2. When the number of substitutes increase, the demand curve for a monopolist wi

Question

2. When the number of substitutes increase, the demand curve for a monopolist will
A) become more inelastic.
B) not change.
C) become more elastic.
D) become steeper.

3. Which of the following is true of a perfectly competitive firm and a monopoly in the long run?
A) P = MR
B) MR = MC
C) P = MC
D) P = ATC

4. A barrier to entry is
A) a term used to explain why monopolies always make economic profits.
B) a restriction on starting a business.
C) the situation when the government produces a good instead of relying on private firms to produce the good.
D) a restriction on the profits that a monopoly can make.

5. Price differentiation is a situation in which
A) consumers' comparison-shop.
B) the demand curve is vertical.
C) there are different prices for the same product that are not due to differences in the marginal cost of providing the commodity to different groups of buyers.
D) there are different prices for similar products reflecting differences in the marginal cost of providing the commodities to different groups of buyers.

Explanation / Answer

2. C) become more elastic. 3. B) MR = MC 4. D) a restriction on the profits that a monopoly can make. 5. C) there are different prices for the same product that are not due to differences in the marginal cost of providing the commodity to different groups of buyers.

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