Question 1

By keeping new firms from entering the market,oligopolies are more likely to have

Accepted Answer

A) long-run economic profit 
B) low prices 
C) great efficiency 
D) decreasing marginal costs 
E) economies of scale 
A) long-run economic profit 
B) low prices 
C) great efficiency 
D) decreasing marginal costs 
E) economies of scale

Question 2

In the United States,price-fixing cartels are

Accepted Answer

A) ubiquitous 
B) nonexistent 
C) generally illegal 
D) discouraged the Department of Labor 
E) dominant in small industries with large numbers of firms 
A) ubiquitous 
B) nonexistent 
C) generally illegal 
D) discouraged the Department of Labor 
E) dominant in small industries with large numbers of firms

Question 3

-Figure 11-13 shows the payoff matrix for two large auto dealerships,Jim's Autos and Tim's Autos.These intense rivals are the largest automobile dealers in the market by far.The matrix shows the profits that each firm would earn from choosing either a low price or a high price.Jim's dominant strategy is to

Accepted Answer

A) always charge a low price 
B) always charge a high price 
C) charge a high price if Tim charges a low price 
D) charge a low price only when Tim charges a low price 
E) follow the price leadership of Tim's Autos 
A) always charge a low price 
B) always charge a high price 
C) charge a high price if Tim charges a low price 
D) charge a low price only when Tim charges a low price 
E) follow the price leadership of Tim's Autos

Question 4

The Department of Justice and the Federal Trade Commission use the HHI to determine whether to challenge mergers.

Accepted Answer

A) True 
 B)False

Question 5

The model of monopolistic competition assumes that

Accepted Answer

A) there are only a few sellers 
B) there are significant barriers to exit 
C) each firm charges the same price for its output 
D) the buyers are price setters 
E) firms are strategically independent 
A) there are only a few sellers 
B) there are significant barriers to exit 
C) each firm charges the same price for its output 
D) the buyers are price setters 
E) firms are strategically independent

Question 6

The typical monopolistically competitive firm always earns an economic profit in the long run,regardless of whether or not it advertises.

Accepted Answer

A) True 
 B)False

Question 7

Camille's Chicken operates in a monopolistically competitive market.If Camille implements a new free delivery service for customers,

Accepted Answer

A) this is an example of advertising 
B) this is a form of nonprice competition 
C) total revenue will increase 
D) total cost will decrease 
E) her firm will be acting as if it were perfectly competitive market 
A) this is an example of advertising 
B) this is a form of nonprice competition 
C) total revenue will increase 
D) total cost will decrease 
E) her firm will be acting as if it were perfectly competitive market

Question 8

-Given the environment illustrated in Figure 11-3,the best outcome the firm can achieve in the short run is

Accepted Answer

A) both c and e 
B) an economic profit 
C) to shut down to minimize short-run loss 
D) a break-even outcome 
E) an economic loss 
A) both c and e 
B) an economic profit 
C) to shut down to minimize short-run loss 
D) a break-even outcome 
E) an economic loss

Question 9

If the firms in a monopolistically competitive market are earning short-run economic profits,then

Accepted Answer

A) each existing firm will increase output in the long run as its marginal revenue curve shifts rightward 
B) each firm will experience an increase in the demand for its output in the long run 
C) each firm's profit will drop to normal in the long run as its demand curve shifts leftward due to entry of new firms 
D) barriers to entry will enable them to earn economic profits in the long run 
E) decreased demand for a key input will reduce that input's price in the long run and lower each firm's average total cost curve 
A) each existing firm will increase output in the long run as its marginal revenue curve shifts rightward 
B) each firm will experience an increase in the demand for its output in the long run 
C) each firm's profit will drop to normal in the long run as its demand curve shifts leftward due to entry of new firms 
D) barriers to entry will enable them to earn economic profits in the long run 
E) decreased demand for a key input will reduce that input's price in the long run and lower each firm's average total cost curve

Question 10

A firm in a monopolistically competitive market is similar to a monopolist in the sense that it

Accepted Answer

A) must overcome significant barriers to entry 
B) faces a downward-sloping demand curve 
C) produces a large share of the market output 
D) is dependent on the actions of other firms 
E) produces the same product as its competitors do 
A) must overcome significant barriers to entry 
B) faces a downward-sloping demand curve 
C) produces a large share of the market output 
D) is dependent on the actions of other firms 
E) produces the same product as its competitors do

Question 11

-At the profit-maximizing,or loss-minimizing,level of output in Figure 11-3,the firm's total cost is approximately

Accepted Answer

A) $14,000 
B) $12,750 
C) $9,100 
D) $16,185 
E) $8,400 
A) $14,000 
B) $12,750 
C) $9,100 
D) $16,185 
E) $8,400

Question 12

Globalization of markets can reduce oligopoly power by

Accepted Answer

A) increasing the number of competitors 
B) increasing market prices 
C) bypassing antitrust legislation in a particular country 
D) identifying new markets for goods and services 
E) reducing the economies of scale 
A) increasing the number of competitors 
B) increasing market prices 
C) bypassing antitrust legislation in a particular country 
D) identifying new markets for goods and services 
E) reducing the economies of scale

Question 13

A cartel is a(n)

Accepted Answer

A) form of explicit collusion in which the parties collectively behave like a monopoly 
B) market that changes very little as firms enter and exit 
C) implicit pricing scheme that does not involve explicit communication between the parties 
D) form of nonprice competition 
E) group of firms engaged in price discrimination 
A) form of explicit collusion in which the parties collectively behave like a monopoly 
B) market that changes very little as firms enter and exit 
C) implicit pricing scheme that does not involve explicit communication between the parties 
D) form of nonprice competition 
E) group of firms engaged in price discrimination

Question 14

If consumers are loyal to the products of an existing firm,this loyalty may

Accepted Answer

A) reduce the incentives for the firm to invest 
B) result in more responsive management and better quality products 
C) reduce the demand for imported goods 
D) serve as a barrier to new entry into the market 
E) force the firm to produce at higher costs 
A) reduce the incentives for the firm to invest 
B) result in more responsive management and better quality products 
C) reduce the demand for imported goods 
D) serve as a barrier to new entry into the market 
E) force the firm to produce at higher costs

Question 15

When firms cooperate without an explicit agreement,they are engaging in

Accepted Answer

A) explicit collusion 
B) tacit collusion 
C) reverse collusion 
D) inclusion 
E) rent seeking 
A) explicit collusion 
B) tacit collusion 
C) reverse collusion 
D) inclusion 
E) rent seeking

Question 16

The prisoner's dilemma demonstrates that

Accepted Answer

A) breaking out of prison may be too costly for most prisoners 
B) the opportunity cost of being a prisoner is indeterminate 
C) the dominant strategies followed by two prisoners may lead to disequilibrium that is unpredictable 
D) the weak strategy may be followed by both prisoners if the opportunity cost is low 
E) the dominant strategies followed by two players may lead to an equilibrium that is less not optimal for both players together 
A) breaking out of prison may be too costly for most prisoners 
B) the opportunity cost of being a prisoner is indeterminate 
C) the dominant strategies followed by two prisoners may lead to disequilibrium that is unpredictable 
D) the weak strategy may be followed by both prisoners if the opportunity cost is low 
E) the dominant strategies followed by two players may lead to an equilibrium that is less not optimal for both players together

Question 17

In the airline industry,tit-for-tat strategies have frequently led to

Accepted Answer

A) reciprocal hiring practices 
B) cost-reducing innovations 
C) profit-destroying price wars 
D) pricing policies that encouraged the entry of new firms 
E) profit-enhancing wage bargains 
A) reciprocal hiring practices 
B) cost-reducing innovations 
C) profit-destroying price wars 
D) pricing policies that encouraged the entry of new firms 
E) profit-enhancing wage bargains

Question 18

-At the profit-maximizing,or loss-minimizing,level of output for the firm in Figure 11-3,total revenue is approximately

Accepted Answer

A) $10,500 
B) $11,000 
C) $5,600 
D) $8,250 
E) zero because the firm should shut down immediately 
A) $10,500 
B) $11,000 
C) $5,600 
D) $8,250 
E) zero because the firm should shut down immediately

Question 19

-The monopolistic competitor in Figure 11-4 will maximize its economic profits,or minimize its losses,by

Accepted Answer

A) producing 100 units of output and charging $200 
B) producing 100 units of output and charging slightly more than $300 
C) producing 125 units of output and charging $300 
D) shutting down,since it has greater losses at any level of production than at zero 
E) producing approximately 180 units of output and charging approximately $225 
A) producing 100 units of output and charging $200 
B) producing 100 units of output and charging slightly more than $300 
C) producing 125 units of output and charging $300 
D) shutting down,since it has greater losses at any level of production than at zero 
E) producing approximately 180 units of output and charging approximately $225

Question 20

In a price-leadership oligopoly,it is much simpler for the price leader to identify its dominant strategy when

Accepted Answer

A) at least one price follower has a terminal strategy 
B) it expects competition from the other firms 
C) it expects other firms to match its prices 
D) the government actively seeks antitrust penalties 
E) price equals marginal cost 
A) at least one price follower has a terminal strategy 
B) it expects competition from the other firms 
C) it expects other firms to match its prices 
D) the government actively seeks antitrust penalties 
E) price equals marginal cost

By keeping new firms from entering the market,oligopolies are more likely to have

In the United States,price-fixing cartels are

The Department of Justice and the Federal Trade Commission use the HHI to determine whether to challenge mergers.

The model of monopolistic competition assumes that

The typical monopolistically competitive firm always earns an economic profit in the long run,regardless of whether or not it advertises.

Camille's Chicken operates in a monopolistically competitive market.If Camille implements a new free delivery service for customers,

-Given the environment illustrated in Figure 11-3,the best outcome the firm can achieve in the short run is

If the firms in a monopolistically competitive market are earning short-run economic profits,then

A firm in a monopolistically competitive market is similar to a monopolist in the sense that it

-At the profit-maximizing,or loss-minimizing,level of output in Figure 11-3,the firm's total cost is approximately

Globalization of markets can reduce oligopoly power by

A cartel is a(n)

If consumers are loyal to the products of an existing firm,this loyalty may

When firms cooperate without an explicit agreement,they are engaging in

The prisoner's dilemma demonstrates that

In the airline industry,tit-for-tat strategies have frequently led to

-At the profit-maximizing,or loss-minimizing,level of output for the firm in Figure 11-3,total revenue is approximately

-The monopolistic competitor in Figure 11-4 will maximize its economic profits,or minimize its losses,by

In a price-leadership oligopoly,it is much simpler for the price leader to identify its dominant strategy when

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

By keeping new firms from entering the market,oligopolies are more likely to have

In the United States,price-fixing cartels are

The Department of Justice and the Federal Trade Commission use the HHI to determine whether to challenge mergers.

The model of monopolistic competition assumes that

The typical monopolistically competitive firm always earns an economic profit in the long run,regardless of whether or not it advertises.

Camille's Chicken operates in a monopolistically competitive market.If Camille implements a new free delivery service for customers,

-Given the environment illustrated in Figure 11-3,the best outcome the firm can achieve in the short run is

If the firms in a monopolistically competitive market are earning short-run economic profits,then

A firm in a monopolistically competitive market is similar to a monopolist in the sense that it

-At the profit-maximizing,or loss-minimizing,level of output in Figure 11-3,the firm's total cost is approximately

Globalization of markets can reduce oligopoly power by

A cartel is a(n)

If consumers are loyal to the products of an existing firm,this loyalty may

When firms cooperate without an explicit agreement,they are engaging in

The prisoner's dilemma demonstrates that

In the airline industry,tit-for-tat strategies have frequently led to

-At the profit-maximizing,or loss-minimizing,level of output for the firm in Figure 11-3,total revenue is approximately

-The monopolistic competitor in Figure 11-4 will maximize its economic profits,or minimize its losses,by

In a price-leadership oligopoly,it is much simpler for the price leader to identify its dominant strategy when

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