Which of the following is not potentially a barrier to entry into a product market?
a. patent protection on the design of the product
b. the absence of economies of scale in the product market
c. government licensing of the product's producers
d. the control of a crucial input necessary to produce the product
QUESTION 2A sudden appreciation in the exchange rate of a country deteriorates the terms of trade of the country.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3The average cost of production at the profit maximizing output level for Jones Inc, is 4 per unit. The average variable cost of production is 3.5 per unit at this output level. The introduction of cheaper substitutes reduces the demand drastically and the market price falls to 1.5 per unit. If the minimum average variable cost the firm must incur is 2.5, identify the correct statement from the following.
a. There are output levels where revenue exceeds variable cost when the price is 1.5 per unit.
b. The firm will continue to operate in the short run.
c. The firm will breakeven at the price of 1.5 per unit.
d. The firm will shut down.
QUESTION 4If an individual firm in a market is a price taker, then:
a. it faces a horizontal demand curve.
b. it is operating in a monopolistically competitive market.
c. it sells its product at the market price that is solely determined by the buyers.
d. it faces a positively sloped marginal revenue curve.
e. it faces significant barriers to exit from the market.
QUESTION 5Which of the following is a characteristic of a monopoly?
a. a large number of sellers
b. homogeneous products
c. large barriers to entry
d. price taking firms
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