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Quiz 2

Micro Economics

1. Which Of The Following Is NOT A Defining Feature Of Perfect Competition?
Perfect information
No barriers to entry
Heterogeneous product
2. An Individual Competitive Firm's Short-Run Supply Function Is (Over The Relevant Range Of Prices):
Its MC schedule
Its AVC schedule
Its AFC schedule
3. Which Of The Following Best Describes A Technology With Increasing Returns To Scale?
Q(2L, K) = Q(L, 2K)
Q(2L, 2K) = Q(L, K)
Q(2L, 2K) = 4Q(L, K)
4. Which Of The Following Will NOT Entail An Outward Shift Of The Production Possibilities Curve?
An upgrading of the quality of a nation's human resources
The reduction of unemployment
An increase in the quantity of a society's labour force
5. Which Of The Following Is A Necessary Condition For A Monopoly To Arise?
Superior technology or scale economies
Production-specific patents
None
6. A Typical Shop In Bavaria Would Offer About A Hundred Brands Of Local Beer. The Local Beer Industry In Bavaria Would Likely Constitute:
An oligopoly
A monopolistic competition
A natural monopoly
7. Vasya Is An Accountant. He Receives $200 Per Hour Doing Tax Returns. He Can Type 12,000 Characters Per Hour Into Spreadsheets. He Can Hire An Assistant Who Types 3,000 Characters Per Hour Into Spreadsheets. Which Of The Following Statements Is True?
Vasya should hire the assistant as long as he pays the assistant less than $50 per hour.
Vasya should hire the assistant as long as he pays the assistant less than $100 per hour.
Vasya should hire the assistant as long as he pays the assistant less than $200 per hour.
8. Creation Of A Trade Union Will Typically Lead To:
A loss of jobs by insiders
An increase in labour market efficiency
A rise in economic rent of insiders
9. Consider A Small Town Build Around A Coal Mine Which Is Perfectly Competitive In Its Product Market And Is The Sole Employer In The Town. Suppose That Employment Is Controlled By A Trade Union Seeking To Maximize The Total Wage Bill Of Its Members. Then Wages Will Be Determined By:
MRPL = MCL
MVPL = MCL
None
10. Cournot Oligopoly Is Characterized By:
Easy adjustment of prices, thus strategic choice of output
Easy adjustment of output, thus strategic choice of prices
Sequential decision-making
11. The Net Result Of The Prisoner's Dilemma, When Applied To A Situation Involving Two Oligopolists, Is That
Prices will be above the level implied by joint profit maximization
Neither firm makes a profit and both leave the industry
Prices will be below the level implied by joint profit maximization
12. A Profit-Maximizing Monopolist Practicing Price Discrimination Will Charge The Lowest Price In The Market Where Demand
Is least price-elastic
Is most price-elastic
has unit price-elasticity
13. A Monopolist's Marginal Revenue Curve Lies Below Average Revenue, Because:
Marginal magnitudes consider smaller increments than average ones
A monopolist has to decrease price of all goods sold if it wants to expand output
A monopolist typically has to pay high taxes
14. Which Of The Following Could Constitute A Case Of Strategic Entry Deterrence?
The incumbent forgoes some of the current profit in favour of better opportunities in case of possible a price war
The incumbent invests into production to make more profit before its market share is contested by an entrant
The incumbent accounts for the expected moves of the entrant and uses that information to maximize own profits
15. Which Of The Following Is A Necessary Condition For A Monopoly To Arise?
Superior technology or scale economies
Production-specific patents
None