If the demand function for a particular good is Q = 20 8P, then the own price elasticity of demand at a price of 2 is:

A. 4.

B. 1/4.

C. 2/3.

D. 1/16.

(NB. The above are all given as absolute values)

Which of the following will make it less likely that a firm will choose to produce its own inputs:

A. substantial specialized investment is involved and the input has complex characteristics.

B. spot markets for the input do not exist.

C. both A and B.

D. the input has no complex characteristics and a spot market for the input exists

Monopolistic competition is characterized by:

A. heterogeneous products.

B. employing labor from a perfectly competitive labor market.

C. no free entry.

D. large markets.

Which of the following is true?

A. A monopolist produces on the inelastic portion of its demand.

B. A monopolist always earns an economic profit.

C. The more inelastic the demand, the closer marginal revenue is to price.

D. In the short run, a monopoly will shut down if P < AVC.

In a Sweezy Oligopoly, a decrease in a firm's marginal cost generally leads to:

A. reduced output and a higher price.

B. increased output and a lower price.

C. higher output and a higher price.

D. None of the preceding answers is correct.