Question 1

An oligopoly market structure prevails in an industry in which there are

Accepted Answer

A)  no barriers to entry. 
B) demand curves that slope upward to the right. 
C) few firms. 
D) conditions that keep individual firms' sales low relative to the market. 
E) no short- or long-run profits. 
A)  no barriers to entry. 
B) demand curves that slope upward to the right. 
C) few firms. 
D) conditions that keep individual firms' sales low relative to the market. 
E) no short- or long-run profits.

Question 2

Which of the following describes oligopolistic interdependence?

Accepted Answer

A)  Each oligopolist makes price and output policies with their effect on other firms in mind. 
B)  There are important external diseconomies in an oligopolistic market. 
C)  No firm can change the price determined in the marketplace, except through advertising. 
D)  There is no likelihood of collusion among producers. 
E)  Within each product group, each oligopolist's product is identical. 
A)  Each oligopolist makes price and output policies with their effect on other firms in mind. 
B)  There are important external diseconomies in an oligopolistic market. 
C)  No firm can change the price determined in the marketplace, except through advertising. 
D)  There is no likelihood of collusion among producers. 
E)  Within each product group, each oligopolist's product is identical.

Question 3

The ________ Act was designed to prevent undesirable and unfair competitive practices and was later used to outlaw deceptive advertising.

Accepted Answer

A)  Sherman 
B)  Federal Trade Commission 
C)  Clayton 
D)  Webb-Pomerene 
E)  Celler-Kefauver 
A)  Sherman 
B)  Federal Trade Commission 
C)  Clayton 
D)  Webb-Pomerene 
E)  Celler-Kefauver

Question 4

The following question are based on the following diagram for a monopolistically competitive firm:
  
-The long-run equilibrium price charged by the monopolistic competitor

Accepted Answer

A)  tends to equal marginal cost. 
B)  tends toward average cost. 
C)  is the same for all variants of a product within a product group. 
D)  is generally lower than the perfectly competitive price. 
E)  is expected to be higher than that of the monopolist. 
A)  tends to equal marginal cost. 
B)  tends toward average cost. 
C)  is the same for all variants of a product within a product group. 
D)  is generally lower than the perfectly competitive price. 
E)  is expected to be higher than that of the monopolist.

Question 5

Monopolistic competition and oligopoly are similar in that firms in both markets

Accepted Answer

A)  face horizontal demand curves. 
B)  do not earn profits in the long run. 
C)  tend to charge higher prices than under perfect competition. 
D)  find that advertising and other types of selling expenses are unnecessary. 
E)  produce homogeneous products. 
A)  face horizontal demand curves. 
B)  do not earn profits in the long run. 
C)  tend to charge higher prices than under perfect competition. 
D)  find that advertising and other types of selling expenses are unnecessary. 
E)  produce homogeneous products.

Question 6

What will the price be if five firms that are the only producers of a product form a cartel and charge a uniform price,if marginal costs are constant at $36 and the demand for the product is as follows? (Hint: MR = 100 - 4Q.)

Accepted Answer

A)  $70 
B)  $68 
C)  $66 
D)  $64 
E)  $62 
A)  $70 
B)  $68 
C)  $66 
D)  $64 
E)  $62

Question 7

An oligopolistic market is one with

Accepted Answer

A)  firms having no power over price. 
B)  few sellers. 
C)  few buyers. 
D)  several monopolists operating simultaneously. 
E)  product groups. 
A)  firms having no power over price. 
B)  few sellers. 
C)  few buyers. 
D)  several monopolists operating simultaneously. 
E)  product groups.

Question 8

The possible outcomes of a two-firm nonrepeated promotional campaign are summarized as follows:
  
-According to the information given,it would be best for firm B to

Accepted Answer

A)  concentrate on local radio spots regardless of the promotional campaign chosen by firm A. 
B)  concentrate on mailbox flyers regardless of the promotion campaign chosen by firm A. 
C)  match A's strategy; that is, if A chooses radio advertising, B should do the same. 
D)  choose the opposite strategy from firm A; that is, if A chooses radio, B should choose mailbox flyers. 
E)  allocate one-half of its promotional budget to local radio advertising and one-half to mailbox flyers. 
A)  concentrate on local radio spots regardless of the promotional campaign chosen by firm A. 
B)  concentrate on mailbox flyers regardless of the promotion campaign chosen by firm A. 
C)  match A's strategy; that is, if A chooses radio advertising, B should do the same. 
D)  choose the opposite strategy from firm A; that is, if A chooses radio, B should choose mailbox flyers. 
E)  allocate one-half of its promotional budget to local radio advertising and one-half to mailbox flyers.

Question 9

At the national level,the brewing industry can be considered to best reflect the characteristics of which market structure?

Accepted Answer

A)  monopoly 
B)  pure oligopoly 
C)  perfect competition 
D)  differentiated oligopoly 
E)  a cartel 
A)  monopoly 
B)  pure oligopoly 
C)  perfect competition 
D)  differentiated oligopoly 
E)  a cartel

Question 10

Product differentiation often gives a producer only a small amount of monopoly power because

Accepted Answer

A)  there can be little or no substitution between product groups. 
B)  the monopolistic competitor faces a downward-sloping demand curve. 
C)  the presence of excess capacity gives the producer some freedom to vary output. 
D)  the product may be unique, but close substitutes are available. 
E)  the industry is difficult to define and hence cannot be regulated. 
A)  there can be little or no substitution between product groups. 
B)  the monopolistic competitor faces a downward-sloping demand curve. 
C)  the presence of excess capacity gives the producer some freedom to vary output. 
D)  the product may be unique, but close substitutes are available. 
E)  the industry is difficult to define and hence cannot be regulated.

Question 11

A cartel is

Accepted Answer

A)  a formal collusive arrangement among firms. 
B)  found most of the time in monopolistic competition. 
C)  usually exempt from antitrust laws in the United States. 
D)  easier to maintain as the number of firms involved increases. 
E)  unlikely to occur in international markets. 
A)  a formal collusive arrangement among firms. 
B)  found most of the time in monopolistic competition. 
C)  usually exempt from antitrust laws in the United States. 
D)  easier to maintain as the number of firms involved increases. 
E)  unlikely to occur in international markets.

Question 12

From the firm's point of view,the greatest advantage in collusion is

Accepted Answer

A)  access to shared technology. 
B)  cheaper production costs. 
C)  higher-quality products. 
D)  a bigger market. 
E)  security. 
A)  access to shared technology. 
B)  cheaper production costs. 
C)  higher-quality products. 
D)  a bigger market. 
E)  security.

Question 13

The promotion of increased competition among U.S.businesses is the major reason for the existence of ________ laws.

Accepted Answer

A)  capital gains tax 
B)  immigration 
C)  tariff 
D)  patent 
E)  antitrust 
A)  capital gains tax 
B)  immigration 
C)  tariff 
D)  patent 
E)  antitrust

Question 14

The possible outcomes of a two-firm nonrepeated promotional campaign are summarized as follows:
  
-According to the information given

Accepted Answer

A)  firm A's dominant strategy is local radio spots. 
B)  firm A's dominant strategy is mailbox flyers. 
C)  firm B's dominant strategy is local radio spots. 
D)  firm B's dominant strategy is mailbox flyers. 
E)  neither firm has a dominant strategy. 
A)  firm A's dominant strategy is local radio spots. 
B)  firm A's dominant strategy is mailbox flyers. 
C)  firm B's dominant strategy is local radio spots. 
D)  firm B's dominant strategy is mailbox flyers. 
E)  neither firm has a dominant strategy.

Question 15

A competitive situation where two or more persons pursue their own interests and no person can dictate the outcome is called a(n)

Accepted Answer

A)  payoff. 
B)  externality. 
C)  contingency. 
D)  frolic. 
E)  game. 
A)  payoff. 
B)  externality. 
C)  contingency. 
D)  frolic. 
E)  game.

Question 16

The basic distinction between perfect competition and monopolistic competition is that

Accepted Answer

A)  in perfect competition there are many sellers; in monopolistic competition, there are few. 
B)  entry into a market is easy for a new seller in perfect competition, while it is difficult in monopolistic competition. 
C)  firms in perfect competition must advertise to sell their products, but since they have a monopoly, monopolistically competitive firms do not. 
D)  perfectly competitive firms produce an identical product; monopolistically competitive firms produce similar products. 
E)  a perfectly competitive firm produces with an excess capacity in the long run; a monopolistically competitive firm does not. 
A)  in perfect competition there are many sellers; in monopolistic competition, there are few. 
B)  entry into a market is easy for a new seller in perfect competition, while it is difficult in monopolistic competition. 
C)  firms in perfect competition must advertise to sell their products, but since they have a monopoly, monopolistically competitive firms do not. 
D)  perfectly competitive firms produce an identical product; monopolistically competitive firms produce similar products. 
E)  a perfectly competitive firm produces with an excess capacity in the long run; a monopolistically competitive firm does not.

Question 17

U.S.antitrust laws and their enforcement

Accepted Answer

A)  reflect the principle that free markets cannot remain competitive. 
B)  have led to government price setting in many industries. 
C)  attempt to maintain the status quo. 
D)  have led to the elimination of market concentration in the United States. 
E)  affect business judgment when courses of action are being considered. 
A)  reflect the principle that free markets cannot remain competitive. 
B)  have led to government price setting in many industries. 
C)  attempt to maintain the status quo. 
D)  have led to the elimination of market concentration in the United States. 
E)  affect business judgment when courses of action are being considered.

Question 18

If firms' production functions are such as to achieve the lowest unit costs when each produces a substantial share of total market output,the industry is likely to exhibit the characteristics of

Accepted Answer

A)  perfect competition. 
B)  monopolistic competition. 
C)  monopsony. 
D)  oligopoly. 
E)  monopoly. 
A)  perfect competition. 
B)  monopolistic competition. 
C)  monopsony. 
D)  oligopoly. 
E)  monopoly.

Question 19

A monopolistically competitive firm may be more inefficient than a perfectly competitive one because

Accepted Answer

A)  it sets its price below marginal cost. 
B)  it produces a smaller than minimum unit-cost output in the long run. 
C)  there are no barriers to its entry or exit from the market. 
D)  it produces a unique product for which no substitutes exist. 
E)  it cannot earn profits. 
A)  it sets its price below marginal cost. 
B)  it produces a smaller than minimum unit-cost output in the long run. 
C)  there are no barriers to its entry or exit from the market. 
D)  it produces a unique product for which no substitutes exist. 
E)  it cannot earn profits.

Question 20

The two approaches to antitrust policy are market

Accepted Answer

A)  conduct and market structure. 
B)  size and market scope. 
C)  concentration and market disintegration. 
D)  power and market monopoly. 
E)  merger and market shares. 
A)  conduct and market structure. 
B)  size and market scope. 
C)  concentration and market disintegration. 
D)  power and market monopoly. 
E)  merger and market shares.

Exam 8: Monopolistic Competition,oligopoly,and Antitrust Policy

An oligopoly market structure prevails in an industry in which there are

Which of the following describes oligopolistic interdependence?

The ________ Act was designed to prevent undesirable and unfair competitive practices and was later used to outlaw deceptive advertising.

The following question are based on the following diagram for a monopolistically competitive firm: -The long-run equilibrium price charged by the monopolistic competitor

Monopolistic competition and oligopoly are similar in that firms in both markets

What will the price be if five firms that are the only producers of a product form a cartel and charge a uniform price,if marginal costs are constant at $36 and the demand for the product is as follows? (Hint: MR = 100 - 4Q.)

An oligopolistic market is one with

The possible outcomes of a two-firm nonrepeated promotional campaign are summarized as follows: -According to the information given,it would be best for firm B to

At the national level,the brewing industry can be considered to best reflect the characteristics of which market structure?

Product differentiation often gives a producer only a small amount of monopoly power because

A cartel is

From the firm's point of view,the greatest advantage in collusion is

The promotion of increased competition among U.S.businesses is the major reason for the existence of ________ laws.

The possible outcomes of a two-firm nonrepeated promotional campaign are summarized as follows: -According to the information given

A competitive situation where two or more persons pursue their own interests and no person can dictate the outcome is called a(n)

The basic distinction between perfect competition and monopolistic competition is that

U.S.antitrust laws and their enforcement

If firms' production functions are such as to achieve the lowest unit costs when each produces a substantial share of total market output,the industry is likely to exhibit the characteristics of

A monopolistically competitive firm may be more inefficient than a perfectly competitive one because

The two approaches to antitrust policy are market

What is Economics

Markets and Prices

The Business Firm: Organization,motivation,and Optimal Input Decisions

Getting Behind the Demand and Supply Curves

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

National Income and Product

Business Fluctuations and Unemployment

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Monetary Policy,interest Rates,and Economic Activity

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

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