Exam 11: Monopolistic Competition and Oligopoly

When a monopolistically competitive firm cuts its price to increase its sales,it experiences a loss in revenue due to the income effect and a gain in revenue due to the substitution effect.

For a monopolistically competitive firm,price equals average revenue.

Figure 11-17 -Refer to Figure 11-17.In the long run,why will the firm produce Qf units and not Qg units,which has a lower its average cost of production?

Economies of scale will create a barrier to entry in an oligopoly industry when

Which of the following statements is true about marginal revenue?

Natural resource cartels such as OPEC are inherently unstable because their members operate with excess capacity and have an incentive to cheat on their output quotas.

Which of the following is not a reason why government officials are willing to impose entry barriers?

Each member of OPEC can increase its income by selling more oil than its output quota because

If the demand curve for a firm is downward-sloping,its marginal revenue curve

In long-run equilibrium,compared to a perfectly competitive market,a monopolistically competitive industry produces a ________ level of output and charges a ________ price.

In an oligopoly,minimum efficient scale is likely to occur at a level of output that is a large fraction of industry sales.

If a monopolistically competitive firm breaks even,the firm is earning as much in this industry as it could in any other comparable industry.

Figure 11-8 Figure 11-8 shows cost and demand curves for a monopolistically competitive producer of iced-tea. -Refer to Figure 11-8.What is the profit-maximizing output level?

An equilibrium in which each player chooses its best strategy given the strategies chosen by the other players is called a Nash equilibrium.

Figure 11-8 Figure 11-8 shows cost and demand curves for a monopolistically competitive producer of iced-tea. -Refer to Figure 11-8.At the profit-maximizing output level the firm will

Suppose electronic cigarette manufacturer NJOY is successful in establishing a profitable market for e-cigarettes in what is a monopolistically competitive industry.In the long run,NJOY will most likely find it ________ to remain profitable as they face ________ competition in the e-cigarette market.

One of the assumptions of monopolistic competition is that firms produce differentiated products.What does this assumption imply about the demand curve facing a representative firm?

If firms in a monopolistically competitive market are earning economic profits,which of the following scenarios best reflects the change a representative firm experiences as the market adjusts to its long-run equilibrium?

Figure 11-13 -Refer to Figure 11-13.If the diagram represents a typical firm in the market,what is likely to happen to its average cost of production in the long run?

There are many cattle ranchers in the world,and there are also many McDonald's restaurants in the world.Why,then,does a McDonald's restaurant face a downward sloping demand curve while a cattle rancher faces a horizontal demand curve?