chapter 13 1) In imperfectly competitive markets, A) there is no competition in
ID: 1114381 • Letter: C
Question
chapter 13
1) In imperfectly competitive markets,
A) there is no competition in the markets.
B) some competition may exist in the markets.
C) some competition may exist but only on price and not in other ways.
D) some competition may exist but only in other ways and not on price.
2) The barrier to entry which requires electricians to be licensed is an example of
A) government rules.
B) economies of scale.
C) patents.
D) ownership of a scarce factor of production.
3) ________ slow(s) the flow of benefits from research and development to consumers.
A) Patents
B) Technology
C) Competition
D) Economies of scale
4) ________ provide an incentive for invention and innovation.
A) Economies of scale
B) Network effects
C) Natural monopolies
D) Patents
5) Government failure
A) leads to a more efficient allocation of resources.
B) leads to a less efficient allocation of resources.
C) occurs because households or firms do not act in their own selfinterest.
D) occurs because government officials do not act in their own selfinterest
6) The National Rifle Association (NRA) lobbies aggressively for the interests of gun owners. For example, the NRA has been instrumental in passing conceal-and-carry laws in several states.. Such behavior on the part of NRA is called
A) government failure.
B) discrimination.
C) consumer loss.
D) rent-seeking behavior
chapter 15
1) The feature that distinguishes monopolistic competition from monopolies and oligopolies is that monopolistically competitive firms
A) cannot influence market price by virtue of their size alone.
B) benefit from barriers to entry.
C) are price takers.
D) do not have price as a decision variable.
2) Firms ________ in monopolistic competition due to product differentiation.
A) have no control over price
B) have blocked entry
C) gain control over price
D) are limited in number
3) The feature that distinguishes perfect competition from monopolistic competition is that perfectly competitive firms are
A) large relative to the market.
B) price takers.
C) able to block the entry of other firms.
D) unable to differentiate their products.
4) In which of the following ways has the Internet has had a significant influence on advertising?
A) The Internet limits firms from actively interacting with customers.
B) The Internet has improved firms' ability to target specific markets.
C) The Internet has reduced the level and transparency of informational advertising.
D) The Internet has increased spending on advertising.
5) As far as the debate about the welfare effects of advertising, it is generally thought that
A) advertising always leads to industry concentration.
B) advertising always leads to positive economic profits in an industry.
C) advertising always improves the functioning of the market.
D) there is no right answer.
6) Related to the Economics in Practice on page 316: Producers of Honest Tea add less sugar to their tea than the amount that would maximize consumers' total utility from sugar because
A) the financial cost of the additional sugar is less than the additional revenue that the firm would earn.
B) producers are attempting to differentiate their product from the very sweet Snapple.
C) the marginal utility to the consumer from adding more sugar is very low (near zero) while the marginal health cost (added calories) is quite high.
D) producers are attempting to market their product to diabetics.
Explanation / Answer
Answer.)
Q1.) B) some competition may exist in the markets.
Q2.) A) government rules.
Government is the source of barriers to entry that are created by patents and copyrights. Legal restrictions, such as licenses or charters, are also part of this category.
Q3.) D) unable to differentiate their products.
Monopolistic competition differs from perfect competition primarily because in monopolistic competition, firms can differentiate their products.
Q4.) D) Patents
patents provide efficient incentives for invention, innovation, and investment in complementary assets so that the market for inventions is a market for innovative control.
Q5.) B) leads to a less efficient allocation of resources.
Government failure is a situation where government intervention in the economy to correct a market failure creates inefficiency and leads to a misallocation of scarce resources.
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