The demand curve faced by a firm with a patent on a marketable product
a. is horizontal
b. is vertical
c. slopes upward
d. slopes downward
e. is nonexistent
QUESTION 2One way to overcome the problem of adverse selection in labor markets is to
a. use signaling and screening
b. advertise job openings widely
c. contract out the hiring function
d. pay above average wages
e. pay below average wages
QUESTION 3Suppose the equilibrium price in a perfectly competitive industry is 10 and a firm in the industry charges 9 . Which of the following will happen?
a. The firm will not sell any output.
b. The firm will sell less output than its competitors.
c. The firm will make more profit than it could at the 10 price.
d. The firm will make less profit than it could at the 10 price.
e. The firm's revenue will increase and its costs may decrease.
QUESTION 4The demand curve a monopolist faces
a. is more elastic than a perfectly competitive firm's demand curve
b. is the market demand curve
c. is as elastic as a perfectly competitive firm's demand curve
d. is not affected by the prices of complements
e. will not shift in response to a change in consumer tastes
QUESTION 5One way for a company like McDonalds to overcome principal-agent problems is to advertise for franchisees.
a. True
b. False
QUESTION 6Suppose the equilibrium price in a perfectly competitive industry is 100 and a firm in the industry charges 112 . Which of the following will happen?
a. The firm will not sell any of its output.
b. The firm will sell more output than its competitors.
c. The firm's profits will increase.
d. The firm's revenue will increase.
e. The firm will gradually take over the entire industry.
QUESTION 7The demand curve a monopolist uses in making an output decision is
a. the same as the demand curve facing a perfectly competitive firm
b. vertical because there are no close substitutes for its product
c. horizontal because there are no close substitutes for its product
d. the same as the market demand curve
e. perfectly inelastic
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