Question 1

Why are selling costs high in monopolistic competition?

Accepted Answer

In monopolistic competition, there are a

Question 2

When duopoly games are repeated and a "tit for tat" strategy is used,

Accepted Answer

A) the competitive outcome is more likely to be reached than when the game is played once. 
B) the monopoly outcome is more likely to be reached than when the game is played once. 
C) both firms begin to incur economic losses. 
D) one firm goes out of business. 
E) because the game is repeated, it is impossible to predict whether the competitive or the monopoly outcome is more likely. 
A) the competitive outcome is more likely to be reached than when the game is played once. 
B) the monopoly outcome is more likely to be reached than when the game is played once. 
C) both firms begin to incur economic losses. 
D) one firm goes out of business. 
E) because the game is repeated, it is impossible to predict whether the competitive or the monopoly outcome is more likely.

Question 3

In monopolistic competition, there is inefficiency because price is greater than marginal cost. What brings about this inefficiency?

Accepted Answer

A) high concentration, as indicated by the large concentration ratio 
B) product differentiation 
C) freedom of entry and exit 
D) marginal cost rises as more output is produced 
E) the fact there are many firms in the market 
A) high concentration, as indicated by the large concentration ratio 
B) product differentiation 
C) freedom of entry and exit 
D) marginal cost rises as more output is produced 
E) the fact there are many firms in the market

Question 4

If firms in an oligopolistic industry consistently cut their price to sell more output, what price and output will result?

Accepted Answer

A) the monopoly price and output 
B) the competitive price and output 
C) the monopolistically competitive price and output 
D) a price lower than the competitive price and less output than the competitive amount 
E) a price lower than the competitive price and more output than the competitive amount 
A) the monopoly price and output 
B) the competitive price and output 
C) the monopolistically competitive price and output 
D) a price lower than the competitive price and less output than the competitive amount 
E) a price lower than the competitive price and more output than the competitive amount

Question 5

Suppose the airplane market is an oligopoly. According to the figure above, if the firms act as a monopolist, the quantity produced will be ________ planes per week and if the firms act as competitors the quantity produced will be ________ 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 6

In monopolistic competition, the entry of new firms

Accepted Answer

A) shifts existing firms' demand curves rightward. 
B) shifts existing firms' demand curves leftward. 
C) only results in a movement along the existing firms' demand curves. 
D) has no effect on the existing firms' demand curves. 
E) shifts existing firms' supply curves rightward. 
A) shifts existing firms' demand curves rightward. 
B) shifts existing firms' demand curves leftward. 
C) only results in a movement along the existing firms' demand curves. 
D) has no effect on the existing firms' demand curves. 
E) shifts existing firms' supply curves rightward.

Question 7

Which of the following is true about monopolistic competition but false about perfect competition?

Accepted Answer

A) There is a large number of independently acting sellers. 
B) There are no barriers to entry. 
C) Firms can earn an economic profit in the short run. 
D) Firms compete on their product's price as well as its quality and marketing. 
E) Firms cannot earn an economic profit in the long run. 
A) There is a large number of independently acting sellers. 
B) There are no barriers to entry. 
C) Firms can earn an economic profit in the short run. 
D) Firms compete on their product's price as well as its quality and marketing. 
E) Firms cannot earn an economic profit in the long run.

Question 8

Why would a firm in a monopolistically competitive industry advertise?

Accepted Answer

Similar to virtually every other busines

Question 9

-The prisoners' dilemma is similar to the problem faced by firms in an oligopoly in the United States because

Accepted Answer

A) mutual interdependence exists, and collusion is illegal in the United States, so the firms cannot legally communicate. 
B) collusion is legal in the United States, and firms can communicate their pricing decisions to each other. 
C) failure to cooperate leads to better outcomes than cooperation. 
D) private prisons are run by oligopolies. 
E) the firms can communicate, but mutual interdependence exists. 
A) mutual interdependence exists, and collusion is illegal in the United States, so the firms cannot legally communicate. 
B) collusion is legal in the United States, and firms can communicate their pricing decisions to each other. 
C) failure to cooperate leads to better outcomes than cooperation. 
D) private prisons are run by oligopolies. 
E) the firms can communicate, but mutual interdependence exists.

Question 10

If a monopolistically competitive seller's marginal cost is $3.56, the firm will decrease its output if

Accepted Answer

A) its marginal revenue is less than $3.56. 
B) its marginal revenue is equal to $3.56. 
C) its marginal revenue is more than $3.56. 
D) its average total cost is equal to $4.00. 
E) Both answers B and D are correct. 
A) its marginal revenue is less than $3.56. 
B) its marginal revenue is equal to $3.56. 
C) its marginal revenue is more than $3.56. 
D) its average total cost is equal to $4.00. 
E) Both answers B and D are correct.

Question 11

-Kevin owns a personal training gymnasium in Orlando. The above figure shows the demand and cost curves for his firm, which competes in a monopolistically competitive market. If Kevin trains 5 clients per day, he will ________ his profit and will ________.

Accepted Answer

A) maximize; earn normal profit 
B) not maximize; earn a normal profit anyway 
C) maximize; earn an economic profit 
D) not maximize; earn an economic profit anyway 
E) not maximize; incur an economic loss 
A) maximize; earn normal profit 
B) not maximize; earn a normal profit anyway 
C) maximize; earn an economic profit 
D) not maximize; earn an economic profit anyway 
E) not maximize; incur an economic loss

Question 12

-The above figure shows a motel engaged in monopolistic competition with other motels. the figure above shows the ________ equilibrium in which the motel is ________ .

Accepted Answer

A) short-run; earning an economic profit 
B) short-run; earning a normal profit 
C) long-run; earning an economic profit 
D) long-run; earning a normal profit 
E) short-run; incurring an economic loss 
A) short-run; earning an economic profit 
B) short-run; earning a normal profit 
C) long-run; earning an economic profit 
D) long-run; earning a normal profit 
E) short-run; incurring an economic loss

Question 13

Advertising costs and other selling costs are

Accepted Answer

A) efficient. 
B) fixed costs. 
C) variable costs. 
D) marginal costs. 
E) considered as part of demand because they affect the demand for the good. 
A) efficient. 
B) fixed costs. 
C) variable costs. 
D) marginal costs. 
E) considered as part of demand because they affect the demand for the good.

Question 14

How would a merger between Coca-Cola and Pepsi Cola affect the four-firm concentration ratio for the soft drink market?
 How would it affect the Herfindahl-Hirschman Index for the soft drink market?

Accepted Answer

Both Coca-Cola and Pepsi Cola are among

Question 15

The primary reason why monopolistically competitive firms cannot earn an economic profit in the long run is because

Accepted Answer

A) there are barriers to entry. 
B) there is freedom of entry. 
C) the antitrust laws prevent profit from increasing. 
D) recessions occur. 
E) they collude to earn a normal profit. 
A) there are barriers to entry. 
B) there is freedom of entry. 
C) the antitrust laws prevent profit from increasing. 
D) recessions occur. 
E) they collude to earn a normal profit.

Question 16

In an oligopoly, output is

Accepted Answer

A) less than the output in monopoly. 
B) greater than the output in perfect competition. 
C) in all circumstances the same as the output in perfect competition. 
D) somewhere between the output in monopoly and that in perfect competition outcomes. 
E) in all circumstances the same as the output in monopoly. 
A) less than the output in monopoly. 
B) greater than the output in perfect competition. 
C) in all circumstances the same as the output in perfect competition. 
D) somewhere between the output in monopoly and that in perfect competition outcomes. 
E) in all circumstances the same as the output in monopoly.

Question 17

Which market structure is characterized by the following characteristics?
I. A large number of firms compete.
Ii. Each firm produces a differentiated product.
Iii. Firms are free to enter and exit.

Accepted Answer

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

Question 18

The absence of barriers to entry in monopolistic competition means that in the long run, firms

Accepted Answer

A) earn an economic profit. 
B) earn zero economic profit. 
C) incur an economic loss. 
D) earn either an economic profit or zero economic profit. 
E) earn either zero economic profit or suffer an economic profit. 
A) earn an economic profit. 
B) earn zero economic profit. 
C) incur an economic loss. 
D) earn either an economic profit or zero economic profit. 
E) earn either zero economic profit or suffer an economic profit.

Question 19

Which of the following statements is correct?

Accepted Answer

A) A firm in oligopoly will charge a price that is lower than the price charged in perfect competition. 
B) If firms in oligopoly look only at their own self-interest in deciding the output they should produce, the total market output will exceed that of a monopoly. 
C) If one oligopolist reduces the price of its product, its demand curve shifts leftward. 
D) Because many producers join to form a cartel, the market becomes monopolistic competition. 
E) It is in the self-interest of each firm in an oligopoly to take the actions that maximize all the firms' joint profit. 
A) A firm in oligopoly will charge a price that is lower than the price charged in perfect competition. 
B) If firms in oligopoly look only at their own self-interest in deciding the output they should produce, the total market output will exceed that of a monopoly. 
C) If one oligopolist reduces the price of its product, its demand curve shifts leftward. 
D) Because many producers join to form a cartel, the market becomes monopolistic competition. 
E) It is in the self-interest of each firm in an oligopoly to take the actions that maximize all the firms' joint profit.

Question 20

Which of the following four-firm concentration ratios would be the best indicator of an oligopoly?

Accepted Answer

A) 0.25 percent 
B) 31 percent 
C) 78 percent 
D) 100 percent 
E) 11 percent 
A) 0.25 percent 
B) 31 percent 
C) 78 percent 
D) 100 percent 
E) 11 percent

Why are selling costs high in monopolistic competition?

When duopoly games are repeated and a "tit for tat" strategy is used,

In monopolistic competition, there is inefficiency because price is greater than marginal cost. What brings about this inefficiency?

If firms in an oligopolistic industry consistently cut their price to sell more output, what price and output will result?

Suppose the airplane market is an oligopoly. According to the figure above, if the firms act as a monopolist, the quantity produced will be planes per week and if the firms act as competitors the quantity produced will be planes per week.

In monopolistic competition, the entry of new firms

Which of the following is true about monopolistic competition but false about perfect competition?

Why would a firm in a monopolistically competitive industry advertise?

-The prisoners' dilemma is similar to the problem faced by firms in an oligopoly in the United States because

If a monopolistically competitive seller's marginal cost is $3.56, the firm will decrease its output if

-Kevin owns a personal training gymnasium in Orlando. The above figure shows the demand and cost curves for his firm, which competes in a monopolistically competitive market. If Kevin trains 5 clients per day, he will his profit and will .

-The above figure shows a motel engaged in monopolistic competition with other motels. the figure above shows the equilibrium in which the motel is .

Advertising costs and other selling costs are

How would a merger between Coca-Cola and Pepsi Cola affect the four-firm concentration ratio for the soft drink market? How would it affect the Herfindahl-Hirschman Index for the soft drink market?

The primary reason why monopolistically competitive firms cannot earn an economic profit in the long run is because

In an oligopoly, output is

Which market structure is characterized by the following characteristics? I. A large number of firms compete. Ii. Each firm produces a differentiated product. Iii. Firms are free to enter and exit.

The absence of barriers to entry in monopolistic competition means that in the long run, firms

Which of the following statements is correct?

Which of the following four-firm concentration ratios would be the best indicator of an oligopoly?

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

Why are selling costs high in monopolistic competition?

When duopoly games are repeated and a "tit for tat" strategy is used,

In monopolistic competition, there is inefficiency because price is greater than marginal cost. What brings about this inefficiency?

If firms in an oligopolistic industry consistently cut their price to sell more output, what price and output will result?

Suppose the airplane market is an oligopoly. According to the figure above, if the firms act as a monopolist, the quantity produced will be ________ planes per week and if the firms act as competitors the quantity produced will be ________ planes per week.

In monopolistic competition, the entry of new firms

Which of the following is true about monopolistic competition but false about perfect competition?

Why would a firm in a monopolistically competitive industry advertise?

-The prisoners' dilemma is similar to the problem faced by firms in an oligopoly in the United States because

If a monopolistically competitive seller's marginal cost is $3.56, the firm will decrease its output if

-Kevin owns a personal training gymnasium in Orlando. The above figure shows the demand and cost curves for his firm, which competes in a monopolistically competitive market. If Kevin trains 5 clients per day, he will ________ his profit and will ________.

-The above figure shows a motel engaged in monopolistic competition with other motels. the figure above shows the ________ equilibrium in which the motel is ________ .

Advertising costs and other selling costs are

How would a merger between Coca-Cola and Pepsi Cola affect the four-firm concentration ratio for the soft drink market? How would it affect the Herfindahl-Hirschman Index for the soft drink market?

The primary reason why monopolistically competitive firms cannot earn an economic profit in the long run is because

In an oligopoly, output is

Which market structure is characterized by the following characteristics? I. A large number of firms compete. Ii. Each firm produces a differentiated product. Iii. Firms are free to enter and exit.

The absence of barriers to entry in monopolistic competition means that in the long run, firms

Which of the following statements is correct?

Which of the following four-firm concentration ratios would be the best indicator of an oligopoly?

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, if the firms act as a monopolist, the quantity produced will be planes per week and if the firms act as competitors the quantity produced will be planes per week.

-Kevin owns a personal training gymnasium in Orlando. The above figure shows the demand and cost curves for his firm, which competes in a monopolistically competitive market. If Kevin trains 5 clients per day, he will his profit and will .

-The above figure shows a motel engaged in monopolistic competition with other motels. the figure above shows the equilibrium in which the motel is .