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Economics Chapter 10 Test Bank
Multiple Choice Questions
1. In the competitive market for figure skate blades, manufacturers offer an array of products
that are
A. distinctly different in a particular way.
B. distinctly similar in a particular way.
C. virtually identical on the competition spectrum.
D. at opposite ends of the competition spectrum.
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
2. _________________ occurs when circumstances have allowed several large firms to have all
or most of the sales in an industry.
A. Collusion
B. A monopoly
C. An oligopoly
D. A cartel
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
3. ____________ arises when firms act together to reduce output and keep prices high.
A. Collusion
B. A cartel
C. A monopoly
D. An oligopoly
Answer: B
Reference:
Explanation:
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Type: Multiple Choice Difficulty: Easy Category: Remember
4. A _______________ refers to a group of firms colluding with one another to produce at the
monopoly output and sell at the monopoly price.
A. prisoner's dilemma
B. cartel
C. game theory
D. duopoly
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
5. The branch of mathematics that analyzes situations in which players must make decisions
and then receive payoffs most often used by economists is
A. oligopoly collusion.
B. prisoner's dilemma.
C. game theory.
D. collusion theory
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
6. If the CEO of I'MaBigBank is playing prisoner's dilemma then, from his perspective, the gains
to be had from cooperation are
A. larger than the payoffs that will be received.
B. smaller than the payoffs that will be perceived.
C. smaller than the rewards from pursuing self-interest.
D. larger than the rewards from pursuing self-interest.
Answer: D
Reference:
Explanation:
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Type: Multiple Choice Difficulty: Medium Category: Analyze
7. The perceived demand curve for a group of competing oligopoly firms will appear kinked as a
result of their commitment to
A. match price increases, but not price cuts.
B. stand at opposite ends of the competition spectrum.
C. match price cuts, but not price increases.
D. stand at the high point of the competition spectrum.
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
8. Perfect competition and monopoly stand at ___________ of the spectrum of competition.
A. opposite ends
B. the high end
C. the low end
D. the mid-way point
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
9. If a perfectly competitive market involves many firms selling identical products, then, in the
face of such competition,
A. each of these firms must act as a price-maker.
B. each of these firms must act as a price-taker.
C. collusion amongst them will most often result.
D. demand curves can become kinked in appearance.
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
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10. Shopping malls typically lease retail space to a large number of clothing stores. When this
group of retailers competes to sell similar but not identical products, they engage in what
economists call _______________.
A. a cartel
B. collusion
C. monopolistic competition
D. perfect competition
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
11. As the name monopolistic competition implies, a firm’s decisions in this setting will in certain
ways resemble ______________ and in other ways resemble ________________.
A. monopoly; imperfect competition
B. monopoly; perfect competition
C. imperfect competition; perfect competition
D. imperfect competition; oligopoly
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
12. If monopolistic competitors must expect a process of entry and exit like perfectly competitive
firms,
A. they will be unable to earn higher-than-normal profits in the short run.
B. they will wish to cooperate to make decisions about what price to charge.
C. they will wish to cooperate to make decisions about what quantity to produce.
D. they will be unable to earn higher-than-normal profits in the long run.
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
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Economics Chapter 10 Test Bank
Multiple Choice Questions
1. In the competitive market for figure skate blades, manufacturers offer an array of products
that are
A. distinctly different in a particular way.
B. distinctly similar in a particular way.
C. virtually identical on the competition spectrum.
D. at opposite ends of the competition spectrum.
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
2. _________________ occurs when circumstances have allowed several large firms to have all
or most of the sales in an industry.
A. Collusion
B. A monopoly
C. An oligopoly
D. A cartel
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
3. ____________ arises when firms act together to reduce output and keep prices high.
A. Collusion
B. A cartel
C. A monopoly
D. An oligopoly
Answer: B
Reference:
Explanation:
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Type: Multiple Choice Difficulty: Easy Category: Remember
4. A _______________ refers to a group of firms colluding with one another to produce at the
monopoly output and sell at the monopoly price.
A. prisoner's dilemma
B. cartel
C. game theory
D. duopoly
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
5. The branch of mathematics that analyzes situations in which players must make decisions
and then receive payoffs most often used by economists is
A. oligopoly collusion.
B. prisoner's dilemma.
C. game theory.
D. collusion theory
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
6. If the CEO of I'MaBigBank is playing prisoner's dilemma then, from his perspective, the gains
to be had from cooperation are
A. larger than the payoffs that will be received.
B. smaller than the payoffs that will be perceived.
C. smaller than the rewards from pursuing self-interest.
D. larger than the rewards from pursuing self-interest.
Answer: D
Reference:
Explanation:
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Type: Multiple Choice Difficulty: Medium Category: Analyze
7. The perceived demand curve for a group of competing oligopoly firms will appear kinked as a
result of their commitment to
A. match price increases, but not price cuts.
B. stand at opposite ends of the competition spectrum.
C. match price cuts, but not price increases.
D. stand at the high point of the competition spectrum.
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
8. Perfect competition and monopoly stand at ___________ of the spectrum of competition.
A. opposite ends
B. the high end
C. the low end
D. the mid-way point
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
9. If a perfectly competitive market involves many firms selling identical products, then, in the
face of such competition,
A. each of these firms must act as a price-maker.
B. each of these firms must act as a price-taker.
C. collusion amongst them will most often result.
D. demand curves can become kinked in appearance.
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
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10. Shopping malls typically lease retail space to a large number of clothing stores. When this
group of retailers competes to sell similar but not identical products, they engage in what
economists call _______________.
A. a cartel
B. collusion
C. monopolistic competition
D. perfect competition
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
11. As the name monopolistic competition implies, a firm’s decisions in this setting will in certain
ways resemble ______________ and in other ways resemble ________________.
A. monopoly; imperfect competition
B. monopoly; perfect competition
C. imperfect competition; perfect competition
D. imperfect competition; oligopoly
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
12. If monopolistic competitors must expect a process of entry and exit like perfectly competitive
firms,
A. they will be unable to earn higher-than-normal profits in the short run.
B. they will wish to cooperate to make decisions about what price to charge.
C. they will wish to cooperate to make decisions about what quantity to produce.
D. they will be unable to earn higher-than-normal profits in the long run.
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
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