Question 1

Which of the following represents an example of a major cartel in global markets? ​

Accepted Answer

A)  ​The Organization of Wheat and Corn Exporting Countries (OWCE
C) . 
B)  ​The Organization of Petroleum Exporting Countries (OPE
C) . 
C)  ​The Brotherhood of Scrap Iron Exporting Countries (BSIE
C) . 
D)  ​The Amalgamated Association of Alfalfa Producing Countries (AAAP
C) . 
A)  ​The Organization of Wheat and Corn Exporting Countries (OWCE
C) . 
B)  ​The Organization of Petroleum Exporting Countries (OPE
C) . 
C)  ​The Brotherhood of Scrap Iron Exporting Countries (BSIE
C) . 
D)  ​The Amalgamated Association of Alfalfa Producing Countries (AAAP
C) .

Question 2

Cartels are legal in the United States.

Accepted Answer

A) True 
 B)False

Question 3

​ Which of the following is true about the demand curve for a monopolistically competitive firm?

Accepted Answer

A)  ​It is less elastic (steeper) than for monopoly, but more elastic (flatter) than for a perfectly competitive firm. 
B)  ​It is less elastic (steeper) than the demand curve for either a monopoly firm or a perfectly competitive firm. 
C)  ​It is more elastic (flatter) than the demand curves for either a monopoly firm or a perfectly competitive firm. 
D)  ​It is less elastic (steeper) than for a perfectly competitive firm, but more elastic (flatter) than for a monopoly firm. 
A)  ​It is less elastic (steeper) than for monopoly, but more elastic (flatter) than for a perfectly competitive firm. 
B)  ​It is less elastic (steeper) than the demand curve for either a monopoly firm or a perfectly competitive firm. 
C)  ​It is more elastic (flatter) than the demand curves for either a monopoly firm or a perfectly competitive firm. 
D)  ​It is less elastic (steeper) than for a perfectly competitive firm, but more elastic (flatter) than for a monopoly firm.

Question 4

In the long run, both monopolistic competition and perfect competition result in;

Accepted Answer

A)  a wide variety of brand-name choices for consumers. 
B)  an efficient allocation of resources. 
C)  zero economic profit for firms. 
D)  excess capacity. 
A)  a wide variety of brand-name choices for consumers. 
B)  an efficient allocation of resources. 
C)  zero economic profit for firms. 
D)  excess capacity.

Question 5

Which of the following statements is always true with respect to oligopolists?

Accepted Answer

A)  They react slowly to actions taken by other firms 
B)  They lower prices together 
C)  They raise prices together 
D)  They know with certainty what they other firms will do 
E)  They take into consideration how other firms might react. 
A)  They react slowly to actions taken by other firms 
B)  They lower prices together 
C)  They raise prices together 
D)  They know with certainty what they other firms will do 
E)  They take into consideration how other firms might react.

Question 6

Exhibit 9-6  Two-Firm Payoff Matrix   Suppose costs are identical for the two firms in Exhibit 9-6. If both firms assume the other will compete and charge a lower price, equilibrium will be established by:

Accepted Answer

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

Question 7

In order from the most to the least competitive market structure is the perfectly competitive, monopolistically competitive, monopolist and then the oligopolistic market structure.

Accepted Answer

A) True 
 B)False

Question 8

In monopolistic competition if there is profit, there is:

Accepted Answer

A)  a signal for new firms to enter. 
B)  a motive for existing firms to increase prices. 
C)  proof that advertising works. 
D)  a motive for existing firms to decrease prices. 
E)  product differentiation. 
A)  a signal for new firms to enter. 
B)  a motive for existing firms to increase prices. 
C)  proof that advertising works. 
D)  a motive for existing firms to decrease prices. 
E)  product differentiation.

Question 9

Which of the following is a characteristic of an oligopoly?

Accepted Answer

A)  Mutual interdependence in pricing decisions. 
B)  Independent pricing decisions. 
C)  Lack of control over prices. 
D)  All of the above are true. 
A)  Mutual interdependence in pricing decisions. 
B)  Independent pricing decisions. 
C)  Lack of control over prices. 
D)  All of the above are true.

Question 10

In a monopolistic competitive industry, short-run economic profit encourages entry of new firms until there are no economic profits in the long-run.

Accepted Answer

A) True 
 B)False

Question 11

A monopolistically competitive market is characterized by:

Accepted Answer

A)  many small sellers selling a differentiated product. 
B)  a single seller of a product that has few suitable substitutes. 
C)  very strong barriers to entry. 
D)  mutual interdependence in pricing decisions. 
A)  many small sellers selling a differentiated product. 
B)  a single seller of a product that has few suitable substitutes. 
C)  very strong barriers to entry. 
D)  mutual interdependence in pricing decisions.

Question 12

Exhibit 9-2  A monopolistic competitive firm   If all firms in a monopolistic competitive industry have demand and cost curves like those shown in Exhibit 9-2, we would expect that in the long run:

Accepted Answer

A)  all firms will leave the industry. 
B)  some firms will leave the industry. 
C)  firms in the industry earn zero economic profits. 
D)  a number of new firms will enter the industry. 
A)  all firms will leave the industry. 
B)  some firms will leave the industry. 
C)  firms in the industry earn zero economic profits. 
D)  a number of new firms will enter the industry.

Question 13

Which of the following is always a characteristic of the oligopoly market structure?  ​

Accepted Answer

A)  ​Many sellers, each small in size relative to the overall market. 
B)  ​Few sellers. 
C)  ​All sellers produce identical products. 
D)  ​Easy, low-cost entry and exit. 
A)  ​Many sellers, each small in size relative to the overall market. 
B)  ​Few sellers. 
C)  ​All sellers produce identical products. 
D)  ​Easy, low-cost entry and exit.

Question 14

Exhibit 9-6  Two-Firm Payoff Matrix   Assume costs are identical for the two firms in Exhibit 9-6. 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 15

An organization of sellers designed to coordinate their supply decisions to maximize joint profits is called a:

Accepted Answer

A)  consumer cooperative. 
B)  marketing association. 
C)  regulatory agency. 
D)  cartel. 
A)  consumer cooperative. 
B)  marketing association. 
C)  regulatory agency. 
D)  cartel.

Question 16

Critics of advertising argue that it:

Accepted Answer

A)  lowers price by increasing competition. 
B)  results in more variety of products. 
C)  establishes brand loyalty, which promotes competition. 
D)  serves as a barrier to entry for new firms. 
A)  lowers price by increasing competition. 
B)  results in more variety of products. 
C)  establishes brand loyalty, which promotes competition. 
D)  serves as a barrier to entry for new firms.

Question 17

If a monopolistically competitive firm can earn a profit, it will increase production until:

Accepted Answer

A)  MR > AVC. 
B)  MR = ATC. 
C)  MC > MR. 
D)  MR = AR. 
E)  MR = MC. 
A)  MR > AVC. 
B)  MR = ATC. 
C)  MC > MR. 
D)  MR = AR. 
E)  MR = MC.

Question 18

Exhibit 9-3  A monopolistic competitive firm in the long run   If all firms in a monopolistic competitive industry have demand and cost curves like those shown in Exhibit 9-3, we would expect that in the long run:

Accepted Answer

A)  a number of new firms will enter the industry. 
B)  some firms will leave the industry. 
C)  firms in the industry earn zero economic profits. 
D)  all firms will leave the industry. 
A)  a number of new firms will enter the industry. 
B)  some firms will leave the industry. 
C)  firms in the industry earn zero economic profits. 
D)  all firms will leave the industry.

Question 19

Cartel pricing refers to the output and price choice of a cartel. This choice most closely resembles that of a:

Accepted Answer

A)  b or d 
B)  godfather oligopoly. 
C)  duopoly. 
D)  monopoly. 
E)  more competitive industry. 
A)  b or d 
B)  godfather oligopoly. 
C)  duopoly. 
D)  monopoly. 
E)  more competitive industry.

Question 20

Which of the following is true for a firm operating under perfect competition, monopolistic competition, and monopoly?

Accepted Answer

A)  Firms earn positive economic profits in the long run. 
B)  Firms earn zero economic profits in the long run. 
C)  Profits are maximized when marginal cost equals marginal revenue. 
D)  Price equals marginal cost. 
A)  Firms earn positive economic profits in the long run. 
B)  Firms earn zero economic profits in the long run. 
C)  Profits are maximized when marginal cost equals marginal revenue. 
D)  Price equals marginal cost.

Exam 9: Monopolistic Competition and Oligopoly

Which of the following represents an example of a major cartel in global markets? ​

Cartels are legal in the United States.

​ Which of the following is true about the demand curve for a monopolistically competitive firm?

In the long run, both monopolistic competition and perfect competition result in;

Which of the following statements is always true with respect to oligopolists?

Exhibit 9-6 Two-Firm Payoff Matrix Suppose costs are identical for the two firms in Exhibit 9-6. If both firms assume the other will compete and charge a lower price, equilibrium will be established by:

In order from the most to the least competitive market structure is the perfectly competitive, monopolistically competitive, monopolist and then the oligopolistic market structure.

In monopolistic competition if there is profit, there is:

Which of the following is a characteristic of an oligopoly?

In a monopolistic competitive industry, short-run economic profit encourages entry of new firms until there are no economic profits in the long-run.

A monopolistically competitive market is characterized by:

Exhibit 9-2 A monopolistic competitive firm If all firms in a monopolistic competitive industry have demand and cost curves like those shown in Exhibit 9-2, we would expect that in the long run:

Which of the following is always a characteristic of the oligopoly market structure? ​

Exhibit 9-6 Two-Firm Payoff Matrix Assume costs are identical for the two firms in Exhibit 9-6. If both firms were allowed to form a cartel and agree on their prices, equilibrium would be established by:

An organization of sellers designed to coordinate their supply decisions to maximize joint profits is called a:

Critics of advertising argue that it:

If a monopolistically competitive firm can earn a profit, it will increase production until:

Exhibit 9-3 A monopolistic competitive firm in the long run If all firms in a monopolistic competitive industry have demand and cost curves like those shown in Exhibit 9-3, we would expect that in the long run:

Cartel pricing refers to the output and price choice of a cartel. This choice most closely resembles that of a:

Which of the following is true for a firm operating under perfect competition, monopolistic competition, and monopoly?

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters

Which of the following represents an example of a major cartel in global markets?

Which of the following is true about the demand curve for a monopolistically competitive firm?

Which of the following is always a characteristic of the oligopoly market structure?