Question 1

Which concept is best illustrated by the "prisoner's dilemma"?

Accepted Answer

A) product standardization 
B) interaction 
C) profit maximization 
D) marginal analysis 
E) average total cost 
A) product standardization 
B) interaction 
C) profit maximization 
D) marginal analysis 
E) average total cost

Question 2

-Assume the firm in Figure 11-2 is currently producing 13 units of output and charging $380 each.The firm

Accepted Answer

A) will increase its profit if it raises its price and reduces its production level 
B) will increase its profit if it lowers its price and expands its production level 
C) cannot increase economic profit by changing its price and output since it is already maximizing its profit 
D) will increase its profit if it raises its price and expands its production level 
E) will increase its profit by lowering its price and reducing its production level 
A) will increase its profit if it raises its price and reduces its production level 
B) will increase its profit if it lowers its price and expands its production level 
C) cannot increase economic profit by changing its price and output since it is already maximizing its profit 
D) will increase its profit if it raises its price and expands its production level 
E) will increase its profit by lowering its price and reducing its production level

Question 3

An equilibrium occurs in a game when

Accepted Answer

A) price equals marginal cost 
B) quantity supplied equals quantity demanded 
C) all independent strategies counterbalance all determinate strategies 
D) all players follow a strategy that negates the strategies of at least one other player 
E) all players follow a strategy that they have no incentive to change 
A) price equals marginal cost 
B) quantity supplied equals quantity demanded 
C) all independent strategies counterbalance all determinate strategies 
D) all players follow a strategy that negates the strategies of at least one other player 
E) all players follow a strategy that they have no incentive to change

Question 4

-Which of the following is not true of the firm in Figure 11-9?

Accepted Answer

A) It has excess capacity. 
B) It produces at the minimum efficient scale of production. 
C) It cannot earn an economic profit. 
D) It is operating in the long run. 
E) It has no fixed costs. 
A) It has excess capacity. 
B) It produces at the minimum efficient scale of production. 
C) It cannot earn an economic profit. 
D) It is operating in the long run. 
E) It has no fixed costs.

Question 5

An oligopolistic firm that is part of a collusive agreement is less likely to cheat

Accepted Answer

A) the more punishment it expects if the cheating is detected 
B) the lower is the possibility of detection 
C) the less likely is the collapse of the entire agreement as a result of cheating 
D) the greater is the additional profit from charging a lower price than the other firms 
E) the higher is the chance of taking customers away from competitors by charging a lower price 
A) the more punishment it expects if the cheating is detected 
B) the lower is the possibility of detection 
C) the less likely is the collapse of the entire agreement as a result of cheating 
D) the greater is the additional profit from charging a lower price than the other firms 
E) the higher is the chance of taking customers away from competitors by charging a lower price

Question 6

A famous cartel that dramatically increased the price of oil in the mid-1970s was

Accepted Answer

A) OTEC 
B) IMF 
C) OECD 
D) OPEC 
E) LDC 
A) OTEC 
B) IMF 
C) OECD 
D) OPEC 
E) LDC

Question 7

-Figure 11-13 shows the payoff matrix for two large auto dealerships,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.The equilibrium level of profit for Jim's Autos would be

Accepted Answer

A) $250,000 
B) $100,000 
C) $200,000 
D) -$50,000 
E) $150,000 
A) $250,000 
B) $100,000 
C) $200,000 
D) -$50,000 
E) $150,000

Question 8

Advertising always results in a more elastic demand curve for the firm's product.

Accepted Answer

A) True 
 B)False

Question 9

All of the following,except one,can be a barrier to entry into an oligopoly market.Which is the exception?

Accepted Answer

A) heavy advertising by existing firms 
B) zoning regulations 
C) excess production capacity among existing firms 
D) tariffs and quotas 
E) a small minimum efficient scale 
A) heavy advertising by existing firms 
B) zoning regulations 
C) excess production capacity among existing firms 
D) tariffs and quotas 
E) a small minimum efficient scale

Question 10

If the sellers in a market are aware of their strategic interdependence,then

Accepted Answer

A) each firm bases its pricing and output decisions on the monopoly model 
B) each firm,when making pricing or output decisions,must consider the reactions of its competitors 
C) the firms have little incentive to collude in their pricing and output decisions 
D) the firms undertake little advertising because they cannot recoup the cost through higher prices 
E) no firm is able to earn above-normal profit in the long run 
A) each firm bases its pricing and output decisions on the monopoly model 
B) each firm,when making pricing or output decisions,must consider the reactions of its competitors 
C) the firms have little incentive to collude in their pricing and output decisions 
D) the firms undertake little advertising because they cannot recoup the cost through higher prices 
E) no firm is able to earn above-normal profit in the long run

Question 11

Cartels frequently break down in the long run because

Accepted Answer

A) they are illegal 
B) tacit collusion is illegal 
C) contracts and agreements are legally binding 
D) cooperative behavior usually lowers profits for the entire industry 
E) members have an incentive to increase output 
A) they are illegal 
B) tacit collusion is illegal 
C) contracts and agreements are legally binding 
D) cooperative behavior usually lowers profits for the entire industry 
E) members have an incentive to increase output

Question 12

When oligopolists make joint decisions concerning their prices and output levels,they are

Accepted Answer

A) a natural oligopoly 
B) colluding 
C) a duopoly 
D) a homogeneous oligopoly 
E) practicing bilateralism 
A) a natural oligopoly 
B) colluding 
C) a duopoly 
D) a homogeneous oligopoly 
E) practicing bilateralism

Question 13

Firms in a monopolistically competitive market follow the same MR = MC profit maximization rule used by firms in other market structures.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following pairs of characteristics would be consistent with imperfect competition?

Accepted Answer

A) Many buyers and sellers and no barriers to entry 
B) Many buyers and sellers and a homogenous product 
C) No barriers to entry and all buyers and sellers have perfect information 
D) Many buyers and sellers and some barriers to entry 
E) Many buyers and sellers and everyone has perfect information 
A) Many buyers and sellers and no barriers to entry 
B) Many buyers and sellers and a homogenous product 
C) No barriers to entry and all buyers and sellers have perfect information 
D) Many buyers and sellers and some barriers to entry 
E) Many buyers and sellers and everyone has perfect information

Question 15

The typical monopolistically competitive firm earns no economic profit in the long run,regardless of whether or not it advertises.

Accepted Answer

A) True 
 B)False

Question 16

A successful tit-for-tat strategy leads to

Accepted Answer

A) explicit collusion 
B) a cartel 
C) a duopoly 
D) tacit collusion 
E) market disequilibrium 
A) explicit collusion 
B) a cartel 
C) a duopoly 
D) tacit collusion 
E) market disequilibrium

Question 17

-Consider the monopolistically competitive firm whose demand curve and cost structure are illustrated in Figure 11-1.In the short run the firm's fixed costs are

Accepted Answer

A) $100 
B) $200 
C) $300 
D) $400 
E) $500 
A) $100 
B) $200 
C) $300 
D) $400 
E) $500

Question 18

Under tacit collusion,

Accepted Answer

A) firms form an explicit agreement to cooperate 
B) prices are usually lower than under perfect competition 
C) firms are usually subject to prosecution in the United States 
D) there is no explicit agreement for firms to cooperate 
E) firms meet to set prices and output levels for the industry 
A) firms form an explicit agreement to cooperate 
B) prices are usually lower than under perfect competition 
C) firms are usually subject to prosecution in the United States 
D) there is no explicit agreement for firms to cooperate 
E) firms meet to set prices and output levels for the industry

Question 19

If a cartel is formed in order to maximize the total profits of its members,it will

Accepted Answer

A) charge the monopoly price,but produce more output than a monopoly would 
B) produce the monopoly output,but charge a lower price than a monopoly would 
C) charge the same price,and produce the same quantity that a monopoly would 
D) charge a higher price and produce more output than a monopoly would 
E) charge the monopoly price,but total output may be higher or lower than a monopoly's 
A) charge the monopoly price,but produce more output than a monopoly would 
B) produce the monopoly output,but charge a lower price than a monopoly would 
C) charge the same price,and produce the same quantity that a monopoly would 
D) charge a higher price and produce more output than a monopoly would 
E) charge the monopoly price,but total output may be higher or lower than a monopoly's

Question 20

With successful collusion that maximizes the total profits of the firms in the market,

Accepted Answer

A) the market demand curve shifts leftward 
B) monopoly power allows the sellers to charge whatever price they want for their joint output level 
C) each firm faces a horizontal demand curve for its output 
D) each firm can sell as much output as it chooses at the price set by the cartel 
E) the pricing decision is constrained by the market demand curve 
A) the market demand curve shifts leftward 
B) monopoly power allows the sellers to charge whatever price they want for their joint output level 
C) each firm faces a horizontal demand curve for its output 
D) each firm can sell as much output as it chooses at the price set by the cartel 
E) the pricing decision is constrained by the market demand curve

Which concept is best illustrated by the "prisoner's dilemma"?

-Assume the firm in Figure 11-2 is currently producing 13 units of output and charging $380 each.The firm

An equilibrium occurs in a game when

-Which of the following is not true of the firm in Figure 11-9?

An oligopolistic firm that is part of a collusive agreement is less likely to cheat

A famous cartel that dramatically increased the price of oil in the mid-1970s was

-Figure 11-13 shows the payoff matrix for two large auto dealerships,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.The equilibrium level of profit for Jim's Autos would be

Advertising always results in a more elastic demand curve for the firm's product.

All of the following,except one,can be a barrier to entry into an oligopoly market.Which is the exception?

If the sellers in a market are aware of their strategic interdependence,then

Cartels frequently break down in the long run because

When oligopolists make joint decisions concerning their prices and output levels,they are

Firms in a monopolistically competitive market follow the same MR = MC profit maximization rule used by firms in other market structures.

Which of the following pairs of characteristics would be consistent with imperfect competition?

The typical monopolistically competitive firm earns no economic profit in the long run,regardless of whether or not it advertises.

A successful tit-for-tat strategy leads to

-Consider the monopolistically competitive firm whose demand curve and cost structure are illustrated in Figure 11-1.In the short run the firm's fixed costs are

Under tacit collusion,

If a cartel is formed in order to maximize the total profits of its members,it will

With successful collusion that maximizes the total profits of the firms in the market,

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

Which concept is best illustrated by the "prisoner's dilemma"?

-Assume the firm in Figure 11-2 is currently producing 13 units of output and charging $380 each.The firm

An equilibrium occurs in a game when

-Which of the following is not true of the firm in Figure 11-9?

An oligopolistic firm that is part of a collusive agreement is less likely to cheat

A famous cartel that dramatically increased the price of oil in the mid-1970s was

-Figure 11-13 shows the payoff matrix for two large auto dealerships,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.The equilibrium level of profit for Jim's Autos would be

Advertising always results in a more elastic demand curve for the firm's product.

All of the following,except one,can be a barrier to entry into an oligopoly market.Which is the exception?

If the sellers in a market are aware of their strategic interdependence,then

Cartels frequently break down in the long run because

When oligopolists make joint decisions concerning their prices and output levels,they are

Firms in a monopolistically competitive market follow the same MR = MC profit maximization rule used by firms in other market structures.

Which of the following pairs of characteristics would be consistent with imperfect competition?

The typical monopolistically competitive firm earns no economic profit in the long run,regardless of whether or not it advertises.

A successful tit-for-tat strategy leads to

-Consider the monopolistically competitive firm whose demand curve and cost structure are illustrated in Figure 11-1.In the short run the firm's fixed costs are

Under tacit collusion,

If a cartel is formed in order to maximize the total profits of its members,it will

With successful collusion that maximizes the total profits of the firms in the market,

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