Perfect Competition and Question

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Take Test: Chapter 15 & 16 Microeconomics .Content Assistive Technology Tips [opens in new window]
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Question 1 Which of the following statements is correct?
Answer a. Both a competitive firm and a monopolist are price makers. b. A competitive firm is a price maker, whereas a monopolist is a price taker. c. Both a competitive firm and a monopolist are price takers. d. A competitive firm is a price taker, whereas a monopolist is a price maker.
.2 points
Question 2 A monopoly
Answer a. can set the price it charges for its output but faces a downward-sloping demand curve so it cannot earn unlimited profits. b. can set the price it charges for its output and earn unlimited profits. c. takes the market price as given and earns small but positive profits. d. can set the price it charges for its output but faces a horizontal demand curve so it can earn unlimited profits.
.2 points
Question 3 Because a monopolist does not face competition from other firms, the outcome in a market with a monopoly
Answer a. is often not in the best interest of society. b. is characterized by unlimited profits. c. does not illustrate profit maximization. d. would be improved if the government produced the product rather than a private firm.
.2 points
Question 4 Microsoft faces very little competition from other firms for its Windows software. Why isn’t the price of the software $1,000 per copy?
Answer a. because the government would not allow such a high price b. because stockholders would not allow such a high

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