1
AGEC-105 Test 2 Questions with Answers (100% Correct
Answers)
AFC+AVC=ATC T/F Answer: True
If total economic surplus is positive due to a shift in a demand or
supply curve, society is better off? T/F Answer: True
The law of diminishing marginal returns states that as the use of an
input increases, its MPP will fall. T/F Answer: True
In an oligopoly, firms will match all price decreases of another, but
will not match price increases. T/F Answer: True
In an oligopoly, the market demand curve is kinked. T/F Answer: True
In an oligopoly, firms will attempt to differentiate their products. T/F
Answer: True
In an oligopoly, firms will match all price increases of another, but will
not match price decreases. T/F Answer: False
What assumption of perfect competition is "relaxed" in the case of
monopolistic competition? Answer: Homogeneous products
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, 2
The piece of legislation that not only plugged loopholes in the
Sherman Antitrust Act of 1890, but also created the Federal Trade
Commission was? Answer: the Clayton Act of 1937
If the government were to impose a lump-sum tax on a monopolist,
what is likely to happen to the quantity produced of a commodity and
the price charged relative to the situation where there is no lump-sum
tax imposed? Answer: No change in price or quantity produced would
occur, only a reduction in profit
The social costs of imperfect competition are known as? Answer: dead-
weight loss
Economics of scale are common barriers to entry? T/F Answer: True
Capital access and costs are common barriers to entry? T/F Answer:
True
Absolute unit-cost advantages are common barriers to entry? Answer:
True
Investment in biotechnology is a recommendation given to agricultural
producers largely because marginal costs of production are reduced.
What are the likely consequences of this investment to producers,
© 2025 All rights reserved
AGEC-105 Test 2 Questions with Answers (100% Correct
Answers)
AFC+AVC=ATC T/F Answer: True
If total economic surplus is positive due to a shift in a demand or
supply curve, society is better off? T/F Answer: True
The law of diminishing marginal returns states that as the use of an
input increases, its MPP will fall. T/F Answer: True
In an oligopoly, firms will match all price decreases of another, but
will not match price increases. T/F Answer: True
In an oligopoly, the market demand curve is kinked. T/F Answer: True
In an oligopoly, firms will attempt to differentiate their products. T/F
Answer: True
In an oligopoly, firms will match all price increases of another, but will
not match price decreases. T/F Answer: False
What assumption of perfect competition is "relaxed" in the case of
monopolistic competition? Answer: Homogeneous products
© 2025 All rights reserved
, 2
The piece of legislation that not only plugged loopholes in the
Sherman Antitrust Act of 1890, but also created the Federal Trade
Commission was? Answer: the Clayton Act of 1937
If the government were to impose a lump-sum tax on a monopolist,
what is likely to happen to the quantity produced of a commodity and
the price charged relative to the situation where there is no lump-sum
tax imposed? Answer: No change in price or quantity produced would
occur, only a reduction in profit
The social costs of imperfect competition are known as? Answer: dead-
weight loss
Economics of scale are common barriers to entry? T/F Answer: True
Capital access and costs are common barriers to entry? T/F Answer:
True
Absolute unit-cost advantages are common barriers to entry? Answer:
True
Investment in biotechnology is a recommendation given to agricultural
producers largely because marginal costs of production are reduced.
What are the likely consequences of this investment to producers,
© 2025 All rights reserved
