Question 1

Exhibit 10-4 Kinked demand curves  
-In Exhibit 10-4, in a kinked-demand oligopoly model, D1 represents the:

Accepted Answer

A)  demand curve applicable to any price increase above $50. 
B)  demand curve applicable to any price decrease below $50. 
C)  demand curve facing firms when a cartel is formed. 
D)  market demand curve. 
E)  demand curve facing the price leader. 
A)  demand curve applicable to any price increase above $50. 
B)  demand curve applicable to any price decrease below $50. 
C)  demand curve facing firms when a cartel is formed. 
D)  market demand curve. 
E)  demand curve facing the price leader.

Question 2

Perfect competition and monopolistic competition are similar because under both market structures,

Accepted Answer

A)  there are zero economic profits in the long run. 
B)  production takes place at the least-cost combination. 
C)  there are few firms. 
D)  entry is difficult. 
E)  differentiated products are produced. 
A)  there are zero economic profits in the long run. 
B)  production takes place at the least-cost combination. 
C)  there are few firms. 
D)  entry is difficult. 
E)  differentiated products are produced.

Question 3

The theory of monopolistic competition predicts that in long-run equilibrium a monopolistically competitive firm will:

Accepted Answer

A)  produce the output level at which price equals long-run marginal cost. 
B)  operate at minimum long-run average cost. 
C)  overutilize its insufficient capacity. 
D)  produce the output level at which price equals long-run average cost. 
A)  produce the output level at which price equals long-run marginal cost. 
B)  operate at minimum long-run average cost. 
C)  overutilize its insufficient capacity. 
D)  produce the output level at which price equals long-run average cost.

Question 4

Compared to the perfectly competitive outcome, monopolistically competitive markets will result in:

Accepted Answer

A)  a wider variety of products and higher prices. 
B)  less product variety and higher prices. 
C)  a wider variety of products and lower prices. 
D)  less product variety and lower prices. 
A)  a wider variety of products and higher prices. 
B)  less product variety and higher prices. 
C)  a wider variety of products and lower prices. 
D)  less product variety and lower prices.

Question 5

Exhibit 10-7 Two-Firm Payoff Matrix  
-Assume costs are identical for the two firms in Exhibit 10-7. If both firms were allowed to form a cartel and agree on their prices, equilibrium would be established by:

Accepted Answer

A)  Camel charging the low price and Marlboro charging the high price. 
B)  Camel charging the high price and Marlboro charging the low price. 
C)  Camel charging the high price and Marlboro charging the high price. 
D)  Camel charging the low price and Marlboro charging the low price. 
A)  Camel charging the low price and Marlboro charging the high price. 
B)  Camel charging the high price and Marlboro charging the low price. 
C)  Camel charging the high price and Marlboro charging the high price. 
D)  Camel charging the low price and Marlboro charging the low price.

Question 6

A common characteristic of oligopolies is:

Accepted Answer

A)  interdependence in pricing decisions. 
B)  independent pricing decisions. 
C)  low industry concentration. 
D)  few or no plant-level economies of scale. 
A)  interdependence in pricing decisions. 
B)  independent pricing decisions. 
C)  low industry concentration. 
D)  few or no plant-level economies of scale.

Question 7

Which of the following is a characteristic of the monopolistic competition market structure?

Accepted Answer

A)  Many firms and a homogeneous product. 
B)  Few firms and differentiated products. 
C)  Few firms and similar products. 
D)  Few firms and a homogeneous product. 
E)  Many firms and differentiated products. 
A)  Many firms and a homogeneous product. 
B)  Few firms and differentiated products. 
C)  Few firms and similar products. 
D)  Few firms and a homogeneous product. 
E)  Many firms and differentiated products.

Exhibit 10-4 Kinked demand curves -In Exhibit 10-4, in a kinked-demand oligopoly model, D₁ represents the:

Perfect competition and monopolistic competition are similar because under both market structures,

The theory of monopolistic competition predicts that in long-run equilibrium a monopolistically competitive firm will:

Compared to the perfectly competitive outcome, monopolistically competitive markets will result in:

Exhibit 10-7 Two-Firm Payoff Matrix -Assume costs are identical for the two firms in Exhibit 10-7. If both firms were allowed to form a cartel and agree on their prices, equilibrium would be established by:

A common characteristic of oligopolies is:

Which of the following is a characteristic of the monopolistic competition market structure?

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exam 10: Monopolistic Competition and Oligopoly

Exhibit 10-4 Kinked demand curves -In Exhibit 10-4, in a kinked-demand oligopoly model, D1 represents the:

Perfect competition and monopolistic competition are similar because under both market structures,

The theory of monopolistic competition predicts that in long-run equilibrium a monopolistically competitive firm will:

Compared to the perfectly competitive outcome, monopolistically competitive markets will result in:

Exhibit 10-7 Two-Firm Payoff Matrix -Assume costs are identical for the two firms in Exhibit 10-7. If both firms were allowed to form a cartel and agree on their prices, equilibrium would be established by:

A common characteristic of oligopolies is:

Which of the following is a characteristic of the monopolistic competition market structure?

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exhibit 10-4 Kinked demand curves -In Exhibit 10-4, in a kinked-demand oligopoly model, D₁ represents the: