ECON 101 ACTUAL EXAM
QUESTIONS WITH CORRECT
ANSWERS
Which of the following is TRUE of firms in both perfect competition and monopolistic
competition?
a. the long-run price is equal to marginal revenue, marginal cost, and average total cost
b. long-run economic profits are equal to zero
c. the long-run level of output is at the point where average total cost is minimized
d. price is equal to marginal cost, ensuring that the efficient level of output is produced -
Answer-b. long-run economic profits are equal to zero
In the long-run equilibrium in monopolistic competition: - Answer-price is equal to
average total cost at an output below where average total cost is minimized
In an oligopoly: - Answer-firms recognize their interdpendence
Oligopoly is a market structure that is charcaterized by a _________ number of
__________ firms producing __________ products. - Answer-small; interdependent;
identical or differentiated
To be called an oligopoly, an industry must have: - Answer-a small number of
interdependent firms
In oligopoly, a firm must realize that: - Answer-another major firm may dominate choices
in the industry, and it will have to behave accordingly
Which of the following scenarios best describes an oligopolistic industry?
a. a single cable company serves customers in a small town
b. thousands of soybean farmers sell their output in a global commodities
c. coca-cola and pepsi sell most of the soft drinks consumed around the world
d. a college has one bookstore selling textbooks to students - Answer-c. coca-cola and
pepsi sell most of the soft drinks consumed around the world
An extreme case of oligopoly in which firms collude to raise joint profits is known as a: -
Answer-cartel
Collusive agreements are typically difficult for cartels to maintain because each firm can
increase profits by: - Answer-producing more than the quantity that maximizes joint
profits
QUESTIONS WITH CORRECT
ANSWERS
Which of the following is TRUE of firms in both perfect competition and monopolistic
competition?
a. the long-run price is equal to marginal revenue, marginal cost, and average total cost
b. long-run economic profits are equal to zero
c. the long-run level of output is at the point where average total cost is minimized
d. price is equal to marginal cost, ensuring that the efficient level of output is produced -
Answer-b. long-run economic profits are equal to zero
In the long-run equilibrium in monopolistic competition: - Answer-price is equal to
average total cost at an output below where average total cost is minimized
In an oligopoly: - Answer-firms recognize their interdpendence
Oligopoly is a market structure that is charcaterized by a _________ number of
__________ firms producing __________ products. - Answer-small; interdependent;
identical or differentiated
To be called an oligopoly, an industry must have: - Answer-a small number of
interdependent firms
In oligopoly, a firm must realize that: - Answer-another major firm may dominate choices
in the industry, and it will have to behave accordingly
Which of the following scenarios best describes an oligopolistic industry?
a. a single cable company serves customers in a small town
b. thousands of soybean farmers sell their output in a global commodities
c. coca-cola and pepsi sell most of the soft drinks consumed around the world
d. a college has one bookstore selling textbooks to students - Answer-c. coca-cola and
pepsi sell most of the soft drinks consumed around the world
An extreme case of oligopoly in which firms collude to raise joint profits is known as a: -
Answer-cartel
Collusive agreements are typically difficult for cartels to maintain because each firm can
increase profits by: - Answer-producing more than the quantity that maximizes joint
profits
