Question 1

Monopolistic competition is defined as a type of market structure in which

Accepted Answer

A) many firms produce the good. 
B) firms produce a homogeneous good. 
C) there are barriers to entry. 
D) firms can make an economic profit in the long run. 
E) firms can easily enter the market but cannot easily exit from it. 
A) many firms produce the good. 
B) firms produce a homogeneous good. 
C) there are barriers to entry. 
D) firms can make an economic profit in the long run. 
E) firms can easily enter the market but cannot easily exit from it.

Question 2

A cartel is

Accepted Answer

A) a market structure with a small number of large firms. 
B) a market structure with a large number of small firms. 
C) a group of firms acting together to raise price, decrease output, and increase economic profit. 
D) a market with only two firms. 
E) another name for an oligopoly. 
A) a market structure with a small number of large firms. 
B) a market structure with a large number of small firms. 
C) a group of firms acting together to raise price, decrease output, and increase economic profit. 
D) a market with only two firms. 
E) another name for an oligopoly.

Question 3

What do demand and marginal revenue curves look like in monopolistic competition?
 How do they compare to the demand and marginal revenue curves in perfect competition and monopoly?

Accepted Answer

In monopolistic competition, the product

Question 4

The decision to innovate

Accepted Answer

A) depends on the marketing department's needs. 
B) depends on whether the firm wants to benefit its customers. 
C) is based on the marginal cost and the marginal revenue of innovation. 
D) is unnecessary in a monopolistically competitive market. 
E) None of the above answers is correct. 
A) depends on the marketing department's needs. 
B) depends on whether the firm wants to benefit its customers. 
C) is based on the marginal cost and the marginal revenue of innovation. 
D) is unnecessary in a monopolistically competitive market. 
E) None of the above answers is correct.

Question 5

Product differentiation means

Accepted Answer

A) firms sell products that are very dissimilar. 
B) products sold by different firms are slightly different. 
C) charging a higher price to consumers with high willingness to pay. 
D) charging a lower price to consumers with low willingness to pay. 
E) that a single firm sells many different types of products. 
A) firms sell products that are very dissimilar. 
B) products sold by different firms are slightly different. 
C) charging a higher price to consumers with high willingness to pay. 
D) charging a lower price to consumers with low willingness to pay. 
E) that a single firm sells many different types of products.

Question 6

If all firms in the industry have similar demand, marginal revenue, and cost curves as the firm in the figure above, in the long run

Accepted Answer

A) nothing changes. 
B) some firms exit the industry and the economic losses of the remaining firms decrease. 
C) some firms exit the industry and the economic profits of the remaining firms increase. 
D) new firms enter the industry and the economic losses of the original firms decrease. 
E) new firms enter the industry and the economic profits of the original firms increase. 
A) nothing changes. 
B) some firms exit the industry and the economic losses of the remaining firms decrease. 
C) some firms exit the industry and the economic profits of the remaining firms increase. 
D) new firms enter the industry and the economic losses of the original firms decrease. 
E) new firms enter the industry and the economic profits of the original firms increase.

Question 7

For a firm in monopolistic competition, define efficient scale and excess capacity. Briefly explain each.

Accepted Answer

The efficient scale is the quantity prod

Question 8

-Suppose MCI and AT&T can each charge either 3¢ or 4¢ a minute for a long distance call. The above table illustrates the payoffs, in millions of dollars, from each of the four possible outcomes that could occur in their duopoly setting. If MCI charges 4¢ a minute and AT&T charges 4¢ a minute, then MCI's profit will be ________ million and AT&T's profit will be ________ million.

Accepted Answer

A) $320; $320 
B) $200; $500 
C) $500; $200 
D) $450; $450 
E) $320; $500 
A) $320; $320 
B) $200; $500 
C) $500; $200 
D) $450; $450 
E) $320; $500

Question 9

The major dilemma facing Boeing and Airbus is the

Accepted Answer

A) fact that neither will respond to the behavior of the other. 
B) certainty surrounding the reaction of each firm to the behavior of the other firm. 
C) fact that if each firm separately tries to maximize its profit, it might wind up with less profit that otherwise. 
D) competition from other firms that drives their economic profit to zero. 
E) fact that when they collude to maximize their profit, the other firm's profit might be larger than its profit. 
A) fact that neither will respond to the behavior of the other. 
B) certainty surrounding the reaction of each firm to the behavior of the other firm. 
C) fact that if each firm separately tries to maximize its profit, it might wind up with less profit that otherwise. 
D) competition from other firms that drives their economic profit to zero. 
E) fact that when they collude to maximize their profit, the other firm's profit might be larger than its profit.

Question 10

If the four-firm concentration ratio for the market for diapers is 73 percent, then this industry is best characterized as

Accepted Answer

A) a monopoly. 
B) monopolistic competition. 
C) an oligopoly. 
D) perfect competition. 
E) either a monopoly or monopolistic competition. 
A) a monopoly. 
B) monopolistic competition. 
C) an oligopoly. 
D) perfect competition. 
E) either a monopoly or monopolistic competition.

Question 11

For a firm in monopolistic competition, innovation and product development are

Accepted Answer

A) senseless because economic profit is always zero in the long run. 
B) necessary in order to have a chance of earning at least a short-run economic profit. 
C) inconsequential because each firm produces a different product. 
D) necessary to allow new firms to enter. 
E) uncommon because other firms already produce similar products. 
A) senseless because economic profit is always zero in the long run. 
B) necessary in order to have a chance of earning at least a short-run economic profit. 
C) inconsequential because each firm produces a different product. 
D) necessary to allow new firms to enter. 
E) uncommon because other firms already produce similar products.

Question 12

The Herfindahl-Hirschman Index is the ________ of the percentage market share of each firm summed over the largest 50 firms in a market.

Accepted Answer

A) sum 
B) square 
C) square root 
D) cube 
E) negative 
A) sum 
B) square 
C) square root 
D) cube 
E) negative

Question 13

In the long-run, a firm in monopolistic competition produces at an output level where

Accepted Answer

A) P > ATC and MR = MC. 
B) P > ATC and MR > MC. 
C) P = ATC and MR = MC. 
D) P = ATC and MR > MC. 
E) P = ATC and MC = ATC. 
A) P > ATC and MR = MC. 
B) P > ATC and MR > MC. 
C) P = ATC and MR = MC. 
D) P = ATC and MR > MC. 
E) P = ATC and MC = ATC.

Question 14

The darkened area in the figure above is the

Accepted Answer

A) deadweight loss. 
B) firm's economic profit. 
C) consumer surplus. 
D) firm's total cost. 
E) firm's total revenue. 
A) deadweight loss. 
B) firm's economic profit. 
C) consumer surplus. 
D) firm's total cost. 
E) firm's total revenue.

Question 15

What is a cartel?

Accepted Answer

A cartel is a group of firms acting toge

Question 16

List four characteristics of monopolistic competition.

Accepted Answer

There are a large number firms; each pro

Question 17

How do product development and marketing affect a firm in monopolistic competition?

Accepted Answer

Product development and marketing have t

Question 18

To maintain their economic profits, firms in monopolistic competition must continually engage in

Accepted Answer

A) product innovation and development. 
B) lowering their product's price. 
C) raising their product's price. 
D) realizing short-run losses. 
E) making the demand for their product more elastic. 
A) product innovation and development. 
B) lowering their product's price. 
C) raising their product's price. 
D) realizing short-run losses. 
E) making the demand for their product more elastic.

Question 19

Suppose two companies, Sony and Magnavox, are competing in a duopoly. If both companies charge a high price, they each earn $700 million in economic profit. If both companies charge a low price, they each earn $500 million in economic profit. If one company charges a high price and the other a low price, the company charging the higher price earns $450 million in economic profit and the company charging the lower price earns $800 million in economic profit.
a. Complete the payoff matrix below for Sony and Magnavox.
   
b. Find the Nash equilibrium.

Accepted Answer

@#IMG-DLM& 
a. The completed payoff matr

Question 20

A market in which the Herfindahl-Hirschman Index exceeds 1,800 is considered to be

Accepted Answer

A) competitive. 
B) not competitive. 
C) moderately competitive. 
D) purely competitive. 
E) either a monopoly or monopolistic competition. 
A) competitive. 
B) not competitive. 
C) moderately competitive. 
D) purely competitive. 
E) either a monopoly or monopolistic competition.

Monopolistic competition is defined as a type of market structure in which

A cartel is

What do demand and marginal revenue curves look like in monopolistic competition? How do they compare to the demand and marginal revenue curves in perfect competition and monopoly?

The decision to innovate

Product differentiation means

If all firms in the industry have similar demand, marginal revenue, and cost curves as the firm in the figure above, in the long run

For a firm in monopolistic competition, define efficient scale and excess capacity. Briefly explain each.

The major dilemma facing Boeing and Airbus is the

If the four-firm concentration ratio for the market for diapers is 73 percent, then this industry is best characterized as

For a firm in monopolistic competition, innovation and product development are

The Herfindahl-Hirschman Index is the ________ of the percentage market share of each firm summed over the largest 50 firms in a market.

In the long-run, a firm in monopolistic competition produces at an output level where

The darkened area in the figure above is the

What is a cartel?

List four characteristics of monopolistic competition.

How do product development and marketing affect a firm in monopolistic competition?

To maintain their economic profits, firms in monopolistic competition must continually engage in

A market in which the Herfindahl-Hirschman Index exceeds 1,800 is considered to be

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

Monopolistic competition is defined as a type of market structure in which

A cartel is

What do demand and marginal revenue curves look like in monopolistic competition? How do they compare to the demand and marginal revenue curves in perfect competition and monopoly?

The decision to innovate

Product differentiation means

If all firms in the industry have similar demand, marginal revenue, and cost curves as the firm in the figure above, in the long run

For a firm in monopolistic competition, define efficient scale and excess capacity. Briefly explain each.

The major dilemma facing Boeing and Airbus is the

If the four-firm concentration ratio for the market for diapers is 73 percent, then this industry is best characterized as

For a firm in monopolistic competition, innovation and product development are

The Herfindahl-Hirschman Index is the ________ of the percentage market share of each firm summed over the largest 50 firms in a market.

In the long-run, a firm in monopolistic competition produces at an output level where

The darkened area in the figure above is the

What is a cartel?

List four characteristics of monopolistic competition.

How do product development and marketing affect a firm in monopolistic competition?

To maintain their economic profits, firms in monopolistic competition must continually engage in

A market in which the Herfindahl-Hirschman Index exceeds 1,800 is considered to be

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