Question 1

In the long run in monopolistic competition:

Accepted Answer

A) economic profits are zero. 
B) P = MC. 
C) P = minimum ATC. 
D) firms have an incentive to leave. 
E) the demand curve is tangent to the MC curve. 
A) economic profits are zero. 
B) P = MC. 
C) P = minimum ATC. 
D) firms have an incentive to leave. 
E) the demand curve is tangent to the MC curve.

Question 2

Supporters of advertising claim that it:

Accepted Answer

A) increases price to benefit fewer customers. 
B) leads to resource misallocation. 
C) does not allow new firms to compete. 
D) informs consumers about the products and their advantages. 
A) increases price to benefit fewer customers. 
B) leads to resource misallocation. 
C) does not allow new firms to compete. 
D) informs consumers about the products and their advantages.

Question 3

Which of the following market structures describes an industry in which a group of firms formally agree to control prices and output of a product?

Accepted Answer

A) Perfect competition. 
B) Monopoly. 
C) Oligopoly. 
D) Cartel. 
E) Monopolistic competition. 
A) Perfect competition. 
B) Monopoly. 
C) Oligopoly. 
D) Cartel. 
E) Monopolistic competition.

Question 4

A monopolistically competitive firm,although inefficient,still operates where price equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 5

The strategic analysis firms undertake is often seen in perfect competition.

Accepted Answer

A) True 
 B)False

Question 6

What does 'a few sellers' in oligopoly market structure mean?

Accepted Answer

A) It means that 1-2 firms are in the market. 
B) It means that less than 10 firms are in the market. 
C) It means that 2-3 firms are in the market. 
D) It means that the concentration ratio is high. 
A) It means that 1-2 firms are in the market. 
B) It means that less than 10 firms are in the market. 
C) It means that 2-3 firms are in the market. 
D) It means that the concentration ratio is high.

Question 7

Which of the following is true in long-run equilibrium for both perfect competition and monopolistic competition?

Accepted Answer

A) Accounting profit is zero. 
B) Marginal cost equals price. 
C) Long-run average cost is at a minimum. 
D) Economic profit is zero. 
E) Economic profit is negative. 
A) Accounting profit is zero. 
B) Marginal cost equals price. 
C) Long-run average cost is at a minimum. 
D) Economic profit is zero. 
E) Economic profit is negative.

Question 8

In a price leadership oligopoly model:

Accepted Answer

A) a cartel of leading firms determines price and industry output. 
B) the industry, in consortium with the government, determines price and output. 
C) one firm is the price leader and all other firms follow. 
D) the firms abandon a profit-maximising goal. 
E) firms do not operate where MR = MC. 
A) a cartel of leading firms determines price and industry output. 
B) the industry, in consortium with the government, determines price and output. 
C) one firm is the price leader and all other firms follow. 
D) the firms abandon a profit-maximising goal. 
E) firms do not operate where MR = MC.

Question 9

Monopolistic competition is characterised by:

Accepted Answer

A) few sellers, differentiated products and ease of entry and exit. 
B) many sellers, differentiated products and difficult entry. 
C) one seller, unique product and extremely difficult entry. 
D) many sellers, differentiated products and easy entry. 
A) few sellers, differentiated products and ease of entry and exit. 
B) many sellers, differentiated products and difficult entry. 
C) one seller, unique product and extremely difficult entry. 
D) many sellers, differentiated products and easy entry.

Question 10

Supporters of advertising claim that it:

Accepted Answer

A) promotes the public interest. 
B) is a barrier to entry. 
C) allows small firms to compete. 
D) misleads consumers. 
A) promotes the public interest. 
B) is a barrier to entry. 
C) allows small firms to compete. 
D) misleads consumers.

Question 11

A firm in a monopolistically competitive industry can:

Accepted Answer

A) raise price and lose all customers. 
B) raise price and sell more units of a product. 
C) lower price and sell the same quantity of a product. 
D) lower price and sell more units of a product. 
A) raise price and lose all customers. 
B) raise price and sell more units of a product. 
C) lower price and sell the same quantity of a product. 
D) lower price and sell more units of a product.

Question 12

Exhibit 9-1 A monopolistic competitive firm
  
-As presented in Exhibit 9-l,the short-run profit per unit of output for the monopolistically competitive firm is:

Accepted Answer

A) zero. 
B) $5. 
C) $10. 
D) $15. 
E) $20. 
A) zero. 
B) $5. 
C) $10. 
D) $15. 
E) $20.

Question 13

Which of the following statements best describes firms under monopolistic competition?

Accepted Answer

A) Profits will be positive in the long run. 
B) Price always equals average variable cost. 
C) In the long run, positive economic profit will be eliminated. 
D) Marginal revenue equals minimum average total cost in the short run. 
A) Profits will be positive in the long run. 
B) Price always equals average variable cost. 
C) In the long run, positive economic profit will be eliminated. 
D) Marginal revenue equals minimum average total cost in the short run.

Question 14

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.

Question 15

A high-concentration ratio indicates the market structure is likely to be:

Accepted Answer

A) monopolistically competitive. 
B) perfectly competitive. 
C) monopolistic. 
D) oligopolistic. 
A) monopolistically competitive. 
B) perfectly competitive. 
C) monopolistic. 
D) oligopolistic.

Question 16

A cartel maximises industry profit by:

Accepted Answer

A) eliminating quotas. 
B) producing at the kink in its demand curve. 
C) producing where MR = MC. 
D) giving secret price concessions. 
E) producing more output than a monopoly would. 
A) eliminating quotas. 
B) producing at the kink in its demand curve. 
C) producing where MR = MC. 
D) giving secret price concessions. 
E) producing more output than a monopoly would.

Question 17

The various strategies a firm can follow in an oligopolistic industry can be expressed in terms of:

Accepted Answer

A) the concentration ratio. 
B) the pay-off matrix. 
C) a cartel. 
D) independence. 
A) the concentration ratio. 
B) the pay-off matrix. 
C) a cartel. 
D) independence.

Question 18

Which of the following statements best describes the price,output and profit conditions of monopolistic competition?

Accepted Answer

A) Price will equal marginal cost at the profit-maximising level of output; and profits will be positive in the long run. 
B) Price will always equal average variable cost in the short run and either profits or losses may result in the long run. 
C) Marginal revenue will equal marginal cost in the short run, profit-maximising level of output; and in the long run, economic profit will be zero. 
D) Marginal revenue will equal average total cost in the short run; and long-run economic profits will be zero. 
A) Price will equal marginal cost at the profit-maximising level of output; and profits will be positive in the long run. 
B) Price will always equal average variable cost in the short run and either profits or losses may result in the long run. 
C) Marginal revenue will equal marginal cost in the short run, profit-maximising level of output; and in the long run, economic profit will be zero. 
D) Marginal revenue will equal average total cost in the short run; and long-run economic profits will be zero.

Question 19

For an oligopolistic market,the most common barrier to entry is often:

Accepted Answer

A) the fact that there are no close substitutes. 
B) patents. 
C) ownership of a vital resource. 
D) economies of scale. 
A) the fact that there are no close substitutes. 
B) patents. 
C) ownership of a vital resource. 
D) economies of scale.

Question 20

The monopolistically competitive firm maximizes short-run profit by following which of the following rules?

Accepted Answer

A) MC = Demand. 
B) MC = P. 
C) MC = MR. 
D) MC > MR. 
A) MC = Demand. 
B) MC = P. 
C) MC = MR. 
D) MC > MR.

In the long run in monopolistic competition:

Supporters of advertising claim that it:

Which of the following market structures describes an industry in which a group of firms formally agree to control prices and output of a product?

A monopolistically competitive firm,although inefficient,still operates where price equals marginal cost.

The strategic analysis firms undertake is often seen in perfect competition.

What does 'a few sellers' in oligopoly market structure mean?

Which of the following is true in long-run equilibrium for both perfect competition and monopolistic competition?

In a price leadership oligopoly model:

Monopolistic competition is characterised by:

Supporters of advertising claim that it:

A firm in a monopolistically competitive industry can:

Exhibit 9-1 A monopolistic competitive firm -As presented in Exhibit 9-l,the short-run profit per unit of output for the monopolistically competitive firm is:

Which of the following statements best describes firms under monopolistic competition?

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

A high-concentration ratio indicates the market structure is likely to be:

A cartel maximises industry profit by:

The various strategies a firm can follow in an oligopolistic industry can be expressed in terms of:

Which of the following statements best describes the price,output and profit conditions of monopolistic competition?

For an oligopolistic market,the most common barrier to entry is often:

The monopolistically competitive firm maximizes short-run profit by following which of the following rules?

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters

Exam 9: Monopolistic competition and oligopoly

In the long run in monopolistic competition:

Supporters of advertising claim that it:

Which of the following market structures describes an industry in which a group of firms formally agree to control prices and output of a product?

A monopolistically competitive firm,although inefficient,still operates where price equals marginal cost.

The strategic analysis firms undertake is often seen in perfect competition.

What does 'a few sellers' in oligopoly market structure mean?

Which of the following is true in long-run equilibrium for both perfect competition and monopolistic competition?

In a price leadership oligopoly model:

Monopolistic competition is characterised by:

Supporters of advertising claim that it:

A firm in a monopolistically competitive industry can:

Exhibit 9-1 A monopolistic competitive firm -As presented in Exhibit 9-l,the short-run profit per unit of output for the monopolistically competitive firm is:

Which of the following statements best describes firms under monopolistic competition?

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

A high-concentration ratio indicates the market structure is likely to be:

A cartel maximises industry profit by:

The various strategies a firm can follow in an oligopolistic industry can be expressed in terms of:

Which of the following statements best describes the price,output and profit conditions of monopolistic competition?

For an oligopolistic market,the most common barrier to entry is often:

The monopolistically competitive firm maximizes short-run profit by following which of the following rules?

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters