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    General multiple choice economics questions

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    Question 21 Save

    The _____ elastic a firm's demand curve, the greater its _____.

    a. less; monopoly power

    b. less; output

    c. more; monopoly power

    d. more; costs

    Question 22 Save

    Which of the following is not a basic feature of a monopolistically competitive industry?

    a. There are many buyers and sellers in the industry

    b. Each firm in the industry produces a differentiated product

    c. There is free entry and exit into the industry

    d. Each firm owns a patent on its product

    Question 23 Save

    The variance of a probability distribution is used to measure risk because a higher variance is associated with

    a. a wider spread of values around the mean.

    b. a more compact distribution.

    c. a lower expected value.

    d. both a and b

    Question 24 Save

    Encouraging firms to invest in research and development and individuals to engage in creative endeavors such as writing novels is one justification for

    a. government-created monopolies.

    b. resource monopolies.

    c. natural monopolies.

    d. monopolistic competition.

    Question 25 Save

    The most important factor in determining the long-run profit potential in monopolistic competition is

    a. free entry and exit.

    b. the elasticity of the market demand curve.

    c. the elasticity of the firm's demand curve.

    d. that it is in the threatener's self interest to act on the threat.

    Question 26 Save

    In making decisions under risk

    a. maximizing expected value is always the best rule.

    b. mean variance analysis is always the best rule.

    c. the coefficient of variation rule is always best.

    d. maximizing expected value is most reliable for making repeated decisions with identical
    probabilities.

    Question 27 Save

    When marginal revenue equals marginal cost, total revenue is equal to total cost, therefore, the firm just "breaks even"

    True

    False

    Question 28 Save

    The following payoff matrix shows the various profit outcomes for 3 projects, A, B, and C, under 2 possible states of nature: the product price is $10 or the product price is $20.
    Profit
    Project P = $10 P = $20
    A 20 80
    B 40 60
    C -26 140
    Using the minimax regret rule the decision maker would choose

    a. A

    b. B

    c. C

    d. impossible to tell from the information

    Question 29 Save

    An oligopolistic situation involving the possible creation of barriers to entry would probably best be modeled by

    a. Cooperative game.

    b. Prisoner's Dilemma game.

    c. Battle of the Sexes game.

    d. Sequential game.

    Question 30 Save

    The essential characteristic of a credible threat is

    a. that the threatener has a reputation for carrying out threats.

    b. that the threatener ignores the costs of carrying out the threat.

    c. that the threatener and the threatenee know each other well.

    d. that it is in the threatener's self interest to act on the threat.

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    https://brainmass.com/economics/utility-demand/general-multiple-choice-economics-questions-219322

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    Solution Preview

    The _____ elastic a firm's demand curve, the greater its _____.

    c. more; monopoly power

    Greater elasticity indicates that consumers will reduce their purchases proportionally more with price changes. So, the less elastic the firm's demand, the greater its degree of market power.

    Question 22
    Which of the following is not a basic feature of a monopolistically competitive industry?

    d. Each firm owns a patent on its product

    Monopolistic competition requires free entry and exit, which precludes having patents.

    Question 23

    The variance of a probability distribution is used to measure risk because a higher variance is associated with

    a. a wider spread of values around the mean.

    Question 24

    Encouraging firms to invest in research and development and individuals to engage ...

    Solution Summary

    Elasticity, market structure, and other questions

    $2.19