. Multiple ChoiceThe jeans industry would fall into what type of market structure? ( jeans are similar but there are some differences in the product)monopolyoligopolyperfect competitionmonopolistic competition
- 39. Multiple ChoiceWhen a major car company lowers its prices, other car makers will probablymaintain existing prices.raise their prices.go out of business.lower their prices.
- 40. Multiple Choice
Game theory is used to explain
why firms price discriminate
how monopolies evolve into oligopolies
strategic behavior of firms in oligopoly
profit maximization in monopoly
price leadership of monopolistic competition
- 41. Multiple Choice
Based on the payoff matrix, which of the following is correct?
Firm A always gets a smaller share of the industry profits.
Firm A’s dominant strategy is to advertise.
Firm B’s dominant strategy is not to advertise.
The dominant strategy for both firms is not to advertise.
Neither firm has a dominant strategy.
- 42. Multiple Choice
In the long run, new firms will enter a monopolistically competitive industry:
provided economies of scale are being realized.
even though losses are incurred in the short run.
until minimum average total cost is achieved.
until economic profits are zero.
- 43. Multiple Choice
A monopolistically competitive firm maximizes profits or minimizes losses in the short run by
Setting price equal to marginal cost.
Producing at the output level where ATC is minimized.
Producing at the output level where MR equals MC.
Producing at the output level where MC equals ATC.
- 44. Multiple Choice
In the above figure, the monopolistically competitive will experience what change into the long run?
a right shift of it's demand curve.
a left shift of it's demand curve.
a right shift of it's supply curve.
a left shift of it's supply curve.
- 45. Multiple Choice
If this graph is for a monopolistically competitive firm, it best represents
short run economic loss.
short run extra-normal profit.
long run economic profit.
long run equilibrium at normal profit.
short run accounting loss.
- 46. Multiple Choice
This firm will charge a price of _____ and make a per unit ___ of _____.
70; loss; 10.
60; normal profit; 0.
70; profit; 3.5.
60: profit; 10.
70; profit; 10.
- 47. Multiple Choice
This firm will charge a price of _____ and make a per unit ___ of _____.
7; loss; 1.5.
7; normal profit; 0.
7; profit; 1.5.
5.5: loss; 1.5.
5.5; profit; 1.5.
- 48. Multiple ChoiceWhat is the equilibrium of the below game?A,XA,YB,XB,Y
- 49. Multiple Choice
The cartel model of oligopoly predicts that
all firms in the industry act in unison to set monopoly price
each producer acts independently of others
firms follow the low-price firm in the industry
differences in cost of production discourage individual firms from cheating
the markup on marginal cost should be the same for all firms
- 50. Multiple ChoiceAccording to the payoff matrix, what is YELLOW'S dominant strategy?highlow
- 51. Multiple Choice
What would facilitate collusion between firms in an oligopolistic industry
An increase in the number of firms
large fluctuations in demand
rapid changes in technology
a standardised product
- 52. Multiple ChoiceThe following table shows the profits associated with the pricing strategies of two oligopolistic firms, Agronomia and Farmingdale. Each firm has two possible strategies: to charge a low price or a high price. The first entry in each cell shows the profits to Agronomia and the second the profits to Farmingdale. If the two firms do not cooperate, what will be the profit for each firm?Agronomia = $50; Farmingdale = $100Agronomia = $150; Farmingdale = $150Agronomia = $300; Farmindale = $50Agronomia = $100; Farmingdale = $100
- 53. Multiple ChoiceE Soda and R Soda are the only two firms in
the soft-drink industry. The companies cannot cooperate. Each firm can follow a high-price strategy or a low-price strategy for pricing its product. In the payoff, the first entry in each cell shows the profits to E Soda and the second entry shows the profits to R Soda. It can be concluded that:neither E Soda nor R Soda has a dominant strategyE Soda has a dominant strategy but R Soda does notBoth firms will choose the high-price strategyBoth firms will choose the low-price strategy - 54. Multiple ChoiceEvergreen and Nature View are bidding for
a landscaping contract. The payoff matrix shows what each firm’s total weekly profits from all its operations will be for each combination of bids. The first entry in each cell shows Evergreen’s profit, and the second entry in each cell shows Nature View’s profit. A Nash equilibrium results under which of the following conditions?When both firms bid lowWhen Evergreen bids high and Nature View bids lowWhen both firms bid high and when both firms bid lowWhen Evergreen bids low, no matter what Nature View’s bid is - 55. Multiple ChoiceAssume that Alpha and Beta are the only sellers of a product and they do not cooperate. Each firm has to decide whether to raise the product price. The payoff matrix gives the profits, in dollars, associated with each pair of pricing strategies. The first entry in each cell shows the profits to Alpha, and the second, the profits to Beta. What is the dominant strategy for each firm?Alpha: Do Not Raise; Beta: Do Not RaiseAlpha: Do Not Raise; Beta: RaiseAlpha: No Dominant Strategy; Beta: RaiseAlpha: Raise; Beta: Do Not Raise
- 56. Multiple ChoiceWhat is the equilibrium of the below game?A,XA,YB,XB,Y
- 57. Multiple ChoiceAccording to the payoff matrix, what will YELLOW do if white goes high?highlow
- 58. Multiple ChoiceList the four market structures in order from least competitive to most competitive.Oligopoly, Monopoly, Perfect Competition, Monopolistic CompetitionPerfect Competition, Oligopoly, Monopoly, Monopolistic CompetitionMonopoly, Oligopoly, Monopolistic Competition, Perfect CompetitionMonopoly, Monopolistic Competition, Perfect Competition, Oligopoly
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