Question 1

Figure 11-11
  
-Refer to Figure 11-11.What is the productively efficient output for the firm represented in the diagram?

Accepted Answer

A) Q₁ units 
B) Q₂ units 
C) Q₃ units 
D) Q₄ units 
A) Q₁ units 
B) Q₂ units 
C) Q₃ units 
D) Q₄ units

Question 2

Complete the following table.
 $\begin{array}{|c|r|r|r|r|}
\hline\text { Energy } & & & \
\text { Drinks } & & &&\text { Marginal } \
\text { Consumed } & & \text { Total } & \text { Average } & \text { Revenue }  \
\text { per Week } & \text { Price }(P) & \text { Revenue }(T R) & \text { Revenue }(A R) & (M R) \
\hline 0 & \$ 6.00 & & & \
\hline 1 & 5.50 & & & \
\hline 2 & 5.00 & & & \
\hline 3 & 4.50 & & & \
\hline 4 & 4.00 & & & \
\hline 5 & 3.50 & & & \
\hline 6 & 3.00 & & & \
\hline 7 & 2.50 & & & \
\hline 8 & 2.00 & & & \
\hline
\end{array}$

Accepted Answer

None

Question 3

Which of the following is not a characteristic of oligopoly?

Accepted Answer

A) the ability to influence price 
B) a small number of firms 
C) low barriers to entry 
D) interdependent firms 
A) the ability to influence price 
B) a small number of firms 
C) low barriers to entry 
D) interdependent firms

Question 4

Occupational licensing is an example of an entry barrier that improves a country's standard of living.

Accepted Answer

A) True 
 B)False

Question 5

What is meant by the term "government-imposed barrier to entry"? Why would a government be willing to impose barriers to entering an industry?

Accepted Answer

Government imposed barriers to entry are

Question 6

If an industry is made up of five identical firms,the four-firm concentration ratio is

Accepted Answer

A) 5%. 
B) 20%. 
C) 80%. 
D) 100%. 
A) 5%. 
B) 20%. 
C) 80%. 
D) 100%.

Question 7

Explain why member firms of a cartel like OPEC have incentives to agree to a low cartel production level and then produce more than its quota.

Accepted Answer

A low cartel production level results in

Question 8

Figure 11-13
  
-Refer to Figure 11-13.What is the output price?

Accepted Answer

A) P₄ 
B) P₃ 
C) P₂ 
D) P₁ 
A) P₄ 
B) P₃ 
C) P₂ 
D) P₁

Question 9

A consequence of the quota that has been imposed on the importation of sugar into the United States is

Accepted Answer

A) consumers are protected from eating unsafe products made from cheap imported sugar. 
B) competition in the U.S.sugar market is reduced. 
C) the cost of producing cereal, chocolate and candy products in the United States is reduced. 
D) the market for sugar in the United States has become monopolistically competitive rather than oligopolistic. 
A) consumers are protected from eating unsafe products made from cheap imported sugar. 
B) competition in the U.S.sugar market is reduced. 
C) the cost of producing cereal, chocolate and candy products in the United States is reduced. 
D) the market for sugar in the United States has become monopolistically competitive rather than oligopolistic.

Question 10

Table 11-1
 $$\begin{array} { | c | c | c | } 
\hline \text { Quantity } & \begin{array} { c } 
\text { Price } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Total Revenue } \
\text { (dollars) }
\end{array} \
\hline 1 & \$ 7.50 & \$ 7.50 \
\hline 2 & 7.00 & 14.00 \
\hline 3 & 6.50 & 19.50 \
\hline 4 & 6.00 & 24.00 \
\hline 5 & 5.50 & 27.50 \
\hline 6 & 5.00 & 30.00 \
\hline
\end{array}$$
-Refer to Figure 11-1.The marginal revenue from the increase in price from P? to P? equals

Accepted Answer

A) the area A. 
B) the area (B + D - 
A) . 
C) the area (A - 
D) . 
D) the area (C - 
B) . 
A) the area A. 
B) the area (B + D - 
A) . 
C) the area (A - 
D) . 
D) the area (C - 
B) .

Question 11

Figure 11-4
   
Figure 11-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 11-4.Should the firm represented in the diagram continue to stay in business despite its losses?

Accepted Answer

A) No, it should shut down. 
B) Yes, its total revenue covers its variable cost. 
C) No, it is not able to cover its fixed cost. 
D) Yes, it should increase its revenue by raising its price. 
A) No, it should shut down. 
B) Yes, its total revenue covers its variable cost. 
C) No, it is not able to cover its fixed cost. 
D) Yes, it should increase its revenue by raising its price.

Question 12

A member of a cartel like OPEC has an incentive to

Accepted Answer

A) argue for larger production quotas for each member of the cartel. 
B) agree to a low cartel production level and then produce more than its quota. 
C) abide by its individual production quota. 
D) support equal production quotas for each member. 
A) argue for larger production quotas for each member of the cartel. 
B) agree to a low cartel production level and then produce more than its quota. 
C) abide by its individual production quota. 
D) support equal production quotas for each member.

Question 13

A monopolistically competitive industry that earns economic profits in the short run will be able to expand its market share even if the market size remains constant.

Accepted Answer

A) True 
 B)False

Question 14

Consider a U-shaped long-run average cost curve that has a minimum efficient scale at 6,000 units of output.In this case,this industry would be

Accepted Answer

A) perfectly competitive if the market quantity demanded is 20,000 units. 
B) monopolistically competitive if the market quantity demanded is 12,000 units. 
C) an oligopoly if the market quantity demanded is 18,000 units. 
D) an oligopoly if the four-firm concentration ratio is more than 10 percent. 
A) perfectly competitive if the market quantity demanded is 20,000 units. 
B) monopolistically competitive if the market quantity demanded is 12,000 units. 
C) an oligopoly if the market quantity demanded is 18,000 units. 
D) an oligopoly if the four-firm concentration ratio is more than 10 percent.

Question 15

Why do most firms in monopolistic competition typically make zero profit in the long run?

Accepted Answer

A) because firms produce differentiated products 
B) because the lack of entry barriers would compete away profits 
C) because firms do not produce at their minimum efficient scale 
D) because the total market is not large enough to accommodate so many firms 
A) because firms produce differentiated products 
B) because the lack of entry barriers would compete away profits 
C) because firms do not produce at their minimum efficient scale 
D) because the total market is not large enough to accommodate so many firms

Question 16

Table 11-2
 $$\begin{array} { | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity } \
\text { (cases) }
\end{array} & \begin{array} { c } 
\text { Price } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Total Revenue } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Total Cost } \
\text { (dollars) }
\end{array} \
\hline 1 & \$ 75 & \$ 75 & \$ 60 \
\hline 2 & 70 & 140 & 85 \
\hline 3 & 65 & 195 & 105 \
\hline 4 & 60 & 240 & 115 \
\hline 5 & 55 & 275 & 130 \
\hline 6 & 50 & 300 & 155 \
\hline 7 & 45 & 315 & 190 \
\hline 8 & 40 & 320 & 230 \
\hline 9 & 35 & 315 & 280 \
\hline
\end{array}$$ 
Eco Energy is a monopolistically competitive producer of a sports beverage called Power On. Table 11-2 shows the firm's demand and cost schedules.
-Refer to Table 11-2.What is likely to happen to the product's price in the long run?

Accepted Answer

A) It will fall. 
B) It will increase. 
C) It will remain constant. 
D) This cannot be determined without information on its long-run demand curve. 
A) It will fall. 
B) It will increase. 
C) It will remain constant. 
D) This cannot be determined without information on its long-run demand curve.

Question 17

Which of the following is not a characteristic of monopolistic competition?

Accepted Answer

A) Firms are price takers. 
B) There are many buyers and sellers. 
C) Barriers to entry are low. 
D) Firms sell similar, but not identical, products. 
A) Firms are price takers. 
B) There are many buyers and sellers. 
C) Barriers to entry are low. 
D) Firms sell similar, but not identical, products.

Question 18

Which of the following is an example of implicit collusion?

Accepted Answer

A) product differentiation 
B) a retaliation strategy 
C) a second-price auction 
D) price leadership 
A) product differentiation 
B) a retaliation strategy 
C) a second-price auction 
D) price leadership

Question 19

The most important barrier to entry is economies of scale.

Accepted Answer

A) True 
 B)False

Question 20

Long-run equilibrium under monopolistic competition and perfect competition is similar in that

Accepted Answer

A) firms produce at the minimum point of their average cost curves. 
B) price equals marginal cost. 
C) firms break even. 
D) price equals marginal revenue. 
A) firms produce at the minimum point of their average cost curves. 
B) price equals marginal cost. 
C) firms break even. 
D) price equals marginal revenue.

Figure 11-11 -Refer to Figure 11-11.What is the productively efficient output for the firm represented in the diagram?

Complete the following table. Energy Drinks Marginal Consumed Total Average Revenue per Week Price (P) Revenue (TR) Revenue (AR) (MR) 0 \ 6.00 1 5.50 2 5.00 3 4.50 4 4.00 5 3.50 6 3.00 7 2.50 8 2.00

Which of the following is not a characteristic of oligopoly?

Occupational licensing is an example of an entry barrier that improves a country's standard of living.

What is meant by the term "government-imposed barrier to entry"? Why would a government be willing to impose barriers to entering an industry?

If an industry is made up of five identical firms,the four-firm concentration ratio is

Explain why member firms of a cartel like OPEC have incentives to agree to a low cartel production level and then produce more than its quota.

Figure 11-13 -Refer to Figure 11-13.What is the output price?

A consequence of the quota that has been imposed on the importation of sugar into the United States is

Table 11-1 Quantity Price (dollars) Total Revenue (dollars) 1 \ 7.50 \ 7.50 2 7.00 14.00 3 6.50 19.50 4 6.00 24.00 5 5.50 27.50 6 5.00 30.00 -Refer to Figure 11-1.The marginal revenue from the increase in price from P? to P? equals

Figure 11-4 Figure 11-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 11-4.Should the firm represented in the diagram continue to stay in business despite its losses?

A member of a cartel like OPEC has an incentive to

A monopolistically competitive industry that earns economic profits in the short run will be able to expand its market share even if the market size remains constant.

Consider a U-shaped long-run average cost curve that has a minimum efficient scale at 6,000 units of output.In this case,this industry would be

Why do most firms in monopolistic competition typically make zero profit in the long run?

Which of the following is not a characteristic of monopolistic competition?

Which of the following is an example of implicit collusion?

The most important barrier to entry is economies of scale.

Long-run equilibrium under monopolistic competition and perfect competition is similar in that

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

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Exam 11: Monopolistic Competition and Oligopoly

Figure 11-11 -Refer to Figure 11-11.What is the productively efficient output for the firm represented in the diagram?

Complete the following table. Energy Drinks Marginal Consumed Total Average Revenue per Week Price (P) Revenue (TR) Revenue (AR) (MR) 0 \ 6.00 1 5.50 2 5.00 3 4.50 4 4.00 5 3.50 6 3.00 7 2.50 8 2.00

Which of the following is not a characteristic of oligopoly?

Occupational licensing is an example of an entry barrier that improves a country's standard of living.

What is meant by the term "government-imposed barrier to entry"? Why would a government be willing to impose barriers to entering an industry?

If an industry is made up of five identical firms,the four-firm concentration ratio is

Explain why member firms of a cartel like OPEC have incentives to agree to a low cartel production level and then produce more than its quota.

Figure 11-13 -Refer to Figure 11-13.What is the output price?

A consequence of the quota that has been imposed on the importation of sugar into the United States is

Table 11-1 Quantity Price (dollars) Total Revenue (dollars) 1 \ 7.50 \ 7.50 2 7.00 14.00 3 6.50 19.50 4 6.00 24.00 5 5.50 27.50 6 5.00 30.00 -Refer to Figure 11-1.The marginal revenue from the increase in price from P? to P? equals

Figure 11-4 Figure 11-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 11-4.Should the firm represented in the diagram continue to stay in business despite its losses?

A member of a cartel like OPEC has an incentive to

A monopolistically competitive industry that earns economic profits in the short run will be able to expand its market share even if the market size remains constant.

Consider a U-shaped long-run average cost curve that has a minimum efficient scale at 6,000 units of output.In this case,this industry would be

Why do most firms in monopolistic competition typically make zero profit in the long run?

Which of the following is not a characteristic of monopolistic competition?

Which of the following is an example of implicit collusion?

The most important barrier to entry is economies of scale.

Long-run equilibrium under monopolistic competition and perfect competition is similar in that

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters