Question 1

If a firm launches a successful advertising campaign,then its

Accepted Answer

A) ATC curve shifts upward with a smaller rise at larger output levels 
B) ATC curve shifts upward with a smaller rise at smaller output levels 
C) demand curve shifts to the left and becomes flatter 
D) demand curve shifts to the right and becomes flatter 
E) demand curve shifts to the left and becomes steeper 
A) ATC curve shifts upward with a smaller rise at larger output levels 
B) ATC curve shifts upward with a smaller rise at smaller output levels 
C) demand curve shifts to the left and becomes flatter 
D) demand curve shifts to the right and becomes flatter 
E) demand curve shifts to the left and becomes steeper

Question 2

Under price leadership

Accepted Answer

A) the leader must be the dominant firm in the industry 
B) all firms follow price changes initiated by the leader 
C) price cuts are followed by other firms in the industry,but price increases are not 
D) price increases are followed by other firms in the industry,but price cuts are not 
E) price wars often occur as a result of tit-for-tat strategies 
A) the leader must be the dominant firm in the industry 
B) all firms follow price changes initiated by the leader 
C) price cuts are followed by other firms in the industry,but price increases are not 
D) price increases are followed by other firms in the industry,but price cuts are not 
E) price wars often occur as a result of tit-for-tat strategies

Question 3

If a monopolistically competitive firm raises its price,

Accepted Answer

A) quantity demanded falls to zero 
B) quantity demanded declines,but not to zero 
C) the market supply curve shifts outward 
D) the market supply curve shifts inward 
E) quantity demanded remains constant 
A) quantity demanded falls to zero 
B) quantity demanded declines,but not to zero 
C) the market supply curve shifts outward 
D) the market supply curve shifts inward 
E) quantity demanded remains constant

Question 4

Cartels are more likely to succeed the larger the number of firms in an industry.

Accepted Answer

A) True 
 B)False

Question 5

Firms use advertising to

Accepted Answer

A) standardize their products 
B) differentiate their products 
C) decrease market prices 
D) reduce total cost 
E) avoid antitrust penalties 
A) standardize their products 
B) differentiate their products 
C) decrease market prices 
D) reduce total cost 
E) avoid antitrust penalties

Question 6

Excess capacity arises when firms cannot sell all of their output at the current market price.

Accepted Answer

A) True 
 B)False

Question 7

A Nash equilibrium

Accepted Answer

A) occurs when quantity demanded equals quantity supplied 
B) exists when each player in a game is taking its best action -- given the actions taken by the other players 
C) exists when each player in a game picks the collectively optimal strategy 
D) is a kind of equilibrium that exists only in an oligopoly 
E) is a kind of equilibrium that exists only in a duopoly 
A) occurs when quantity demanded equals quantity supplied 
B) exists when each player in a game is taking its best action -- given the actions taken by the other players 
C) exists when each player in a game picks the collectively optimal strategy 
D) is a kind of equilibrium that exists only in an oligopoly 
E) is a kind of equilibrium that exists only in a duopoly

Question 8

In monopolistic competition,nonprice competition

Accepted Answer

A) allows firms to earn above-normal profit in the long run 
B) initially causes a leftward shift in the demand curve for each firm's output 
C) causes each firm to move upward along a given average total cost curve 
D) might lead to economic profit in the short run 
E) causes each firm to move toward the right along the given demand curve for its output 
A) allows firms to earn above-normal profit in the long run 
B) initially causes a leftward shift in the demand curve for each firm's output 
C) causes each firm to move upward along a given average total cost curve 
D) might lead to economic profit in the short run 
E) causes each firm to move toward the right along the given demand curve for its output

Question 9

The demand curve facing a monopolistic competitor is

Accepted Answer

A) a horizontal line at the market price 
B) upward sloping 
C) perfectly elastic 
D) perfectly inelastic 
E) downward sloping 
A) a horizontal line at the market price 
B) upward sloping 
C) perfectly elastic 
D) perfectly inelastic 
E) downward sloping

Question 10

Which of the following is an example of a cartel?

Accepted Answer

A) AFL-CIO 
B) OPEC 
C) United Auto Workers Union 
D) NATO 
E) Organization of American States 
A) AFL-CIO 
B) OPEC 
C) United Auto Workers Union 
D) NATO 
E) Organization of American States

Question 11

-The monopolistically competitive firm shown in Figure 11-4

Accepted Answer

A) achieves a break-even outcome as its best alternative 
B) earns an economic profit in the long run 
C) suffers an economic loss in the long run 
D) shuts down since it suffers an economic loss 
E) produces at the minimum point of its LRATC curve 
A) achieves a break-even outcome as its best alternative 
B) earns an economic profit in the long run 
C) suffers an economic loss in the long run 
D) shuts down since it suffers an economic loss 
E) produces at the minimum point of its LRATC curve

Question 12

Game theory is based on the idea that

Accepted Answer

A) government determines the rules of the game 
B) firms are strategically independent 
C) firms are price takers 
D) a player's strategy must take account of the strategies followed by other players 
E) a player's strategy must be independent of the strategies followed by other players 
A) government determines the rules of the game 
B) firms are strategically independent 
C) firms are price takers 
D) a player's strategy must take account of the strategies followed by other players 
E) a player's strategy must be independent of the strategies followed by other players

Question 13

-Figure 11-13 shows the payoff matrix for the only two auto dealerships in a community,Jim's Autos and Tim's Autos.The matrix shows the profits that each firm would earn from choosing either a low price or a high price.In this example,

Accepted Answer

A) both firms would be best off if they charged a low price 
B) there is no equilibrium to the market 
C) both firms would be best off if they charged a high price 
D) both firms will go out of business in the long run 
E) the market is more efficient than a perfectly competitive market 
A) both firms would be best off if they charged a low price 
B) there is no equilibrium to the market 
C) both firms would be best off if they charged a high price 
D) both firms will go out of business in the long run 
E) the market is more efficient than a perfectly competitive market

Question 14

In the short run,a monopolistically competitive firm

Accepted Answer

A) must earn zero economic profit 
B) may earn positive or negative economic profits 
C) will produce output up at the point where TR = TC 
D) will be protected from competition by barriers to entry 
E) will equate price and marginal cost 
A) must earn zero economic profit 
B) may earn positive or negative economic profits 
C) will produce output up at the point where TR = TC 
D) will be protected from competition by barriers to entry 
E) will equate price and marginal cost

Question 15

-The best outcome the firm illustrated in Figure 11-3 can achieve is a(n)

Accepted Answer

A) economic loss equal to its fixed cost 
B) economic loss of $3,500 
C) economic loss of slightly more than $7,000 
D) economic loss of approximately $4,000 
E) profit per unit of output approximately equal to $40 
A) economic loss equal to its fixed cost 
B) economic loss of $3,500 
C) economic loss of slightly more than $7,000 
D) economic loss of approximately $4,000 
E) profit per unit of output approximately equal to $40

Question 16

For the monopolistically competitive firm,

Accepted Answer

A) competition is blocked by barriers to entry 
B) limit pricing can forestall competition indefinitely 
C) marginal revenue is less than the product's price 
D) price discrimination is a key tool 
E) marginal revenue is equal to the product's price 
A) competition is blocked by barriers to entry 
B) limit pricing can forestall competition indefinitely 
C) marginal revenue is less than the product's price 
D) price discrimination is a key tool 
E) marginal revenue is equal to the product's price

Question 17

Oligopolies in the United States rarely engage in explicit collusion because

Accepted Answer

A) it leads to lower profits 
B) firms are very wary of each other in this type of market 
C) they may have different dominant strategies 
D) it is illegal 
E) dominant strategies may not exist 
A) it leads to lower profits 
B) firms are very wary of each other in this type of market 
C) they may have different dominant strategies 
D) it is illegal 
E) dominant strategies may not exist

Question 18

Collusive arrangements tend to collapse when

Accepted Answer

A) there is a small number of sellers 
B) the benefits of cheating are great and the costs are low 
C) inflation is high 
D) interest rates are low 
E) there is a powerful price leader 
A) there is a small number of sellers 
B) the benefits of cheating are great and the costs are low 
C) inflation is high 
D) interest rates are low 
E) there is a powerful price leader

Question 19

Each of the following,except one,is a limitation on collusive behavior.Which is the exception?

Accepted Answer

A) the market demand curve 
B) a tit-for-tat strategy 
C) the threat of prosecution 
D) incentives for firms to lower prices 
E) incentives for firms to raise output 
A) the market demand curve 
B) a tit-for-tat strategy 
C) the threat of prosecution 
D) incentives for firms to lower prices 
E) incentives for firms to raise output

Question 20

An important difference between a perfectly competitive market and a monopolistically competitive market is that,in the latter,

Accepted Answer

A) there are more sellers of the good 
B) there are only a few large sellers 
C) there are no barriers to entry or exit 
D) there is only one seller of the good 
E) the product is not standardized 
A) there are more sellers of the good 
B) there are only a few large sellers 
C) there are no barriers to entry or exit 
D) there is only one seller of the good 
E) the product is not standardized

If a firm launches a successful advertising campaign,then its

Under price leadership

If a monopolistically competitive firm raises its price,

Cartels are more likely to succeed the larger the number of firms in an industry.

Firms use advertising to

Excess capacity arises when firms cannot sell all of their output at the current market price.

A Nash equilibrium

In monopolistic competition,nonprice competition

The demand curve facing a monopolistic competitor is

Which of the following is an example of a cartel?

-The monopolistically competitive firm shown in Figure 11-4

Game theory is based on the idea that

-Figure 11-13 shows the payoff matrix for the only two auto dealerships in a community,Jim's Autos and Tim's Autos.The matrix shows the profits that each firm would earn from choosing either a low price or a high price.In this example,

In the short run,a monopolistically competitive firm

-The best outcome the firm illustrated in Figure 11-3 can achieve is a(n)

For the monopolistically competitive firm,

Oligopolies in the United States rarely engage in explicit collusion because

Collusive arrangements tend to collapse when

Each of the following,except one,is a limitation on collusive behavior.Which is the exception?

An important difference between a perfectly competitive market and a monopolistically competitive market is that,in the latter,

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters

Exam 11: Monopolistic Competition and Oligopoly

If a firm launches a successful advertising campaign,then its

Under price leadership

If a monopolistically competitive firm raises its price,

Cartels are more likely to succeed the larger the number of firms in an industry.

Firms use advertising to

Excess capacity arises when firms cannot sell all of their output at the current market price.

A Nash equilibrium

In monopolistic competition,nonprice competition

The demand curve facing a monopolistic competitor is

Which of the following is an example of a cartel?

-The monopolistically competitive firm shown in Figure 11-4

Game theory is based on the idea that

-Figure 11-13 shows the payoff matrix for the only two auto dealerships in a community,Jim's Autos and Tim's Autos.The matrix shows the profits that each firm would earn from choosing either a low price or a high price.In this example,

In the short run,a monopolistically competitive firm

-The best outcome the firm illustrated in Figure 11-3 can achieve is a(n)

For the monopolistically competitive firm,

Oligopolies in the United States rarely engage in explicit collusion because

Collusive arrangements tend to collapse when

Each of the following,except one,is a limitation on collusive behavior.Which is the exception?

An important difference between a perfectly competitive market and a monopolistically competitive market is that,in the latter,

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters