1. Which of the following statements is true for both monopolistically competitive and oligopolistic industries?
A) It is impossible for new firms to enter the industries.
B) Collusion and the creation of cartels is common.
C) Producers cannot benefit from knowing other firms' plans.
D) Firms have some degree of control over prices.
2. Which of the following best describes an oligopoly?
A) many monopolistically competitive firms
B) a few firms sharing monopoly power
C) a former monopoly that has been broken up by the government
D) a government-granted franchise or monopoly
3. Collusion most frequently occurs in industries that are
A) oligopolistic
B) monopolistically competitive
C) monopolistic
D) perfectly competitive
4. If a few firms share most of an entire industry's revenues, the market structure is most likely
A) monopolistically competitive
B) an oligopoly
C) perfectly competitive
D) a monopoly
5. All of the following can help break a monopoly EXCEPT
A) increased barriers to entry
B) changing consumer tastes
C) international competition
D) technology and innovation
6. Which of the following best describes a successful monopolist?
A) The only buyer of a resource or type of labor
B) The only seller of a difficult-to-substitute product
C) The only buyer of a consumer product
D) The only seller of a non-essential product
7. A monopoly is able to make greater profits than a perfectly competitive firm because
A) the monopolist fixes prices in cooperation with its rivals
B) barriers to entry in the monopolist's market prevent competition
C) antitrust legislation protects the monopolist from regulation
D) monopolistic firms are always larger than competitive firms
8. Which of the following is most likely to be observed in a monopolistically competitive market?
A) Standardized, homogenous products
B) Collusion and price-fixing between firms
C) Government antitrust oversight
D) Non-price competition, such as advertising
9. Which of the following would most likely be a monopoly?
A) An appliance store
B) A supermarket
C) An electricity provider
D) A dentist's office
10. Monopolistically competitive firms most frequently do which of the following? Compete in pricing wars with other firms in the industry
A) Advertise the traits that make their product identifiable
B) Enjoy monopoly pricing power
C) Merge and consolidate into oligopolistic groupings
11. When the government grants an exclusive patent to one firm, that firm enjoys
A) productive efficiency B) antitrust regulation
C) monopoly powers D) collusive prices
12. Which of these could be considered a government-created barrier to market entry?
A) Discretionary spending
B) Antitrust legislation
C) Patents and copyrights
D) Progressive income taxes
13. The basic difference between copyrights and patents is that
A) copyrights never expire, while patents always have an expiration date
B) copyrights are used to protect ideas, while patents protect processes and products
C) copyrights are awarded by private entities, while patents are awarded by the government
D) copyrights always last longer than patents
14. A patent is given to a firm to protect that firm's
A) monopoly power over a new process or product
B) research and development investment
C) ability to profit from its discoveries
D) all of the above
15. If a proprietorship fails, who is responsible for the firm's debts?
A) The workers B) The sole proprietor
C) The shareholders D) The public
16. Which of the following is a disadvantage faced by sole proprietors?
A) Limited decision-making power
B) Full responsibility for the business' debts
C) Demands placed on them by shareholders
D) "Double taxation" of profits through corporate and dividend taxes
17. A proprietorship shared between multiple people is known as
A) a partnership B) a franchise
C) an oligopoly D) a conglomerate
18. In general, a company whose shareholders collect dividends must be
A) publicly traded B) a private bank
C) taking a loss D) earning a profit
19. A corporation distributes profits to its many part-owners by
A) raising the interest rate B) offering stock
C) paying dividends D) issuing bonds
20. Which of the following organizations is most likely to sell stock?
A) Sole proprietorship B) Partnership
C) Corporation D) Labor union
21. A business that is related to an established corporation and shares the same trademarks, brands, and business model is known as a
A) merger B) franchise
C) proprietorship D) entrepreneurship
22. Firm X and Firm Y were previously in direct competition, but now they plan to merge. This combination would be considered a
A) horizontal merger B) vertical merger
C) complementary merger D) conglomerate merger
23. A vertical merger is
A) the combination of two firms that specialize in different stages of the same supply chain
B) the combination of two firms from completely unrelated industries
C) a combination of two firms that were previously in competition with each other
D) a combination of two firms that are not corporations
24. If a corporation that makes rubber combines with a corporation that makes tires, this action would most likely be considered
A) a horizontal merger B) a conglomerate merger
C) a stock merger D) a vertical merger
25. The personal income earned by the sale of stock is known as
A) preferred stock B) dividends
C) mutual fund income D) capital gains