ECON 411 Chapter 8 Practice #3 Exam
Questions and Answers Graded A+
In the model of monopolistic competition, compared to a firm with a higher
marginal cost, a firm with a lower marginal cost will set a ________ price, produce
________ output, and earn ________ profits.
A) higher; more; more
B) lower; less; less
C) higher; less; less
D) lower; more; more
E) higher; less; more - Correct answer-D) lower; more; more
In the model of monopolistic competition, if firms have ________ average cost
curves, then opening trade will ________ the total number of firms and ________
the average price.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,A) downward sloping; decrease; decrease
B) upward sloping; decrease; increase
C) downward sloping; increase; decrease
D) upward sloping; increase; decrease
E) downward sloping; decrease; increase - Correct answer-A) downward sloping;
decrease; decrease
The most common form of price discrimination in international trade is
A) non-tariff barriers.
B) Voluntary Export Restraints.
C) preferential trade arrangements.
D) product boycotts.
E) dumping. - Correct answer-E) dumping.
In an industry where firms experience internal scale economies, the long-run cost
of production will depend on
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, A) individual firms' fixed costs.
B) the size of the labor force.
C) the size of the market.
D) whether the country engages in inter-industry trade.
E) whether the country engages in intra-industry trade. - Correct answer-C) the size
of the market.
In the model of monopolistic competition, an increase in industry output will cause
individual firms' demand curves to become ________, which will ________
demand for higher-priced goods and ________ demand for lower-priced goods.
A) steeper; reduce; increase
B) flatter; reduce; increase
C) flatter; increase; reduce
D) steeper; increase; reduce
E) horizontal; reduce; reduce - Correct answer-B) flatter; reduce; increase
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
Questions and Answers Graded A+
In the model of monopolistic competition, compared to a firm with a higher
marginal cost, a firm with a lower marginal cost will set a ________ price, produce
________ output, and earn ________ profits.
A) higher; more; more
B) lower; less; less
C) higher; less; less
D) lower; more; more
E) higher; less; more - Correct answer-D) lower; more; more
In the model of monopolistic competition, if firms have ________ average cost
curves, then opening trade will ________ the total number of firms and ________
the average price.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,A) downward sloping; decrease; decrease
B) upward sloping; decrease; increase
C) downward sloping; increase; decrease
D) upward sloping; increase; decrease
E) downward sloping; decrease; increase - Correct answer-A) downward sloping;
decrease; decrease
The most common form of price discrimination in international trade is
A) non-tariff barriers.
B) Voluntary Export Restraints.
C) preferential trade arrangements.
D) product boycotts.
E) dumping. - Correct answer-E) dumping.
In an industry where firms experience internal scale economies, the long-run cost
of production will depend on
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, A) individual firms' fixed costs.
B) the size of the labor force.
C) the size of the market.
D) whether the country engages in inter-industry trade.
E) whether the country engages in intra-industry trade. - Correct answer-C) the size
of the market.
In the model of monopolistic competition, an increase in industry output will cause
individual firms' demand curves to become ________, which will ________
demand for higher-priced goods and ________ demand for lower-priced goods.
A) steeper; reduce; increase
B) flatter; reduce; increase
C) flatter; increase; reduce
D) steeper; increase; reduce
E) horizontal; reduce; reduce - Correct answer-B) flatter; reduce; increase
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
