Question 1

In the long run,the economic profits of Hoot's Chicken 'n' Ribs,a monopolistic competitor,are:

Accepted Answer

A)  not eliminated, because competition is not perfect. 
B)  not eliminated, because the demand curve slopes downward. 
C)  eliminated due to firms entering the industry. 
D)  eliminated due to firms leaving the industry. 
E)  not eliminated, because firms cannot enter the industry. 
A)  not eliminated, because competition is not perfect. 
B)  not eliminated, because the demand curve slopes downward. 
C)  eliminated due to firms entering the industry. 
D)  eliminated due to firms leaving the industry. 
E)  not eliminated, because firms cannot enter the industry.

Question 2

What are the characteristics of monopolistic competition?

Accepted Answer

Monopolistic competition is ch

Question 3

Product differentiation:

Accepted Answer

A)  refers to the attempt of firms to make their products look like those of the other firms in the industry. 
B)  refers to the attempt of firms to make real or apparent differences in essentially substitutable products look different in the minds of the consumers. 
C)  refers to the advantage big firms have in research and development. 
D)  is a common characteristic of a perfectly competitive market structure. 
E)  is only employed in a monopoly market structure. 
A)  refers to the attempt of firms to make their products look like those of the other firms in the industry. 
B)  refers to the attempt of firms to make real or apparent differences in essentially substitutable products look different in the minds of the consumers. 
C)  refers to the advantage big firms have in research and development. 
D)  is a common characteristic of a perfectly competitive market structure. 
E)  is only employed in a monopoly market structure.

Question 4

Suppose an oil cartel has an agreement to restrict members' production in order to maintain a price of $30 per barrel.A single cartel member may want to cheat and exceed its quota so that it can:

Accepted Answer

A)  reduce its costs. 
B)  charge higher prices. 
C)  make demand more inelastic. 
D)  earn a bigger profit. 
A)  reduce its costs. 
B)  charge higher prices. 
C)  make demand more inelastic. 
D)  earn a bigger profit.

Question 5

The monopolistic competition market structure is characterized by a few large firms which account for a large percentage of industry sales.

Accepted Answer

A) True 
 B)False

Question 6

The monopolistic competition market structure is characterized by:

Accepted Answer

A)  few firms and similar products. 
B)  many firms and differentiated products. 
C)  many firms and a homogeneous product. 
D)  few firms and a homogeneous product. 
A)  few firms and similar products. 
B)  many firms and differentiated products. 
C)  many firms and a homogeneous product. 
D)  few firms and a homogeneous product.

Question 7

In order from the most to the least competitive market structure is the perfectly competitive,monopolistically competitive,monopolist and then the oligopolistic market structure.

Accepted Answer

A) True 
 B)False

Question 8

A cartel is:

Accepted Answer

A)  a joint venture of two companies. 
B)  a joining of firms for the purpose of fixing prices and controlling output. 
C)  a breaking up of a company into two or more parts. 
D)  the joining of industry with government to solve a specified problem. 
E)  the joining of two firms with unrelated products. 
A)  a joint venture of two companies. 
B)  a joining of firms for the purpose of fixing prices and controlling output. 
C)  a breaking up of a company into two or more parts. 
D)  the joining of industry with government to solve a specified problem. 
E)  the joining of two firms with unrelated products.

Question 9

Cartel pricing refers to the output and price choice of a cartel.This choice most closely resembles that of a:

Accepted Answer

A)  b or d 
B)  godfather oligopoly. 
C)  duopoly. 
D)  monopoly. 
E)  more competitive industry. 
A)  b or d 
B)  godfather oligopoly. 
C)  duopoly. 
D)  monopoly. 
E)  more competitive industry.

Question 10

If a firm has substantial market power,it must be operating in an industry that would be classified as:

Accepted Answer

A)  a monopoly or oligopoly. 
B)  perfectly competitive. 
C)  monopolistically competitive. 
D)  perfectly competitive or monopolistically competitive. 
E)  perfectly competitive or a monopoly. 
A)  a monopoly or oligopoly. 
B)  perfectly competitive. 
C)  monopolistically competitive. 
D)  perfectly competitive or monopolistically competitive. 
E)  perfectly competitive or a monopoly.

Question 11

Critics of advertising argue that it:

Accepted Answer

A)  lowers price by increasing competition. 
B)  results in more variety of products. 
C)  establishes brand loyalty, which promotes competition. 
D)  serves as a barrier to entry for new firms. 
A)  lowers price by increasing competition. 
B)  results in more variety of products. 
C)  establishes brand loyalty, which promotes competition. 
D)  serves as a barrier to entry for new firms.

Question 12

Which of the following statements best describes firms under monopolistic competition?

Accepted Answer

A)  Profits will be positive in the long run. 
B)  Price always equals average variable cost. 
C)  In the long run, positive economic profit will be eliminated. 
D)  Marginal revenue equals minimum average total cost in the short run. 
A)  Profits will be positive in the long run. 
B)  Price always equals average variable cost. 
C)  In the long run, positive economic profit will be eliminated. 
D)  Marginal revenue equals minimum average total cost in the short run.

Question 13

Examples of nonprice competition include advertising and product differentiation.

Accepted Answer

A) True 
 B)False

Question 14

Cartel agreements are difficult to maintain because individual members:

Accepted Answer

A)  can gain by raising their price above the price that is best for the cartel. 
B)  are often unable to police the price and output policies of other members. 
C)  can gain by secretly raising their price above the price that is best for the cartel. 
D)  can enforce price arrangements vigorously in court. 
A)  can gain by raising their price above the price that is best for the cartel. 
B)  are often unable to police the price and output policies of other members. 
C)  can gain by secretly raising their price above the price that is best for the cartel. 
D)  can enforce price arrangements vigorously in court.

Question 15

Game theory is a model for describing oligopoly price decisions among firms that are:

Accepted Answer

A)  interdependent. 
B)  independent. 
C)  regulated 
D)  merging 
A)  interdependent. 
B)  independent. 
C)  regulated 
D)  merging

Question 16

In the long run,both monopolistic competition and perfect competition result in;

Accepted Answer

A)  a wide variety of brand-name choices for consumers. 
B)  an efficient allocation of resources. 
C)  zero economic profit for firms. 
D)  excess capacity. 
A)  a wide variety of brand-name choices for consumers. 
B)  an efficient allocation of resources. 
C)  zero economic profit for firms. 
D)  excess capacity.

Question 17

A cartel:

Accepted Answer

A)  is a group of firms formally agreeing to control the price and the output of a product. 
B)  has as its primary goal to reap monopoly profits by replacing competition with cooperation. 
C)  is illegal in the United States, but not in other nations. 
D)  all of the above. 
A)  is a group of firms formally agreeing to control the price and the output of a product. 
B)  has as its primary goal to reap monopoly profits by replacing competition with cooperation. 
C)  is illegal in the United States, but not in other nations. 
D)  all of the above.

Question 18

Nonprice competition,price leadership,and cartels are models in the ____ market structure(s).

Accepted Answer

A)  perfectly competitive 
B)  monopolistically competitive 
C)  oligopoly 
D)  monopoly 
E)  perfectly competitive and monopolistically competitive 
A)  perfectly competitive 
B)  monopolistically competitive 
C)  oligopoly 
D)  monopoly 
E)  perfectly competitive and monopolistically competitive

Question 19

How will the price and output of a monopolist compare with perfect competition?

Accepted Answer

A)  The output of the monopolist will be too large and the price too high. 
B)  The output of the monopolist will be too large and the price too low. 
C)  The output of the monopolist will be too small and the price too high. 
D)  The output of the monopolist will be too small and the price too low. 
A)  The output of the monopolist will be too large and the price too high. 
B)  The output of the monopolist will be too large and the price too low. 
C)  The output of the monopolist will be too small and the price too high. 
D)  The output of the monopolist will be too small and the price too low.

Question 20

Video rental stores in cities are an illustration of:

Accepted Answer

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

Exam 9: Monopolistic Competition and Oligopoly

In the long run,the economic profits of Hoot's Chicken 'n' Ribs,a monopolistic competitor,are:

What are the characteristics of monopolistic competition?

Product differentiation:

Suppose an oil cartel has an agreement to restrict members' production in order to maintain a price of $30 per barrel.A single cartel member may want to cheat and exceed its quota so that it can:

The monopolistic competition market structure is characterized by a few large firms which account for a large percentage of industry sales.

The monopolistic competition market structure is characterized by:

In order from the most to the least competitive market structure is the perfectly competitive,monopolistically competitive,monopolist and then the oligopolistic market structure.

A cartel is:

Cartel pricing refers to the output and price choice of a cartel.This choice most closely resembles that of a:

If a firm has substantial market power,it must be operating in an industry that would be classified as:

Critics of advertising argue that it:

Which of the following statements best describes firms under monopolistic competition?

Examples of nonprice competition include advertising and product differentiation.

Cartel agreements are difficult to maintain because individual members:

Game theory is a model for describing oligopoly price decisions among firms that are:

In the long run,both monopolistic competition and perfect competition result in;

A cartel:

Nonprice competition,price leadership,and cartels are models in the ____ market structure(s).

How will the price and output of a monopolist compare with perfect competition?

Video rental stores in cities are an illustration of:

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters