Question 1

If an oligopolist cuts the prices of its products,

Accepted Answer

A) customers will switch to a rival firm. 
B) customers will remain unchanged in number. 
C) customers will switch from rival firms to buy from them. 
D) rival firms will not react. 
A) customers will switch to a rival firm. 
B) customers will remain unchanged in number. 
C) customers will switch from rival firms to buy from them. 
D) rival firms will not react.

Question 2

Figure 12-1
  
-In Figure 12-1, for a monopolistically competitive firm, long-run equilibrium can occur only at the quantity indicated by which point?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 3

One of the most famous cartels is OPEC.

Accepted Answer

A) True 
 B)False

Question 4

The Organization of Petroleum Exporting Countries (OPEC) is an example of

Accepted Answer

A) a price leadership system. 
B) a generally unsuccessful cartel. 
C) an organization devoted to tacit collusion. 
D) a successful cartel. 
A) a price leadership system. 
B) a generally unsuccessful cartel. 
C) an organization devoted to tacit collusion. 
D) a successful cartel.

Question 5

An oligopolist cares very much about what other firms in her industry are doing.

Accepted Answer

A) True 
 B)False

Question 6

A monopolistic competitor faces a horizontal demand curve.

Accepted Answer

A) True 
 B)False

Question 7

All of the following are possible characteristics of oligopoly except

Accepted Answer

A) free entry into the industry. 
B) significant economies of scale. 
C) interdependence among sellers. 
D) homogeneous product. 
A) free entry into the industry. 
B) significant economies of scale. 
C) interdependence among sellers. 
D) homogeneous product.

Question 8

What quantity of output and price do they try to set, when a group of oligopoly firms form a cartel?
 Will there be any changes in the price and quantity supplied if the cartel gets broken down?

Accepted Answer

By forming cartels, oligopoly

Question 9

Figure 12-3
  
-Oligopolist A cuts price in an attempt to enlarge his share of the market.His competitors fail to retaliate with price cuts.In this case, in Figure 12-3, oligopolist A will move from point A to which point?

Accepted Answer

A) B 
B) C 
C) D 
D) E 
A) B 
B) C 
C) D 
D) E

Question 10

The analysis of oligopolistic behavior is difficult because

Accepted Answer

A) there are few real-world examples of oligopolies for economists to study. 
B) oligopolists make decisions independently of each other. 
C) firms in oligopolistic industries react to each other's behavior in many ways. 
D) economists have paid little attention to the topic in recent years and so have not yet applied to it the techniques of modern economic theory. 
A) there are few real-world examples of oligopolies for economists to study. 
B) oligopolists make decisions independently of each other. 
C) firms in oligopolistic industries react to each other's behavior in many ways. 
D) economists have paid little attention to the topic in recent years and so have not yet applied to it the techniques of modern economic theory.

Question 11

Cartels usually succumb to divisive forces caused by

Accepted Answer

A) limited information. 
B) members cheating by giving secret discounts. 
C) entry by new rivals seeking profits. 
D) insufficient profits compared to independent operations. 
A) limited information. 
B) members cheating by giving secret discounts. 
C) entry by new rivals seeking profits. 
D) insufficient profits compared to independent operations.

Question 12

Oligopolies are difficult to analyze because of the interdependent nature of management decisions.

Accepted Answer

A) True 
 B)False

Question 13

A profit-maximizing, monopolistically competitive restaurant serves 60 burgers a day at a total cost of $180 and earns a total profit of $180.In the long run, everything else equal, the

Accepted Answer

A) restaurant will charge more than $6 per burger. 
B) restaurant's average total cost will rise and its total revenue will fall. 
C) restaurant will sell more burgers at a lower average profit per burger. 
D) All of the above are correct. 
A) restaurant will charge more than $6 per burger. 
B) restaurant's average total cost will rise and its total revenue will fall. 
C) restaurant will sell more burgers at a lower average profit per burger. 
D) All of the above are correct.

Question 14

In the cigarette industry either R.J.Reynolds or Phillip Morris, for a time, raised prices twice a year by about 50 cents per carton.The other firms in the industry raised their prices by the same amount.Economists call this

Accepted Answer

A) predatory pricing. 
B) a price war. 
C) price leadership. 
D) sales maximization. 
A) predatory pricing. 
B) a price war. 
C) price leadership. 
D) sales maximization.

Question 15

To understand most of today's economic activity in the U.S.economy, we should look at which of the following models?

Accepted Answer

A) perfect competition and pure monopoly 
B) perfect competition and oligopoly 
C) oligopoly and monopolistic competition 
D) monopolistic competition and monopoly 
A) perfect competition and pure monopoly 
B) perfect competition and oligopoly 
C) oligopoly and monopolistic competition 
D) monopolistic competition and monopoly

Question 16

Displayed below is the payoff matrix of firm B for four different strategies, B1, B2, B3, and B4, and the potential retaliatory responses of firm A (A1, A2, A3, A4).?
  If firm B uses the maximin criterion, which strategy will it choose?

Accepted Answer

A) B1 
B) B2 
C) B3 
D) B4 
A) B1 
B) B2 
C) B3 
D) B4

Question 17

Society benefits from monopolistic competition because the firms are allocatively efficient.

Accepted Answer

A) True 
 B)False

Question 18

Demand for a firm has been reliably measured as P = 100 − 5Q where Q is output and P is price in dollars. Total cost is in the table below. Complete the table and indicate the level of output and price which a profit-maximizing firm would select and indicate the same for a sales-maximizing firm.

Accepted Answer

@#IMG-DLM&
From the table, the profit-ma

Question 19

An advertising race among oligopolists may be rational if it

Accepted Answer

A) is defense advertising. 
B) raises entry barriers. 
C) increases cost per unit of sales. 
D) encourages new entrants. 
A) is defense advertising. 
B) raises entry barriers. 
C) increases cost per unit of sales. 
D) encourages new entrants.

Question 20

Firms that maximize sales always produce more than profit-maximizing firms.

Accepted Answer

A) True 
 B)False

Exam 12: Between Competition and Monopoly

If an oligopolist cuts the prices of its products,

Figure 12-1 -In Figure 12-1, for a monopolistically competitive firm, long-run equilibrium can occur only at the quantity indicated by which point?

One of the most famous cartels is OPEC.

The Organization of Petroleum Exporting Countries (OPEC) is an example of

An oligopolist cares very much about what other firms in her industry are doing.

A monopolistic competitor faces a horizontal demand curve.

All of the following are possible characteristics of oligopoly except

What quantity of output and price do they try to set, when a group of oligopoly firms form a cartel? Will there be any changes in the price and quantity supplied if the cartel gets broken down?

Figure 12-3 -Oligopolist A cuts price in an attempt to enlarge his share of the market.His competitors fail to retaliate with price cuts.In this case, in Figure 12-3, oligopolist A will move from point A to which point?

The analysis of oligopolistic behavior is difficult because

Cartels usually succumb to divisive forces caused by

Oligopolies are difficult to analyze because of the interdependent nature of management decisions.

A profit-maximizing, monopolistically competitive restaurant serves 60 burgers a day at a total cost of $180 and earns a total profit of $180.In the long run, everything else equal, the

In the cigarette industry either R.J.Reynolds or Phillip Morris, for a time, raised prices twice a year by about 50 cents per carton.The other firms in the industry raised their prices by the same amount.Economists call this

To understand most of today's economic activity in the U.S.economy, we should look at which of the following models?

Displayed below is the payoff matrix of firm B for four different strategies, B1, B2, B3, and B4, and the potential retaliatory responses of firm A (A1, A2, A3, A4).? If firm B uses the maximin criterion, which strategy will it choose?

Society benefits from monopolistic competition because the firms are allocatively efficient.

Demand for a firm has been reliably measured as P = 100 − 5Q where Q is output and P is price in dollars. Total cost is in the table below. Complete the table and indicate the level of output and price which a profit-maximizing firm would select and indicate the same for a sales-maximizing firm.

An advertising race among oligopolists may be rational if it

Firms that maximize sales always produce more than profit-maximizing firms.

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

He Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

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