) Which of the following industries is most likely to be a perfect competitive?
A) The automobile industry.
B) A grocery shop.
C) A local telephone company.
D) A restaurant.
8) Which of the following is a form of non-price competition:
B) Quality of service.
C) Product quality.
D) All of the above.
9) According to the kinked demand curve model, a firm
will assume that rival firms will:
A) Match price cuts but not price increases.
B) Keep their prices constant.
C) Keep their rates of production constant.
D) Match price increases but not price cuts.
10) In an monopolistic competitive industry, firms can
earn positive economic profits
A) In the short run but not in the long run.
B) In the short run and in the long run.
C) In the long run but not in the short run.
D) None of the above.
11) IATA (the International Air Transport Association) is an example of :
A) Perfectly competitive firms.
B) An oligopoly.
D) Price leadership model.
12) In which of the following markets a firm has full
market power :
B) Perfect competition.
C) Monopolistic competition.
13) Under price leadership model:
A) All firms but the dominant are price takers.
B) Other firms follow the price increase by the leader.
C) the dominant firm sets the price.
D) All of the above.
14) Which of the following constitute price discrimination
A) A department store has a 25% sale.
B) A Japanese car is sold in Saudi Arabia lower than in Jordan.
C) STC charges higher call rates during day time.
D) An Economic textbook is sold cheaper in USA than in Egypt.
Q7 Answer is B. Because there are many grocery shops and almost having same products. Perfect competition have many sellers with identical products.
Q8 Answer is D. All are non price competition because prices are not changed and other facilities are given with product which may increase sales.
Q9 Answer is A.
Q10 Answer is A.
In short run any firm could earn economic profit in any industry but in long run firms in perfect competition and monopolistic competition will earn zero economic profit because there are many firms and entry exit is free.
Q11 Answer is D.
Q12 Answer is A. Monopoly industry have only one firm so all powers remain with the firm.
Q13 Answer is B.
Leader firm decides the price of industry and followed by other firms.
Q14 Answer is C. Because different rate is charged during day when call are most needed.
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