Exam 14: Oligopoly and Monopolistic Competition

OnWheels and Speedstar are the only two manufacturers of sports cars.The cars manufactured by these companies are considered to be close substitutes,but not identical.How should each firm determine its price in this case?

An industry is composed of four firms: Firms A,B,C,and D.Firm D is twice as large as C.Firm C is twice as large as B.Firm B is twice as large as A.This industry is likely to have a Herfindahl-Hirschman Index of ________.

A monopolistic competitor exits the industry in the long run if ________.

Which of the following is true?

Scenario: There are several pen manufacturers in Corinthia. However, the pens sold by each manufacturer have a unique design. -Refer to the scenario above.How will the demand for pens faced by the existing pen manufacturers in Corinthia be affected if new firms enter the industry in the long run?

The formula used for calculating the total profit of a monopolistic competitor is ________.

The following figure shows the cost curves of firm that operates in a monopolistic competition market, as well as the demand (D) facing this firm and its marginal revenue (MR). -Refer to the figure above.In the long run,this firm's MR curve is likely to ________.

In the short run,a monopolistically competitive firm ________.

The residual demand curve facing a firm in a monopolistically competitive industry is ________.

A ________ is a plan by one firm to price a good at marginal cost forever if the other cheats on an agreement.

Which of the following applies to both perfect competition and oligopoly without product differentiation?

Consider the following table.Which option correctly fills the blanks in the table?

The following figure depicts one among ten identical firms in a monopolistically competitive market.Let the social surplus be valued in dollars.For the government,the benefit of regulating a market is the value of the total social surplus gained from regulation.It costs the government $100 to force all firms to produce at the socially optimal quantity of output. a)What is the gain to the government of implementing such a regulation? b)Should the government implement such a regulation?

The IT industry in Argonesia has a Herfindahl-Hirschman Index of 1,320.This implies that the IT industry in Argonesia is ________.

Scenario: The market demand for soccer balls in a small town is 2,500 units, and there are two rival sports brands selling soccer balls in this town, Sporty and Go! The products of the two brands are identical. -Refer to the scenario above.If ________,the demand for Go!'s soccer balls will be 2,500 units.

The difference between an oligopoly with differentiated products and a monopolistic competition is ________.

The cost of producing a tube of tooth paste is $0.05.If the market for tooth paste is monopolistically competitive,a manufacturer who charges $0.05 for each bottle will ________.

There are about 2,000 nail salons in New York City.Most salons are small businesses and offer a wide array of services.Based on this information,which of the following best describes the structure of this market in New York City?

If new firms enter a monopolistically competitive market structure in the long run,________.

La Dila and Swiss Pro are the only two firms in an industry.The firms charge equal prices for their products,which are perfect substitutes.La Dila decides to lower its price slightly.Swiss Pro responds by cutting its price further.This price cutting will continue as long as each firm's ________.