Which of the following could be true of perfect competition but not of monopoly?
a. The government licenses production of the good to a few firms.
b. The government grants a patent for the good.
c. A firm can earn economic profit in the long run.
d. If price falls below average variable cost, it pays to shut down.
e. There are no barriers to entry.
QUESTION 2Which of the following is not characteristic of perfect competition?
a. many buyers and sellers
b. brand name advertising
c. standardized products
d. fully informed buyers and sellers
e. free entry and exit of firms
QUESTION 3Which of the following is true of monopoly?
a. There are no barriers to entry.
b. The firm is a price taker.
c. There are no close substitutes for the product being produced.
d. There are many firms in the industry.
e. The firm faces a horizontal demand curve.
QUESTION 4Which of the following is not true of a perfectly competitive market?
a. Firms experience constant returns to scale.
b. Firms face significant barriers to entry.
c. Economic profit is zero.
d. Each firm chooses the quantity it wants to sell.
e. Each firm knows the prices of outputs and inputs.
QUESTION 5A monopolist is
a. one of a large number of small firms that produce a homogeneous good
b. one of a small number of large firms that produce a differentiated good
c. a single seller of a product with many close substitutes
d. one of a small number of large firms that produce a homogeneous good
e. a single seller of a product with no close substitutes
QUESTION 6Commodity products are
a. pasteurized
b. bland
c. perceived by consumers to be identical
d. made by one manufacturer
e. made by hand
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