Question 1

The market for apples is an example of a(n)________.

Accepted Answer

A)  perfectly competitive market 
B)  monopolistically competitive market 
C)  monopoly 
D)  oligopoly 
A)  perfectly competitive market 
B)  monopolistically competitive market 
C)  monopoly 
D)  oligopoly

Question 2

Which of the following happens when new firms enter a monopolistically competitive market structure?

Accepted Answer

A)  The existing firms face higher demand. 
B)  The existing firms face relatively inelastic demand curves. 
C)  The existing firms earn higher profits. 
D)  The existing firms earn lower profits. 
A)  The existing firms face higher demand. 
B)  The existing firms face relatively inelastic demand curves. 
C)  The existing firms earn higher profits. 
D)  The existing firms earn lower profits.

Question 3

Why do firms enter into a collusive agreement?

Accepted Answer

A)  To increase profits 
B)  To reduce prices 
C)  To reduce market concentration 
D)  To increase market supply 
A)  To increase profits 
B)  To reduce prices 
C)  To reduce market concentration 
D)  To increase market supply

Question 4

The following figure depicts four different market situations.
  
-Refer to the figure above.Which of the four market situations does not depict a monopolistically competitive firm?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 5

Which of the following describes a feature of a monopolistically competitive market?

Accepted Answer

A)  Social surplus is maximized, and some products will be priced below the competitive level. 
B)  Social surplus is maximized but at prices possibly above the competitive level. 
C)  Social surplus is not maximized, but the prices will be lower than the competitive level. 
D)  Social surplus is not maximized, but product diversity may add to consumer welfare. 
A)  Social surplus is maximized, and some products will be priced below the competitive level. 
B)  Social surplus is maximized but at prices possibly above the competitive level. 
C)  Social surplus is not maximized, but the prices will be lower than the competitive level. 
D)  Social surplus is not maximized, but product diversity may add to consumer welfare.

Question 6

The firms in the petroleum industry of Perylia have decided to cooperate with each other by setting their respective market shares.This is an example of ________ in the petroleum industry.

Accepted Answer

A)  cost cutting 
B)  undercutting 
C)  collusion 
D)  free riding 
A)  cost cutting 
B)  undercutting 
C)  collusion 
D)  free riding

Question 7

The competition faced by firms in an oligopoly with differentiated products is higher than that faced by firms in ________.

Accepted Answer

A)  a duopoly with homogeneous products 
B)  perfect competition 
C)  monopolistic competition 
D)  a monopoly 
A)  a duopoly with homogeneous products 
B)  perfect competition 
C)  monopolistic competition 
D)  a monopoly

Question 8

The ________ the Herfindahl-Hirschman Index,the ________ is.

Accepted Answer

A)  lower; more concentrated an industry 
B)  higher; more concentrated an industry 
C)  higher; less concentrated an industry 
D)  lower; higher the profits earned in an industry 
A)  lower; more concentrated an industry 
B)  higher; more concentrated an industry 
C)  higher; less concentrated an industry 
D)  lower; higher the profits earned in an industry

Question 9

The following table shows the payoffs (profits) of the two firms in a duapoly industry who produce a nondifferentiated product. Each firm has two options: charge a high price of $70, or the minimum possible price of $50. The first number in the payoff cells is the profit of Firm A, and the second number is the profit of Firm B. Assume that both firms are after maximum profit.
  
-Refer to the table above.What is the equilibrium result in this duopoly market?

Accepted Answer

A)  Firm A charging $70, and Firm B charging $70 
B)  Firm A charging $70, and Firm B charging $50 
C)  Firm A charging $50, and Firm B charging $70 
D)  Firm A charging $50, and Firm B charging $50 
A)  Firm A charging $70, and Firm B charging $70 
B)  Firm A charging $70, and Firm B charging $50 
C)  Firm A charging $50, and Firm B charging $70 
D)  Firm A charging $50, and Firm B charging $50

Question 10

The table below summarizes the information possessed by a firm in a monopolistically competitive market. Quantity demanded is in thousands of units.
  
-Refer to the table above.This market is ________.

Accepted Answer

A)  in the long-run equilibrium, because the firm earns a maximum profit of zero 
B)  in the long-run equilibrium, because the marginal revenue equals the marginal cost at the optimal quantity for the firm 
C)  not in the long-run equilibrium, because the firm earns a maximum profit that is negative 
D)  not in the long-run equilibrium, because the marginal revenue and the marginal cost are not equal 
A)  in the long-run equilibrium, because the firm earns a maximum profit of zero 
B)  in the long-run equilibrium, because the marginal revenue equals the marginal cost at the optimal quantity for the firm 
C)  not in the long-run equilibrium, because the firm earns a maximum profit that is negative 
D)  not in the long-run equilibrium, because the marginal revenue and the marginal cost are not equal

Question 11

In an oligopoly with differentiated products,firms ________.

Accepted Answer

A)  earn positive economic profits 
B)  incur losses 
C)  earn zero economic profits 
D)  do not face competition from their rivals 
A)  earn positive economic profits 
B)  incur losses 
C)  earn zero economic profits 
D)  do not face competition from their rivals

Question 12

Scenario: Suppose there are only two firms in an industry, and their products are perfect substitutes for each other. Each firm had a fixed marginal cost of $5 and zero fixed cost of operation. The highest the consumers of this product are willing to pay for it is $10, and there are 200 consumers in this market.
-Refer to the scenario above.Suppose Firm 1 announces that it will charge $10 for its product.Then the optimal decision of Firm 2 will be to charge ________,and Firm 2 will then get ________ of the market share.

Accepted Answer

A)  $9.99; 100 percent 
B)  $10; 50 percent 
C)  $5; 100 percent 
D)  $5; 50 percent 
A)  $9.99; 100 percent 
B)  $10; 50 percent 
C)  $5; 100 percent 
D)  $5; 50 percent

Question 13

The long-run equilibrium for a perfectly competitive firm occurs at the minimum point of the ________.

Accepted Answer

A)  total fixed cost curve 
B)  average fixed cost curve 
C)  average total cost curve 
D)  marginal cost curve 
A)  total fixed cost curve 
B)  average fixed cost curve 
C)  average total cost curve 
D)  marginal cost curve

Question 14

The following table shows the total costs incurred by a firm to produce different levels of output. It also shows the price that consumers are willing to pay for each level of output.
  
-Refer to the table above.The firm ________ in the short run.

Accepted Answer

A)  earns a profit of $22 
B)  incurs a loss of $22 
C)  earns a profit of $76 
D)  incurs a loss of $76 
A)  earns a profit of $22 
B)  incurs a loss of $22 
C)  earns a profit of $76 
D)  incurs a loss of $76

Question 15

Which of the following is true?

Accepted Answer

A)  Firms in all four market structures earn zero economic profits in the long run. 
B)  Firms in perfectly competitive markets earn zero economic profits in the long run. 
C)  Firms in monopolistically competitive markets earn positive economic profits in the long run. 
D)  Firms in oligopoly markets earn equal profits in the long run. 
A)  Firms in all four market structures earn zero economic profits in the long run. 
B)  Firms in perfectly competitive markets earn zero economic profits in the long run. 
C)  Firms in monopolistically competitive markets earn positive economic profits in the long run. 
D)  Firms in oligopoly markets earn equal profits in the long run.

Question 16

A monopolistically competitive firm makes positive economic profits if ________.

Accepted Answer

A)  price is less than average total cost 
B)  price is higher than average total cost 
C)  price equals marginal cost 
D)  price equals average fixed cost 
A)  price is less than average total cost 
B)  price is higher than average total cost 
C)  price equals marginal cost 
D)  price equals average fixed cost

Question 17

Why does a monopolistic competitor earn zero economic profits in the long run?

Accepted Answer

If the existing firms in a monopolistica

Question 18

The following table shows the total costs incurred by a firm to produce different levels of output. It also shows the price that consumers are willing to pay for each level of output.
  
-Refer to the table above.If the firm is a monopolistic competitor,what is the equilibrium price charged by the firm?

Accepted Answer

A)  $77 
B)  $80 
C)  $65 
D)  $57 
A)  $77 
B)  $80 
C)  $65 
D)  $57

Question 19

New firms enter a monopolistically competitive market structure in the long run if the price charged by the existing firms in the short run ________.

Accepted Answer

A)  exceeds the average total cost of production 
B)  equals the average fixed cost of production 
C)  equals the average variable cost of production 
D)  equals the price charged in a perfectly competitive market 
A)  exceeds the average total cost of production 
B)  equals the average fixed cost of production 
C)  equals the average variable cost of production 
D)  equals the price charged in a perfectly competitive market

Question 20

What determines the success of a cartel?

Accepted Answer

Two important considerations d

The market for apples is an example of a(n)________.

Which of the following happens when new firms enter a monopolistically competitive market structure?

Why do firms enter into a collusive agreement?

The following figure depicts four different market situations. -Refer to the figure above.Which of the four market situations does not depict a monopolistically competitive firm?

Which of the following describes a feature of a monopolistically competitive market?

The firms in the petroleum industry of Perylia have decided to cooperate with each other by setting their respective market shares.This is an example of ________ in the petroleum industry.

The competition faced by firms in an oligopoly with differentiated products is higher than that faced by firms in ________.

The the Herfindahl-Hirschman Index,the is.

The table below summarizes the information possessed by a firm in a monopolistically competitive market. Quantity demanded is in thousands of units. -Refer to the table above.This market is ________.

In an oligopoly with differentiated products,firms ________.

The long-run equilibrium for a perfectly competitive firm occurs at the minimum point of the ________.

The following table shows the total costs incurred by a firm to produce different levels of output. It also shows the price that consumers are willing to pay for each level of output. -Refer to the table above.The firm ________ in the short run.

Which of the following is true?

A monopolistically competitive firm makes positive economic profits if ________.

Why does a monopolistic competitor earn zero economic profits in the long run?

New firms enter a monopolistically competitive market structure in the long run if the price charged by the existing firms in the short run ________.

What determines the success of a cartel?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Consumers and Incentives

Sellers and Incentives

Perfect Competition and the Invisible Hand

Trade

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Monopoly

Game Theory and Strategic Play

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters

Exam 14: Oligopoly and Monopolistic Competition

The market for apples is an example of a(n)________.

Which of the following happens when new firms enter a monopolistically competitive market structure?

Why do firms enter into a collusive agreement?

The following figure depicts four different market situations. -Refer to the figure above.Which of the four market situations does not depict a monopolistically competitive firm?

Which of the following describes a feature of a monopolistically competitive market?

The firms in the petroleum industry of Perylia have decided to cooperate with each other by setting their respective market shares.This is an example of ________ in the petroleum industry.

The competition faced by firms in an oligopoly with differentiated products is higher than that faced by firms in ________.

The ________ the Herfindahl-Hirschman Index,the ________ is.

The table below summarizes the information possessed by a firm in a monopolistically competitive market. Quantity demanded is in thousands of units. -Refer to the table above.This market is ________.

In an oligopoly with differentiated products,firms ________.

The long-run equilibrium for a perfectly competitive firm occurs at the minimum point of the ________.

The following table shows the total costs incurred by a firm to produce different levels of output. It also shows the price that consumers are willing to pay for each level of output. -Refer to the table above.The firm ________ in the short run.

Which of the following is true?

A monopolistically competitive firm makes positive economic profits if ________.

Why does a monopolistic competitor earn zero economic profits in the long run?

New firms enter a monopolistically competitive market structure in the long run if the price charged by the existing firms in the short run ________.

What determines the success of a cartel?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Consumers and Incentives

Sellers and Incentives

Perfect Competition and the Invisible Hand

Trade

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Monopoly

Game Theory and Strategic Play

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters

The the Herfindahl-Hirschman Index,the is.