Multiple Choice Quiz


1	The supply rule of the profit maximising monopolist is different from that of a competitive firm
		A)	TRUE
		B)	FALSE


2	Comparing a monopoly and a competitive firm, the monopolist will _______________
		A)	produce less at a lower price
		B)	produce more at a lower price
		C)	produce less at a higher price
		D)	produce less at a lower price


3	A discriminating monopolist will charge a higher price to groups with elastic demand
		A)	TRUE
		B)	FALSE


4	Perfect price discrimination means that every customer ____________
		A)	buys the same amount
		B)	pays the same price
		C)	contributes the same revenue
		D)	pays what she thinks the product is worth


5	A monopoly may be self-perpetuating because profits may be used for
		A)	research
		B)	cost-saving
		C)	technical advance
		D)	all of the above


6	All of the following are types of imperfect competition except
		A)	monopolistic competition
		B)	oligopoly
		C)	monopoly
		D)	unfair competition


7	A natural monopoly has a declining ________ over a large range of output
		A)	long run marginal cost
		B)	short run marginal cost
		C)	long run average cost
		D)	long run marginal cost


8	When a market is contestable, incumbent firms must _____________ to avoid the entry of new competitors
		A)	behave like competitive firms
		B)	agree to act together
		C)	differentiate their products
		D)	practise price discrimination


9	The long run equilibrium in monopolistic competition involves competitors making excess profits
		A)	TRUE
		B)	FALSE


10	The reason for the kinked demand curve is that
		A)	The oligopolist believes that competitors will match output increases but not output reductions
		B)	The oligopolist believes that competitors will match price increases but not output reductions
		C)	The oligopolist believes that competitors will match price cuts but not price rises
		D)	The oligopolist believes that competitors will match price increases but not output increases


11	Game theory studies interdependent decision-making
		A)	TRUE
		B)	FALSE


12	The Prisoners' Dilemma Game demonstrates that
		A)	players are better off to act independently
		B)	monopoly is better than competition
		C)	people will always cheat
		D)	players are better off if they co-operate


13	In Nash equilibrium each player chooses the best strategy __________
		A)	assuming other players move first
		B)	dominated by the other players
		C)	given the strategies of other players
		D)	that is a credible threat


14	A dominant strategy is ____________
		A)	a winning strategy
		B)	a losing strategy
		C)	a players best strategy when moving first
		D)	a player's best strategy whatever the strategies adopted by rivals


15	Strategic entry barriers are made by nature
		A)	TRUE
		B)	FALSE

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