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Multiple-choice questions – choose the best answer

1. Antitrust laws allow the government to

a. promote competition.

b. prevent mergers.

c. break up monopolies.

d. all of the above

2. Cartels are difficult to maintain because

a. laws often prohibit explicit collusive agreements among competing firms.

b. there is always tension between cooperation and self-interest in a cartel.

c. cartel agreements are difficult to enforce.

d. all of the above

3. When a profit-maximizing firm in a monopolistically competitive market is in long-run equilibrium

a. the demand curve will be perfectly elastic.

b. price exceeds marginal cost.

c. marginal cost is falling.

d. marginal revenue exceeds marginal cost.

4. As the number of firms in an oligopoly increases,

a. each seller becomes more concerned about its impact on the market price.

b. the output effect decreases.

c. the quantity of output becomes closer to the socially efficient quantity.

d. All of the above are correct.

5. In a duopoly situation, the logic of self-interest results in a total output level that

a. equals the output level that would prevail in a competitive market.

b. equals the output level that would prevail in a monopoly.

c. exceeds the monopoly level, but falls short of the competitive level.

d. falls short of the monopoly level.

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