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1
Which of the following statements is correct about oligopoly firms?
A)They typically achieve economic capacity.
B)They may or may not charge a price higher than marginal cost.
C)They maximize profits by equating marginal revenue and marginal cost.
D)They operate in an intensely competitive atmosphere in which the market dictates price.
E)They produce an output that puts them graphically on the rising portion of the AC curve.
2
All of the following statements, except one, are valid statements regarding barriers to entry and the existence of large profits in an oligopoly industry. Which statement is not valid?
A)Barriers to entry enable firms to spend large sums on research that can then be recovered in future sales.
B)Barriers to entry lead to lower profits.
C)The large profits enable firms to finance the development of new technology.
D)The barriers to entry help maintain large-sized firms within the industry, which enhances the ability of these firms to capture economies of scale.
E)The barriers to entry increase the prospect of downward shifts in the short-run average cost curves.
3
All of the following statements, except one, are correct about a firm operating under conditions of either monopolistic competition or oligopoly. Which is the exception?
A)Graphically, it faces a downward-sloping demand curve.
B)It charges a price above marginal cost in both the short run and the long run.
C)It charges a price equal to average cost in both the short run and the long run.
D)It fails to achieve economic efficiency.
E)It fails to achieve productive efficiency.





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