American Military University ECON 201 ECON201 FINAL EXAM

American Military University ECON 201 ECON201 FINAL EXAM Question 1 of 29 One defining characteristic of pure monopoly is that: • A. The monopolist is a price taker • B. The monopolist uses advertising • C. The monopolist produces a product with no close substitutes • D. There is relatively easy entry into the industry, but exit is difficult Question 2 of 29 Which is a barrier to entry? • A. Close substitutes • B. Diseconomies of scale • C. Government licensing • D. Price-taking behavior Question 3 of 29 Other things equal, which reduces competition in an industry? • A. Patent laws • B. Freedom of entry for new firms • C. An increase in the number of producers • D. An increase in the number of buyers Question 4 of 29 The representative firm in a purely competitive industry: • A. Will always earn a profit in the short run • B. May earn either an economic profit or a loss in the long run • C. Will always earn an economic profit in the long run • D. Will earn an economic profit of zero in the long run Question 5 of 29 An example of a monopolistically competitive industry would be: • A. Steel • B. Soybeans • C. Electricity • D. Retail clothing Question 6 of 29 Firms in an industry will not earn long-run economic profits if: • A. Fixed costs are zero • B. The number of firms in the industry is fixed • C. There is free entry and exit of firms in the industry • D. Production costs for a given level of output are minimized Question 7 of 29 Marginal product is: • A. the increase in total output attributable to the employment of one more worker. • B. the increase in total revenue attributable to the employment of one more worker. • C. the increase in total cost attributable to the employment of one more worker. • D. total product divided by the number of workers employed. Question 8 of 29 The law of diminishing returns indicates that: • A. as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point. • B. because of economies and diseconomies of scale a competitive firm's long-run average total cost curve will be U-shaped. • C. the demand for goods produced by purely competitive industries is downsloping. • D. beyond some point the extra utility derived from additional units of a product wil