ECO365 Week-3 Knowledge check (Score 100%)

Question-1: In a monopolistically competitive market,
A. firms produce differentiated products
B. there are barriers to entry
C. firms produce homogeneous products
D. the demand for any firm's product is perfectly elastic

Question-2: Strategic decision making is most important in
A. competitive markets
B. monopolistically competitive markets
C. oligopolistic markets
D. monopolistic markets

Question-3: The general monitoring problem implies that
A. profit maximization should always be considered to be a firm's goal
B. there is a cost of supervising employees so that they work toward the owner's goals rather than their own
C. government must intervene to protect national goals
D. competition will ensure common goals among the owners and managers of a firm

Question-4: Lazy monopolists are characterized by the tendency to
A. maximize profits at the cost of losing market share
B. pay too much to protect their monopoly positions
C. earn enough profits to keep their shareholders happy without trying too hard to hold costs down
D. minimize losses so that the dividends of shareholders are maximized
Question-5: Judgment by performance means that the competitiveness of a market is determined by
A. the actual behavior of firms in the market
B. the structure of the industry
C. . the number of firms in the market
D. technological considerations

Question-6: Consumers tend to accept the market restrictions imposed by suppliers because
A. governments prevent them from organizing
B. they see themselves as laborers and therefore benefit from restrictions
C. their costs of organizing are higher than the cost of collusion by the suppliers
D. when combined, their losses are small for the group as a whole

Question-7: The fact that U.S. managers' salaries are about four times higher than those of comparable managers in Japan, where banks control firms more closely, is probably
A. an example of the monitoring problem in the United States
B. an example of X-inefficiency in Japan
C. due to the fact that the U.S. economy is much less competitive
D. due to the fact that there are more natural monopolies in the United States


Answer will be sent by email as attachment.