A monopolistically competitive firm and a perfectly competitive firm are alike because both types of firms
I. face downward sloping demand curves.
II. have marginal revenue curves that lie beneath their demand curves.
III. can make only zero economic profit in the long run.
A) I and II
B) I and III
C) III only
D) I only
Ques. 2Which of the following best explains why monopolistically competitive firms face a downward sloping demand curve while perfectly competitive firms do not?
A) Monopolistically competitive firms sell a differentiated good.
B) Monopolistically competitive industries have only a few firms.
C) Monopolistically competitive firms have barriers to entry.
D) Only industries with free entry and exit have firms that face horizontal demand curves.
Ques. 3If the demand for its product is elastic, a monopoly's
A) total revenue is unchanged when the firm lowers its price.
B) total revenue decreases when the firm lowers its price.
C) marginal revenue is positive.
D) marginal revenue is zero.
Ques. 4In the above table, diminishing marginal returns start to occur when the
A) 3rd worker is employed.
B) 4th worker is employed.
C) 5th worker is employed.
D) 6th worker is employed.
Ques. 5The legal responsibility for losses incurred by a proprietorship falls upon the
A) stockholders.
B) partners.
C) owner.
D) creditors.
Ques. 6If a consumer spends all of his or her income and the marginal utility per dollar is equal for all goods, then
A) marginal utility is maximized.
B) total utility is maximized.
C) a consumer could not be better off even with greater income.
D) the proportion of income spent on each good must be equal.
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