Question 1

Firms in which of the following industries can earn an economic profit in the long run?

Accepted Answer

A) both monopolistic competition and monopoly 
B) perfect competition 
C) monopoly 
D) monopolistic competition 
E) monopolistic competition and perfect competition 
A) both monopolistic competition and monopoly 
B) perfect competition 
C) monopoly 
D) monopolistic competition 
E) monopolistic competition and perfect competition C

Question 2

A Nash equilibrium in the duopoly game

Accepted Answer

A) means that one player has greater market power. 
B) occurs when each player takes the best possible action regardless of the strategy chosen by other firms. 
C) will always lead to equilibrium in which the firms' total profit is the largest. 
D) can occur only if firms cooperate with each other. 
E) means that a firm must be able to determine its actions and the actions of its competitor. 
A) means that one player has greater market power. 
B) occurs when each player takes the best possible action regardless of the strategy chosen by other firms. 
C) will always lead to equilibrium in which the firms' total profit is the largest. 
D) can occur only if firms cooperate with each other. 
E) means that a firm must be able to determine its actions and the actions of its competitor. B

Question 3

The prisoners' dilemma game

Accepted Answer

A) shows that prisoners are better off if they cooperate. 
B) shows it is easy to cooperate. 
C) has an equilibrium in which both prisoners are made as well off as possible. 
D) would have the same outcome even if the prisoners can communicate and cooperate. 
E) has an equilibrium in which one prisoner is made as well off as possible and the other prisoner is made as worse off as possible. 
A) shows that prisoners are better off if they cooperate. 
B) shows it is easy to cooperate. 
C) has an equilibrium in which both prisoners are made as well off as possible. 
D) would have the same outcome even if the prisoners can communicate and cooperate. 
E) has an equilibrium in which one prisoner is made as well off as possible and the other prisoner is made as worse off as possible. A

Question 4

The tool that economists use to analyze the mutual interdependence of oligopolies is

Accepted Answer

A) economies of scale. 
B) the four-firm concentration ratio. 
C) game theory. 
D) the HHI. 
E) the efficient scale. 
A) economies of scale. 
B) the four-firm concentration ratio. 
C) game theory. 
D) the HHI. 
E) the efficient scale.

Question 5

-Long-run economic profits are most likely to be earned in

Accepted Answer

A) perfect competition and oligopoly. 
B) perfect competition and monopoly. 
C) monopoly and oligopoly. 
D) oligopoly and monopolistic competition. 
E) perfect competition and monopolistic competition. 
A) perfect competition and oligopoly. 
B) perfect competition and monopoly. 
C) monopoly and oligopoly. 
D) oligopoly and monopolistic competition. 
E) perfect competition and monopolistic competition.

Question 6

What does monopolistic competition have in common with monopoly?

Accepted Answer

A) a large number of firms 
B) a downward-sloping demand curve 
C) the ability to collude with respect to price 
D) mutual interdependence 
E) barriers to entry 
A) a large number of firms 
B) a downward-sloping demand curve 
C) the ability to collude with respect to price 
D) mutual interdependence 
E) barriers to entry

Question 7

For a firm in monopolistic competition, the efficient scale is the amount of output at which ________ is a minimum.

Accepted Answer

A) fixed cost 
B) average total cost 
C) average variable cost 
D) average fixed cost 
E) marginal cost 
A) fixed cost 
B) average total cost 
C) average variable cost 
D) average fixed cost 
E) marginal cost

Question 8

In the example of the Nike running shoe, we see that

Accepted Answer

A) selling costs account for over half of a shoe's retail price. 
B) materials actually account for two-thirds of the retail price of the shoes. 
C) taxes account for one-quarter of the retail price of the shoes. 
D) production costs exceed selling costs by a wide margin. 
E) raw materials costs are by far the largest component of the total costs of producing the shoes. 
A) selling costs account for over half of a shoe's retail price. 
B) materials actually account for two-thirds of the retail price of the shoes. 
C) taxes account for one-quarter of the retail price of the shoes. 
D) production costs exceed selling costs by a wide margin. 
E) raw materials costs are by far the largest component of the total costs of producing the shoes.

Question 9

Monopolistic competition is judged to be economically inefficient because

Accepted Answer

A) the price is greater than marginal cost. 
B) firms earn zero economic profit in the long run. 
C) marginal revenue equals marginal cost. 
D) firms have deficient capacity in the long run. 
E) firms earn an economic profit in the long run. 
A) the price is greater than marginal cost. 
B) firms earn zero economic profit in the long run. 
C) marginal revenue equals marginal cost. 
D) firms have deficient capacity in the long run. 
E) firms earn an economic profit in the long run.

Question 10

The four-firm concentration ratio is the percentage of ________ accounted for by the four largest firms in an industry.

Accepted Answer

A) profit 
B) supply 
C) total revenue 
D) total cost 
E) marginal cost 
A) profit 
B) supply 
C) total revenue 
D) total cost 
E) marginal cost

Question 11

If firms in monopolistic competition are earning economic profits, eventually

Accepted Answer

A) they shut down. 
B) they exit the industry. 
C) the market turns into a monopoly. 
D) new firms enter the industry. 
E) the firms in the market increase their production so that their economic profit disappears. 
A) they shut down. 
B) they exit the industry. 
C) the market turns into a monopoly. 
D) new firms enter the industry. 
E) the firms in the market increase their production so that their economic profit disappears.

Question 12

The women's dress industry is monopolistically competitive because each firm has

Accepted Answer

A) a large market share. 
B) a very small market share. 
C) no market share. 
D) no competition for their market share. 
E) struck a deal with the many other firms about what price will be charged. 
A) a large market share. 
B) a very small market share. 
C) no market share. 
D) no competition for their market share. 
E) struck a deal with the many other firms about what price will be charged.

Question 13

In an oligopoly, there are

Accepted Answer

A) many firms and barriers to entry. 
B) many firms and no barriers to entry. 
C) few firms and barriers to entry. 
D) few firms and no barriers to entry. 
E) barriers to entry and only one firm. 
A) many firms and barriers to entry. 
B) many firms and no barriers to entry. 
C) few firms and barriers to entry. 
D) few firms and no barriers to entry. 
E) barriers to entry and only one firm.

Question 14

The freedom of entry and exit in monopolistic competition means that firms

Accepted Answer

A) enter the market when economic losses are being suffered. 
B) exit the market when economic profits are being earned. 
C) enter the market when normal profits are being earned. 
D) can enter a market to compete for economic profits and leave when economic losses are being incurred. 
E) find it easy to permanently earn an economic profit. 
A) enter the market when economic losses are being suffered. 
B) exit the market when economic profits are being earned. 
C) enter the market when normal profits are being earned. 
D) can enter a market to compete for economic profits and leave when economic losses are being incurred. 
E) find it easy to permanently earn an economic profit.

Question 15

If a firm in the long run produces less than its efficient scale, it

Accepted Answer

A) should raise its markup to increase its profit. 
B) should lower its markup to increase its profit. 
C) cannot be a perfectly competitive firm. 
D) should not advertise to increase its profit. 
E) must have its markup equal to zero. 
A) should raise its markup to increase its profit. 
B) should lower its markup to increase its profit. 
C) cannot be a perfectly competitive firm. 
D) should not advertise to increase its profit. 
E) must have its markup equal to zero.

Question 16

Which of the following four-firm concentration ratios is consistent with monopolistic competition?

Accepted Answer

A) 100 percent 
B) 75 percent 
C) 25 percent 
D) 0 percent 
E) 91 percent 
A) 100 percent 
B) 75 percent 
C) 25 percent 
D) 0 percent 
E) 91 percent

Question 17

Suppose the airplane market is an oligopoly. According to the figure above, the quantity produced can range as high as ________ planes per week and as low as ________ planes per week.

Accepted Answer

A) 6; 12 
B) 12; 6 
C) 0; 6 
D) 12; 0 
E) None of the above answers is correct. 
A) 6; 12 
B) 12; 6 
C) 0; 6 
D) 12; 0 
E) None of the above answers is correct.

Question 18

The clothing industry has many firms with differentiated products and no barriers to entry. The cereal industry has a few firms with either identical or differentiated products and moderate barriers to entry. The food industry is characterized as ________ and the cereal industry is characterized as ________.

Accepted Answer

A) perfect competition; monopolistic competition 
B) monopolistic competition; oligopoly 
C) oligopoly; monopolistic competition 
D) perfect competition; perfect competition 
E) monopolistic competition; monopoly 
A) perfect competition; monopolistic competition 
B) monopolistic competition; oligopoly 
C) oligopoly; monopolistic competition 
D) perfect competition; perfect competition 
E) monopolistic competition; monopoly

Question 19

Advertising costs

Accepted Answer

A) make the marginal revenue more elastic. 
B) shift the ATC curve upward. 
C) shift the marginal cost curve rightward. 
D) indirectly shift the marginal cost curve upward. 
E) affect the marginal cost but not the total cost. 
A) make the marginal revenue more elastic. 
B) shift the ATC curve upward. 
C) shift the marginal cost curve rightward. 
D) indirectly shift the marginal cost curve upward. 
E) affect the marginal cost but not the total cost.

Question 20

Why are cartels among firms usually kept secret?

Accepted Answer

Cartels are typically kept secret becaus

Firms in which of the following industries can earn an economic profit in the long run?

A Nash equilibrium in the duopoly game

The prisoners' dilemma game

The tool that economists use to analyze the mutual interdependence of oligopolies is

-Long-run economic profits are most likely to be earned in

What does monopolistic competition have in common with monopoly?

For a firm in monopolistic competition, the efficient scale is the amount of output at which ________ is a minimum.

In the example of the Nike running shoe, we see that

Monopolistic competition is judged to be economically inefficient because

The four-firm concentration ratio is the percentage of ________ accounted for by the four largest firms in an industry.

If firms in monopolistic competition are earning economic profits, eventually

The women's dress industry is monopolistically competitive because each firm has

In an oligopoly, there are

The freedom of entry and exit in monopolistic competition means that firms

If a firm in the long run produces less than its efficient scale, it

Which of the following four-firm concentration ratios is consistent with monopolistic competition?

Suppose the airplane market is an oligopoly. According to the figure above, the quantity produced can range as high as planes per week and as low as planes per week.

The clothing industry has many firms with differentiated products and no barriers to entry. The cereal industry has a few firms with either identical or differentiated products and moderate barriers to entry. The food industry is characterized as and the cereal industry is characterized as .

Advertising costs

Why are cartels among firms usually kept secret?

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 13: Monopolistic Competition and Oligopoly

Firms in which of the following industries can earn an economic profit in the long run?

A Nash equilibrium in the duopoly game

The prisoners' dilemma game

The tool that economists use to analyze the mutual interdependence of oligopolies is

-Long-run economic profits are most likely to be earned in

What does monopolistic competition have in common with monopoly?

For a firm in monopolistic competition, the efficient scale is the amount of output at which ________ is a minimum.

In the example of the Nike running shoe, we see that

Monopolistic competition is judged to be economically inefficient because

The four-firm concentration ratio is the percentage of ________ accounted for by the four largest firms in an industry.

If firms in monopolistic competition are earning economic profits, eventually

The women's dress industry is monopolistically competitive because each firm has

In an oligopoly, there are

The freedom of entry and exit in monopolistic competition means that firms

If a firm in the long run produces less than its efficient scale, it

Which of the following four-firm concentration ratios is consistent with monopolistic competition?

Suppose the airplane market is an oligopoly. According to the figure above, the quantity produced can range as high as ________ planes per week and as low as ________ planes per week.

Advertising costs

Why are cartels among firms usually kept secret?

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Suppose the airplane market is an oligopoly. According to the figure above, the quantity produced can range as high as planes per week and as low as planes per week.