1
ECON 411 Chapter 8 Practice #2 Questions with Answers
(100% Correct Answers)
A monopolistic firm
A) will never sell a product whose demand is inelastic at the quantity
sold.
B) can sell as much as it wants for any price it determines in the
market.
C) cannot determine the price, which is determined by consumer
demand.
D) cannot sell additional quantity unless it raises the price on each unit
E) will always earn a profit in the long run. Answer: A) will never sell
a product whose demand is inelastic at the quantity sold.
An imperfectly competitive firm has the following total cost curve:
C = 100 + 4Q.
What is average total cost equal to when Q = 10? Answer: C/Q = [100 +
(4)(10)]/10
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,2
= 14
An imperfectly competitive firm has the following total cost curve:
C = 100 + 4Q.
What is average fixed cost equal to when Q = 10? Answer: F/Q = 100/10
= 10
Under oligopoly, firms' pricing policies are ________ and, under
monopolistic competition, they are ________.
A) interdependent; independent
B) independent; interdependent
C) cooperative; uncooperative
D) uncooperative; cooperative
E) profit maximizing; revenue maximizing Answer: A)
interdependent; independent
Monopolistic competition is associated with
A) high-profit margins in the long run.
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, 3
B) price-taking behavior.
C) explicit consideration at the firm level of the strategic impact of
other firms' pricing decisions.
D) product differentiation.
E) increasing returns to scale. Answer: D) product differentiation.
Modeling trade in imperfectly competitive industries is problematic
because
A) it is difficult to find an imperfectly competitive firm in the real
world.
B) there are no models of imperfectly competitive behavior.
C) there is no single generally accepted model of behavior by
imperfectly competitive firms.
D) collusion among imperfectly competitive firms makes usable data
rare.
E) there is only a single model of imperfect competition (monopoly)
but imperfect competition can take many forms in the real world.
© 2025 All rights reserved
ECON 411 Chapter 8 Practice #2 Questions with Answers
(100% Correct Answers)
A monopolistic firm
A) will never sell a product whose demand is inelastic at the quantity
sold.
B) can sell as much as it wants for any price it determines in the
market.
C) cannot determine the price, which is determined by consumer
demand.
D) cannot sell additional quantity unless it raises the price on each unit
E) will always earn a profit in the long run. Answer: A) will never sell
a product whose demand is inelastic at the quantity sold.
An imperfectly competitive firm has the following total cost curve:
C = 100 + 4Q.
What is average total cost equal to when Q = 10? Answer: C/Q = [100 +
(4)(10)]/10
© 2025 All rights reserved
,2
= 14
An imperfectly competitive firm has the following total cost curve:
C = 100 + 4Q.
What is average fixed cost equal to when Q = 10? Answer: F/Q = 100/10
= 10
Under oligopoly, firms' pricing policies are ________ and, under
monopolistic competition, they are ________.
A) interdependent; independent
B) independent; interdependent
C) cooperative; uncooperative
D) uncooperative; cooperative
E) profit maximizing; revenue maximizing Answer: A)
interdependent; independent
Monopolistic competition is associated with
A) high-profit margins in the long run.
© 2025 All rights reserved
, 3
B) price-taking behavior.
C) explicit consideration at the firm level of the strategic impact of
other firms' pricing decisions.
D) product differentiation.
E) increasing returns to scale. Answer: D) product differentiation.
Modeling trade in imperfectly competitive industries is problematic
because
A) it is difficult to find an imperfectly competitive firm in the real
world.
B) there are no models of imperfectly competitive behavior.
C) there is no single generally accepted model of behavior by
imperfectly competitive firms.
D) collusion among imperfectly competitive firms makes usable data
rare.
E) there is only a single model of imperfect competition (monopoly)
but imperfect competition can take many forms in the real world.
© 2025 All rights reserved
