Question 1

Monopolistic competition is characterized by

Accepted Answer

A) one firm selling several products. 
B) many firms selling the same product. 
C) many firms selling slightly different products. 
D) one firm selling one product. 
A) one firm selling several products. 
B) many firms selling the same product. 
C) many firms selling slightly different products. 
D) one firm selling one product.

Question 2

In the long run, zero economic profit exists in monopolistic competition and perfect competition.

Accepted Answer

A) True 
 B)False

Question 3

Economists tend to be concerned about entry barriers.Why are entry barriers so important?

Accepted Answer

Economists see barriers as the primary r

Question 4

If the firms in a market reach an agreement about pricing and output shares, we would call this

Accepted Answer

A) a cartel. 
B) a dominant strategy. 
C) a Nash equilibrium. 
D) a duopoly. 
A) a cartel. 
B) a dominant strategy. 
C) a Nash equilibrium. 
D) a duopoly.

Question 5

Figure 13-3
​  
-The game theory approach to the analysis of oligopoly assumes that oligopolists

Accepted Answer

A) ignore their interdependence. 
B) behave with little forethought. 
C) do not take their businesses seriously. 
D) act strategically. 
A) ignore their interdependence. 
B) behave with little forethought. 
C) do not take their businesses seriously. 
D) act strategically.

Question 6

The monopolistically competitive firm differs from monopoly in that its

Accepted Answer

A) demand curve is flatter. 
B) demand curve slopes downward. 
C) MR curve lies below its demand curve. 
D) profit is maximized where MR = MC. 
A) demand curve is flatter. 
B) demand curve slopes downward. 
C) MR curve lies below its demand curve. 
D) profit is maximized where MR = MC.

Question 7

Most economic activity in the United States is carried out by monopolies.

Accepted Answer

A) True 
 B)False

Question 8

A situation in which both players can adopt moves such that each player's move is its most profitable response to the move of the other is the

Accepted Answer

A) prisoner's dilemma. 
B) Nash equilibrium. 
C) maximin criterion. 
D) tacit collusion. 
A) prisoner's dilemma. 
B) Nash equilibrium. 
C) maximin criterion. 
D) tacit collusion.

Question 9

Unlike the situation for a firm in perfect competition, positive economic profit exists for firms in monopolistic competition for both the short run and in the long run.

Accepted Answer

A) True 
 B)False

Question 10

One of the most famous cartels is OPEC.

Accepted Answer

A) True 
 B)False

Question 11

One indication that an industry might be oligopolistic is that prices change

Accepted Answer

A) infrequently. 
B) frequently. 
C) in rhythmic patterns. 
D) on a regular, periodic basis. 
A) infrequently. 
B) frequently. 
C) in rhythmic patterns. 
D) on a regular, periodic basis.

Question 12

An oligopolist's effective demand curve will be kinked if the firm

Accepted Answer

A) is acting as a price leader in the industry. 
B) expects other firms to match price cuts but not price increases. 
C) expects other firms to match all price changes. 
D) fears new entry into the industry. 
A) is acting as a price leader in the industry. 
B) expects other firms to match price cuts but not price increases. 
C) expects other firms to match all price changes. 
D) fears new entry into the industry.

Question 13

The authors of this text argue that oligopolies are interdependent firms.What do they mean by this? Give three examples of the types of interdependence which might occur.

Accepted Answer

Oligopolists are few in number, and they

Question 14

A firm in a monopolistically competitive market makes no economic profit in the long run because

Accepted Answer

A) long-run marginal cost will be too high to make any economic profit. 
B) long-run price will be equal to long-run marginal cost. 
C) long-run marginal cost will be equal to long-run marginal revenue. 
D) long-run price will be equal to long-run average cost. 
A) long-run marginal cost will be too high to make any economic profit. 
B) long-run price will be equal to long-run marginal cost. 
C) long-run marginal cost will be equal to long-run marginal revenue. 
D) long-run price will be equal to long-run average cost.

Question 15

The most widely used approach for the analysis of oligopoly behavior is

Accepted Answer

A) game theory. 
B) role-playing. 
C) strategic engineering. 
D) input-output analysis. 
A) game theory. 
B) role-playing. 
C) strategic engineering. 
D) input-output analysis.

Question 16

Game theory can be used to investigate

Accepted Answer

A) why cartels break down. 
B) why some firms maintain excess productive capacity. 
C) how oligopolists set prices. 
D) All of the responses are correct. 
A) why cartels break down. 
B) why some firms maintain excess productive capacity. 
C) how oligopolists set prices. 
D) All of the responses are correct.

Question 17

Oligopolists seldom change prices, because they don't like change.

Accepted Answer

A) True 
 B)False

Question 18

In game theory, a prisoner's dilemma

Accepted Answer

A) never has a dominant strategy. 
B) is equivalent to a Nash equilibrium. 
C) always has the best result for the players when game is played repeatedly. 
D) is a game that has a preferred outcome for the players that is not an equilibrium. 
A) never has a dominant strategy. 
B) is equivalent to a Nash equilibrium. 
C) always has the best result for the players when game is played repeatedly. 
D) is a game that has a preferred outcome for the players that is not an equilibrium.

Question 19

A monopolistically competitive firm in the long run will

Accepted Answer

A) have a demand curve tangent to its AC. 
B) have a demand curve below its AC. 
C) have a demand curve above its AC. 
D) operate where excessive profit can be achieved. 
A) have a demand curve tangent to its AC. 
B) have a demand curve below its AC. 
C) have a demand curve above its AC. 
D) operate where excessive profit can be achieved.

Question 20

Repeated games can lead to tacit collusion.

Accepted Answer

A) True 
 B)False

Exam 13: Between Competition and Monopoly

Monopolistic competition is characterized by

In the long run, zero economic profit exists in monopolistic competition and perfect competition.

Economists tend to be concerned about entry barriers.Why are entry barriers so important?

If the firms in a market reach an agreement about pricing and output shares, we would call this

Figure 13-3 ​ -The game theory approach to the analysis of oligopoly assumes that oligopolists

The monopolistically competitive firm differs from monopoly in that its

Most economic activity in the United States is carried out by monopolies.

A situation in which both players can adopt moves such that each player's move is its most profitable response to the move of the other is the

Unlike the situation for a firm in perfect competition, positive economic profit exists for firms in monopolistic competition for both the short run and in the long run.

One of the most famous cartels is OPEC.

One indication that an industry might be oligopolistic is that prices change

An oligopolist's effective demand curve will be kinked if the firm

The authors of this text argue that oligopolies are interdependent firms.What do they mean by this? Give three examples of the types of interdependence which might occur.

A firm in a monopolistically competitive market makes no economic profit in the long run because

The most widely used approach for the analysis of oligopoly behavior is

Game theory can be used to investigate

Oligopolists seldom change prices, because they don't like change.

In game theory, a prisoner's dilemma

A monopolistically competitive firm in the long run will

Repeated games can lead to tacit collusion.

What Is Economics

The Economony: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Useconomy

Filters

Figure 13-3 -The game theory approach to the analysis of oligopoly assumes that oligopolists