KIIT University 2008 micro-economics - exam paper

28)

______
A)

Oligopoly
B)

Monopoly
C)

Perfect competition
D)

Monopolistic competition
E)

This could happen in any of the 4 market structures.

29)

One source of efficiency in perfectly competitive markets is due to the fact that

29)

______
A)

in the long run, product differentiation makes it worth paying higher per-unit costs for output.
B)

firms produce where long-run avg. costs are minimized.
C)

firms will not enter the market if price is above avg. cost.
D)

in the short run, firms decide what level of output to produce by comparing price to avg. cost.
E)

lower-cost firms do not have an advantage over higher-cost ones.

30)

As compared to a perfectly competitive industry, consumers buying from monopolistically competitive firms gain ________, but lose because ________.

30)

______
A)

variety; prices are lower
B)

efficiency; there is limited variety
C)

low prices; there is little variety
D)

variety; prices are higher
E)

more firms; there is little variety

31)

Which of the subsequent is false?

31)

______
A)

A firm in monopolistic competition has no market power and is at the mercy of market-determined demand and price.
B)

The key difference ranging from monopolistic competition and perfect competition is product differentiation.
C)

If products are in a few way unique, firms may be able to still retain a few of their customers, even if they charge somewhat higher prices than rivals.
D)

Firms in perfect competition have less market power than firms in monopolistic competition.
E)

Monopolistic competition is more similar to perfect competition than to monopoly in terms of the price charged, the volume produced, and the profit earned.

32)

Policymakers are generally not concerned about deadweight losses from monopolistic competition because

32)

______
A)

it would not be possible to regulate the industry.
B)

the size of the losses is small relative to the costs of preventing them.

Earning:   Approval pending.