What do monopolistic competition, pure monopoly, and perfect competition have in common?
a. free entry
b. long-run economic profits
c. differentiated product
d. price taking
e. the rule of profit maximization
QUESTION 2Conglomerate mergers involve more than two firms.
a. True
b. False
QUESTION 3The demand curve facing a firm will be more elastic,
a. the fewer the number of competing firms
b. the more differentiated the product
c. the more substitutes there are for its product
d. the greater the firm's ability to control price
e. the larger the profit the firm can make
QUESTION 4Firm size alone is not the same as market power, as illustrated by
a. a large automaker raising its prices without concern about competition
b. a movie theater in an isolated community facing stiff competition
c. wheat farmers selling their commodity product to farm cooperatives
d. the only newspaper in a metropolitan area facing competition for advertising sales from TV, radio, and the Internet
e. None of the answers is correct
QUESTION 5Social welfare is
a. a government program through which society takes care of low-income people
b. the overall well-being of people in the economy
c. measured by spending on party supplies, restaurant meals, and movie tickets
d. applies to sociology, not economics
e. All the answers are correct.
QUESTION 6A monopolistic competitor's demand curve is
a. perfectly elastic
b. less elastic than a monopolist's or oligopolist's but more elastic than a perfect competitor's
c. as elastic as an oligopolist's
d. more elastic than a monopolist's or oligopolist's but less elastic than a perfect competitor's
e. perfectly inelastic
QUESTION 7The Justice Department generally challenges any merger that meets the following two conditions: (1) the post-merger HHI exceeds 1,800 and (2) the merger increases the index by more than 100 points.
a. True
b. False
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