Applied Microeconomics MCQs

Option A: p = Z

Option B: P = MC + Z

Option C: p = MC

Option D: P = MC – Z

Correct Answer: P = MC + Z ✔

Option A: restrict; promote

Option B: restrict; restrict

Option C: promote; promote

Option D: promote; restrict

Correct Answer: promote; restrict ✔

Option A: nationalized; privatized

Option B: natural monopoly; potentially competitive

Option C: cartel; a sellers’ market

Option D: monopolistic competition duopoly

Correct Answer: natural monopoly; potentially competitive ✔

Option A: extended warranties offer value for money.

Option B: the cost of repair will usually exceed the cost of the warranty

Option C: they are paid commission on each extended warranty they sell.

Option D: They are concerned about customer satisfaction.

Correct Answer: they are paid commission on each extended warranty they sell. ✔

Option A: firms producing the same product

Option B: firms at various stages in production process.

Option C: firm producing complementary products

Option D: firms producing unrelated products.

Correct Answer: firms producing unrelated products. ✔

Option A: increasing market power is the best way to achieve efficiency.

Option B: competition is the best way to achieve efficiency.

Option C: public ownership is the best way to achieve efficiency

Option D: regulation is the best way to achieve efficiency.

Correct Answer: competition is the best way to achieve efficiency. ✔

Option A: low; low

Option B: high; high

Option C: low; high

Option D: high; low

Correct Answer: low; high ✔

Option A: Spain

Option B: Belgium

Option C: USA

Option D: UK

Correct Answer: USA ✔

Option A: Persuade the regulator to operate in the industry’s interests

Option B: Persuade the regulator to act in the firms interests.

Option C: Bribe the regulator.

Option D: Persuade the government to change the regulatory regime.

Correct Answer: A. Persuade the regulator to operate in the industry’s interests ✔

Option A: deregulation

Option B: making markets contestable

Option C: natural monopoly.

Option D: cross-subsidization.

Correct Answer: making markets contestable ✔

Option A: removes barriers to entry

Option B: imposes higher standards of conduct

Option C: removes barriers to entry and minimum product quality standards

Option D: breaks up private sector monopolies.

Correct Answer: removes barriers to entry ✔

Option A: corporately owned businesses to individuals

Option B: publicly held stock to private individuals.

Option C: government businesses to the private sector

Option D: privately owned businesses to the government sector

Correct Answer: government businesses to the private sector ✔

Option A: Competitive pricing.

Option B: Price discrimination

Option C: price discounting.

Option D: price fixing.

Correct Answer: Price discrimination ✔

Option A: production merger

Option B: vertical merger

Option C: conglomerate merger.

Option D: horizontal merger

Correct Answer: vertical merger ✔

Option A: a conglomerate merger.

Option B: a horizontal merger

Option C: a complementary products merger.

Option D: a vertical merger

Correct Answer: a vertical merger ✔

Option A: firms producing unrelated products

Option B: firms producing complementary products

Option C: firms at various stages in a production process.

Option D: firms producing the same product

Correct Answer: firms producing the same product ✔

Option A: is that if encourages firms to engage in research which leads to new products

Option B: is the revenue generated from the fines paid by those individuals who are found guilty of antitrust violation?

Option C: Is that this policy serves to deter firms from engaging in such practices as collusion, price-fixing and deceptive advertising

Option D: is that it forces firms to produce efficiently.

Correct Answer: Is that this policy serves to deter firms from engaging in such practices as collusion, price-fixing and deceptive advertising ✔

Option A: Car licenses are very expensive vehicle entry to the city center is very restricted road pricing is being introduced and modern cheap rail transport is being expanded.

Option B: London

Option C: Athens

Option D: Singapore

Correct Answer: Singapore ✔

Option A: absolutely inelastic

Option B: Unitarily elastic

Option C: Elastic

Option D: inelastic

Correct Answer: Unitarily elastic ✔

Option A: Environmentally damaging

Option B: an inferior good

Option C: a potential public good

Option D: a superior good

Correct Answer: a superior good ✔