Question 1

Relatively low barriers to entry and modest economies of scale help explain why markets are oligopolistic.

Accepted Answer

A) True 
 B)False

Question 2

The merger of Boeing and McDonnell Douglas in the commercial jetliner industry is an example of a(n)

Accepted Answer

A)  vertical merger 
B)  horizontal merger 
C)  conglomerate merger 
D)  integrative merger 
A)  vertical merger 
B)  horizontal merger 
C)  conglomerate merger 
D)  integrative merger

Question 3

Figure 6.1 Demand and Cost Conditions for a Monopolistically Competitive Firm
  
-Refer to Figure 6.1. What price should this monopolistic competitive firm charge in order to maximize profits?

Accepted Answer

A)  $10 
B)  $7 
C)  $5 
D)  $3 
A)  $10 
B)  $7 
C)  $5 
D)  $3

Question 4

Product differentiation is a fundamental characteristic of perfect competition.

Accepted Answer

A) True 
 B)False

Question 5

Sam Walton, the founder of Wal-Mart, earned his undergraduate degree in economics.

Accepted Answer

A) True 
 B)False

Question 6

Table 6.1 Hypothetical Profit Matrix for Boeing and Airbus
 (millions of dollars in profits for high-price and low-price strategies)
$\begin{array}{llcc}
&&& \text { Boeing  }&\
  \text {  } &   \text {  } &   \text {High price  } &   \text {} &\text { Low price }   \
 \text {  } &  \text { High price } &   \text { Airbus $ =\$ 500 $  } &   \text {  } &\text {Airbus $ =\$ 650 $  }  \
 \text {Airbus  } &  \text {  } &   \text {  Boeing $ =\$ 500 $ } &   \text {  } &\text { Boeing $ =\$ 400 $ }  \
 \text {  } &  \text {  } &   \text {  } &   \text {  } & \text {  } \
 \text {  } &  \text {Low price  } &   \text { Airbus $ =\$ 400 $ } &   \text {  } & \text {  Airbus $ =\$ 350 $} \ 
 \text {  } &  \text {  } &   \text { Boeing $ =\$ 650 $ } &   \text {  } &\text { Boeing $ =\$ 350 $ }  \
\end{array}$

-Refer to Table 6.1. If Boeing and Airbus behave competitively, the most likely profit is

Accepted Answer

A)  $500 million for Boeing and $500 million for Airbus 
B)  $400 million for Boeing and $650 million for Airbus 
C)  $650 million for Boeing and $400 million for Airbus 
D)  $350 million for Boeing and $350 million for Airbus 
A)  $500 million for Boeing and $500 million for Airbus 
B)  $400 million for Boeing and $650 million for Airbus 
C)  $650 million for Boeing and $400 million for Airbus 
D)  $350 million for Boeing and $350 million for Airbus

Question 7

When a firm engages in a new, successful advertising campaign, it will find that its demand curve will _________, and its short-run average cost curve will _______________.

Accepted Answer

A)  become more inelastic; shift down 
B)  become more inelastic; shift up 
C)  stay the same; shift up 
D)  shift downward; shift down 
A)  become more inelastic; shift down 
B)  become more inelastic; shift up 
C)  stay the same; shift up 
D)  shift downward; shift down

Question 8

Which of the following is not a characteristic of monopolistically competitive markets?

Accepted Answer

A)  only normal profits in the long run 
B)  price-taking firms 
C)  excess productive capacity in the long run 
D)  many firms of relatively small size 
A)  only normal profits in the long run 
B)  price-taking firms 
C)  excess productive capacity in the long run 
D)  many firms of relatively small size

Question 9

Which of the following is not a necessary condition for price discrimination?

Accepted Answer

A)  The seller can prevent re-sale of products. 
B)  The market can be subdivided into groups with different sensitivities to price. 
C)  The seller has different costs of supplying the product to different customers. 
D)  The seller can control the price of the product. 
A)  The seller can prevent re-sale of products. 
B)  The market can be subdivided into groups with different sensitivities to price. 
C)  The seller has different costs of supplying the product to different customers. 
D)  The seller can control the price of the product.

Question 10

Which of the following is not a characteristic of oligopoly?

Accepted Answer

A)  profit maximization according to the MR = MC rule 
B)  sizable barriers to entry 
C)  firm's horizontal demand curve 
D)  firms being price makers rather than price takers 
A)  profit maximization according to the MR = MC rule 
B)  sizable barriers to entry 
C)  firm's horizontal demand curve 
D)  firms being price makers rather than price takers

Relatively low barriers to entry and modest economies of scale help explain why markets are oligopolistic.

The merger of Boeing and McDonnell Douglas in the commercial jetliner industry is an example of a(n)

Figure 6.1 Demand and Cost Conditions for a Monopolistically Competitive Firm -Refer to Figure 6.1. What price should this monopolistic competitive firm charge in order to maximize profits?

Product differentiation is a fundamental characteristic of perfect competition.

Sam Walton, the founder of Wal-Mart, earned his undergraduate degree in economics.

When a firm engages in a new, successful advertising campaign, it will find that its demand curve will _, and its short-run average cost curve will _______.

Which of the following is not a characteristic of monopolistically competitive markets?

Which of the following is not a necessary condition for price discrimination?

Which of the following is not a characteristic of oligopoly?

Scarcity and Choice

Market Transactions: Demand and Supply Analysis

Demand and Supply Applications

Production and the Costs of Production

Competition and Monopoly: Virtues and Vices

Labor Markets

Government and Markets

The Mixed Economy of the United States

Gross Domestic Product and Economic Growth

The Business Cycle, Unemployment, and Inflation

Macroeconomic Instability: Aggregate Demand and Aggregate Supply

Fiscal Policy and the Federal Budget

Money and the Banking System

The Federal Reserve and Monetary Policy

The United States and the Global Economy

International Finance

Economic Systems and Developing Countries

Filters

Exam 6: Imperfect Competition

Relatively low barriers to entry and modest economies of scale help explain why markets are oligopolistic.

The merger of Boeing and McDonnell Douglas in the commercial jetliner industry is an example of a(n)

Figure 6.1 Demand and Cost Conditions for a Monopolistically Competitive Firm -Refer to Figure 6.1. What price should this monopolistic competitive firm charge in order to maximize profits?

Product differentiation is a fundamental characteristic of perfect competition.

Sam Walton, the founder of Wal-Mart, earned his undergraduate degree in economics.

When a firm engages in a new, successful advertising campaign, it will find that its demand curve will _________, and its short-run average cost curve will _______________.

Which of the following is not a characteristic of monopolistically competitive markets?

Which of the following is not a necessary condition for price discrimination?

Which of the following is not a characteristic of oligopoly?

Scarcity and Choice

Market Transactions: Demand and Supply Analysis

Demand and Supply Applications

Production and the Costs of Production

Competition and Monopoly: Virtues and Vices

Labor Markets

Government and Markets

The Mixed Economy of the United States

Gross Domestic Product and Economic Growth

The Business Cycle, Unemployment, and Inflation

Macroeconomic Instability: Aggregate Demand and Aggregate Supply

Fiscal Policy and the Federal Budget

Money and the Banking System

The Federal Reserve and Monetary Policy

The United States and the Global Economy

International Finance

Economic Systems and Developing Countries

Filters

When a firm engages in a new, successful advertising campaign, it will find that its demand curve will _, and its short-run average cost curve will _______.