KIIT University 2008 micro-economics - exam paper

3)

_______
A)

I, II, and III
B)

IV only
C)

I and II
D)

III and IV
E)

I only

4)

How is a monopolistically competitive firm various from a perfectly competitive firm? For monopolistic competition,

4)

_______
A)

firms do not allocate resources as efficiently.
B)

there are not a large number of close substitutes available.
C)

firms do not attempt to maximize profit.
D)

firms do not break even in the long run.
E)

firms do not produce where marginal revenue equals marginal cost.
5)

If oligopoly firms engage in price wars, and undercut every other's prices for as long as possible, which of the subsequent statements is NOT true?

5)

_______
A)

Consumers will benefit from the price war.
B)

The firms will earn significant profits.
C)

The industry will may be socially efficient.
D)

Price will be equal to marginal cost on the last unit.
E)

Oligopoly prices will be equal to perfectly competitive prices.

6)

In a centralized cartel, firms set prices as if they were

6)

_______
A)

sharing the market by setting geographic boundaries.
B)

one firm acting as a monopoly.
C)

non-cooperative rivals.
D)

sharing the market by producing non-rival products.
E)

perfectly competitive firms.

7)

When firms in a monopolistically competitive market are currently earning economic losses, we can predict that in the future,

7)

_______
A)

price will increase as more firms enter the market.
B)

price and profits are likely to increase after a few firms exit the market.
C)

price and output of the surviving firms are likely to reduce after a few firms fail and exit the market.
D)

no change in price or output is likely to occur because of entry barriers.
E)

price will reduce further as more firms enter the market.

8)

The demand curve faced by a monopolistically competitive firm is

8)

_______
A)

Earning:   Approval pending.