Question 1

In long-run equilibrium, a firm in monopolistic competition makes

Accepted Answer

A) an economic profit, but the economic profit is less than it would be if the firm was a monopoly. 
B) an economic profit that is higher than what it would be if the firm was a monopoly. 
C) zero economic profit. 
D) an economic profit that is the same amount as it would be if the firm was a monopoly. 
E) an economic profit, an economic loss, or zero economic profit. 
A) an economic profit, but the economic profit is less than it would be if the firm was a monopoly. 
B) an economic profit that is higher than what it would be if the firm was a monopoly. 
C) zero economic profit. 
D) an economic profit that is the same amount as it would be if the firm was a monopoly. 
E) an economic profit, an economic loss, or zero economic profit.

Question 2

Concentration ratios

Accepted Answer

A) refer to the concentration of customers in a certain area. 
B) measure whether the market is dominated by a small number of firms. 
C) measure the concentration of a large number of firms in a certain area. 
D) have high values for perfect competition. 
E) measure how concentrated a firm's sales are among certain types of goods. 
A) refer to the concentration of customers in a certain area. 
B) measure whether the market is dominated by a small number of firms. 
C) measure the concentration of a large number of firms in a certain area. 
D) have high values for perfect competition. 
E) measure how concentrated a firm's sales are among certain types of goods.

Question 3

How do advertising and other selling costs affect a firm?

Accepted Answer

A) They shift the marginal cost curve upward. 
B) The only effect is that the excess capacity is reduced. 
C) The only effect is that the demand for the product increases. 
D) They shift the average total cost curve upward. 
E) The do not change demand and shift the average total cost curve downward. 
A) They shift the marginal cost curve upward. 
B) The only effect is that the excess capacity is reduced. 
C) The only effect is that the demand for the product increases. 
D) They shift the average total cost curve upward. 
E) The do not change demand and shift the average total cost curve downward.

Question 4

A firm in monopolistic competition has ________ demand curve.

Accepted Answer

A) a downward sloping 
B) an upward sloping 
C) a vertical 
D) a horizontal 
E) a U-shaped 
A) a downward sloping 
B) an upward sloping 
C) a vertical 
D) a horizontal 
E) a U-shaped

Question 5

Which of the following is the best example of a monopolistically competitive industry?

Accepted Answer

A) land-based long distance telephone service 
B) wheat farming 
C) the local electricity producer 
D) manufacturing of shirts 
E) cable television 
A) land-based long distance telephone service 
B) wheat farming 
C) the local electricity producer 
D) manufacturing of shirts 
E) cable television

Question 6

-The above figure represents a restaurant operating in monopolistic competition.
a. What is the profit-maximizing level of output?
b. What price will the firm charge?
c. What is the firm's profit (or loss)?
d. Is this a long-run equilibrium?
 Why or why not?
e. Is this firm producing its efficient scale of output?

Accepted Answer

a. The quantity is 20 meals a day.
b. Th

Question 7

Oligopoly is a market structure in which

Accepted Answer

A) many firms each produce a slightly differentiated product. 
B) one firm produces a unique product. 
C) a small number of firms compete. 
D) many firms produce an identical product. 
E) the number of firms is so small that they do not compete with each other. 
A) many firms each produce a slightly differentiated product. 
B) one firm produces a unique product. 
C) a small number of firms compete. 
D) many firms produce an identical product. 
E) the number of firms is so small that they do not compete with each other.

Question 8

$$\begin{array} { c c } 
\text { Firm } & \begin{array} { c } 
\text { Sales } \
\text { (millions of dollars) }
\end{array} \
\hline \text { QT Burgers } & 75 \
\text { Kwickie Chix } & 50 \
\text { Speedy Spuds } & 50 \
\text { Hasty Pudding } & 25 \
\text { Other 200 firms } & 800 \
\hline
\end{array}$$
-The table above shows the revenue figures for the top four firms along with a total for the remaining firms in the fast-food industry. What is the four-firm concentration ratio for the industry?

Accepted Answer

A) 200 
B) 20 percent 
C) 25 percent 
D) 80 percent 
E) 100 percent 
A) 200 
B) 20 percent 
C) 25 percent 
D) 80 percent 
E) 100 percent

Question 9

When weighing the efficiency of monopolistic competition, which of the following should be considered?
I. The information provided by advertising
Ii. Product variety
Iii. The extra cost of excess capacity

Accepted Answer

A) ii only 
B) i and iii 
C) ii and iii 
D) i, ii, and iii 
E) iii only 
A) ii only 
B) i and iii 
C) ii and iii 
D) i, ii, and iii 
E) iii only

Question 10

-If two duopolists can stick to a cartel agreement to boost their prices, then both

Accepted Answer

A) earn greater profits than if they did not collude. 
B) price at marginal cost. 
C) price below average total cost. 
D) decrease their economic profits. 
E) increase their production so that each produces more than if they did not collude. 
A) earn greater profits than if they did not collude. 
B) price at marginal cost. 
C) price below average total cost. 
D) decrease their economic profits. 
E) increase their production so that each produces more than if they did not collude.

Question 11

A firm in monopolistic competition that introduces a new and differentiated product will temporarily have a ________ demand for its product and is able to charge a ________.

Accepted Answer

A) less elastic; a lower price than before 
B) less elastic; a higher price than before 
C) more elastic; a lower price than before 
D) more elastic; a higher price than before 
E) less elastic; the same price as before 
A) less elastic; a lower price than before 
B) less elastic; a higher price than before 
C) more elastic; a lower price than before 
D) more elastic; a higher price than before 
E) less elastic; the same price as before

Question 12

In the long run, advertising by all firms in a monopolistically competitive industry

Accepted Answer

A) increases all firms' demand. 
B) decreases all firms' demand. 
C) lowers all firms' costs. 
D) might increase or decrease the firms' prices. 
E) lowers all firms' prices. 
A) increases all firms' demand. 
B) decreases all firms' demand. 
C) lowers all firms' costs. 
D) might increase or decrease the firms' prices. 
E) lowers all firms' prices.

Question 13

In monopolistic competition, there are ________ barriers to entry and so firms in monopolistic competition ________ earn an economic profit in the long run.

Accepted Answer

A) high; can 
B) high; cannot 
C) no; can 
D) no; cannot 
E) sometimes; can sometimes 
A) high; can 
B) high; cannot 
C) no; can 
D) no; cannot 
E) sometimes; can sometimes

Question 14

Sally's Mom is pretty sure her twins, Tim and John, together cut the hair off Sally's Barbie doll. She talks to them separately and gives them the following options. If they both confess they will have to pay Sally $10 each. If Tim confesses and John does not confess, Tim pays $15 and John pays $8. If Tim does not confess and John confesses, Tim has to pay $8 and John $15. If both do not confess, they both pay her $14. Sally's Mom has them in separate rooms and they cannot talk to each other.
a. Complete the payoff matrix below.
   
b. If they reach the Nash equilibrium, what will Tim and John do?

Accepted Answer

@#IMG-DLM& 
a. The complete payoff matri

Question 15

One of the major benefits to society of monopolistic competition is

Accepted Answer

A) high prices. 
B) restricted output. 
C) product differentiation. 
D) the excess capacity. 
E) the markup. 
A) high prices. 
B) restricted output. 
C) product differentiation. 
D) the excess capacity. 
E) the markup.

Question 16

A firm in monopolistic competition is similar to a firm in perfect competition because they both

Accepted Answer

A) can earn only zero economic profit in the long run. 
B) can earn only zero economic profit in the short run. 
C) maximize their profits by producing where P = MR = MC. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct. 
A) can earn only zero economic profit in the long run. 
B) can earn only zero economic profit in the short run. 
C) maximize their profits by producing where P = MR = MC. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct.

Question 17

The concepts of mutual interdependence and game theory illustrate the fact that firms competing in oligopoly

Accepted Answer

A) consider the actions of the rivals before changing the price of their product. 
B) ignore the actions of their rivals when considering price changes. 
C) engage in frequent price changes. 
D) never change prices. 
E) will mutually determine the combined best outcome for all players. 
A) consider the actions of the rivals before changing the price of their product. 
B) ignore the actions of their rivals when considering price changes. 
C) engage in frequent price changes. 
D) never change prices. 
E) will mutually determine the combined best outcome for all players.

Question 18

In the prisoners' dilemma, each player is ________ regardless of the other players' actions.

Accepted Answer

A) forced to confess 
B) forced to deny 
C) better off confessing 
D) better off denying 
E) going to go free 
A) forced to confess 
B) forced to deny 
C) better off confessing 
D) better off denying 
E) going to go free

Question 19

In a prisoners' dilemma game, in the Nash equilibrium

Accepted Answer

A) neither player gets his or her best outcome. 
B) both players get their best outcome. 
C) one player gets his or her best outcome and the other player does not. 
D) collusion would not alter the outcome. 
E) Either answer A or C might be correct depending on whether the players communicate with each other or do not communicate with each other. 
A) neither player gets his or her best outcome. 
B) both players get their best outcome. 
C) one player gets his or her best outcome and the other player does not. 
D) collusion would not alter the outcome. 
E) Either answer A or C might be correct depending on whether the players communicate with each other or do not communicate with each other.

Question 20

The firm in the above figure has an economic profit of ________.

Accepted Answer

A) $0 
B) $80 
C) $160 
D) more than $161 
E) less than zero, that is, the firm has an economic loss 
A) $0 
B) $80 
C) $160 
D) more than $161 
E) less than zero, that is, the firm has an economic loss

In long-run equilibrium, a firm in monopolistic competition makes

Concentration ratios

How do advertising and other selling costs affect a firm?

A firm in monopolistic competition has ________ demand curve.

Which of the following is the best example of a monopolistically competitive industry?

Oligopoly is a market structure in which

When weighing the efficiency of monopolistic competition, which of the following should be considered? I. The information provided by advertising Ii. Product variety Iii. The extra cost of excess capacity

-If two duopolists can stick to a cartel agreement to boost their prices, then both

A firm in monopolistic competition that introduces a new and differentiated product will temporarily have a demand for its product and is able to charge a .

In the long run, advertising by all firms in a monopolistically competitive industry

In monopolistic competition, there are barriers to entry and so firms in monopolistic competition earn an economic profit in the long run.

One of the major benefits to society of monopolistic competition is

A firm in monopolistic competition is similar to a firm in perfect competition because they both

The concepts of mutual interdependence and game theory illustrate the fact that firms competing in oligopoly

In the prisoners' dilemma, each player is ________ regardless of the other players' actions.

In a prisoners' dilemma game, in the Nash equilibrium

The firm in the above figure has an economic profit of ________.

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

In long-run equilibrium, a firm in monopolistic competition makes

Concentration ratios

How do advertising and other selling costs affect a firm?

A firm in monopolistic competition has ________ demand curve.

Which of the following is the best example of a monopolistically competitive industry?

Oligopoly is a market structure in which

When weighing the efficiency of monopolistic competition, which of the following should be considered? I. The information provided by advertising Ii. Product variety Iii. The extra cost of excess capacity

-If two duopolists can stick to a cartel agreement to boost their prices, then both

A firm in monopolistic competition that introduces a new and differentiated product will temporarily have a ________ demand for its product and is able to charge a ________.

In the long run, advertising by all firms in a monopolistically competitive industry

In monopolistic competition, there are ________ barriers to entry and so firms in monopolistic competition ________ earn an economic profit in the long run.

One of the major benefits to society of monopolistic competition is

A firm in monopolistic competition is similar to a firm in perfect competition because they both

The concepts of mutual interdependence and game theory illustrate the fact that firms competing in oligopoly

In the prisoners' dilemma, each player is ________ regardless of the other players' actions.

In a prisoners' dilemma game, in the Nash equilibrium

The firm in the above figure has an economic profit of ________.

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

A firm in monopolistic competition that introduces a new and differentiated product will temporarily have a demand for its product and is able to charge a .

In monopolistic competition, there are barriers to entry and so firms in monopolistic competition earn an economic profit in the long run.