Question 1

Which of the following statements about the prisoner's dilemma is false?

Accepted Answer

A)  The prisoner's dilemma in a one-shot game leads to a noncooperative, equilibrium outcome. 
B)  The prisoner's dilemma in repeated games could lead to cooperation especially if there is some enforcement mechanism that punishes a player who does not cooperate. 
C)  Players caught in a prisoner's dilemma act in selfish ways that lead to an equilibrium that is sub-optimal. 
D)  The prisoner's dilemma game rarely ends in a non-cooperative equilibrium. 
A)  The prisoner's dilemma in a one-shot game leads to a noncooperative, equilibrium outcome. 
B)  The prisoner's dilemma in repeated games could lead to cooperation especially if there is some enforcement mechanism that punishes a player who does not cooperate. 
C)  Players caught in a prisoner's dilemma act in selfish ways that lead to an equilibrium that is sub-optimal. 
D)  The prisoner's dilemma game rarely ends in a non-cooperative equilibrium.

Question 2

Table 11-5
 $\begin{array}{|c|c|c|}
\hline \text { Quantity } & \text { Price } & \text { Total Cost } \
\hline 1 & \$ 18 & \$ 14 \
\hline 2 & 16 & 20 \
\hline 3 & 14 & 26 \
\hline 4 & 12 & 32 \
\hline 5 & 10 & 38 \
\hline 6 & 8 & 44 \
\hline
\end{array}$ Table 11-5 shows the demand and cost data facing a monopolistically competitive producer of canvas bags.
-Refer to Table 11-5.What are the firm's profit-maximizing or loss-minimizing price and quantity?

Accepted Answer

A)  price = $10; quantity = 5. 
B)  price = $12; quantity = 4. 
C)  The firm should shut down temporarily. 
D)  This cannot be determined from the information given. 
A)  price = $10; quantity = 5. 
B)  price = $12; quantity = 4. 
C)  The firm should shut down temporarily. 
D)  This cannot be determined from the information given.

Question 3

A monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing and becoming more elastic in the long run as new firms move into the industry until

Accepted Answer

A)  the original firm is driven into bankruptcy. 
B)  the firm's demand curve is perfectly elastic. 
C)  the firm's demand curve is tangent to its average total cost curve. 
D)  the firm exits the market. 
A)  the original firm is driven into bankruptcy. 
B)  the firm's demand curve is perfectly elastic. 
C)  the firm's demand curve is tangent to its average total cost curve. 
D)  the firm exits the market.

Question 4

We can draw demand curves for firms in perfectly competitive and monopolistically competitive industries,but not for oligopoly firms.The reason for this is

Accepted Answer

A)  there are no barriers to entry in perfectly competitive and monopolistically competitive industries. There are high barriers to entry in oligopoly industries. 
B)  we can assume that the prices charged by perfectly competitive and monopolistically competitive firms have no impact on rival firms. For oligopoly this assumption is unrealistic. 
C)  that perfectly competitive and monopolistically competitive firms are price takers. Oligopoly firms are price makers. 
D)  perfectly competitive and monopolistically competitive firms sell standardized products. Oligopoly firms sell differentiated products. 
A)  there are no barriers to entry in perfectly competitive and monopolistically competitive industries. There are high barriers to entry in oligopoly industries. 
B)  we can assume that the prices charged by perfectly competitive and monopolistically competitive firms have no impact on rival firms. For oligopoly this assumption is unrealistic. 
C)  that perfectly competitive and monopolistically competitive firms are price takers. Oligopoly firms are price makers. 
D)  perfectly competitive and monopolistically competitive firms sell standardized products. Oligopoly firms sell differentiated products.

Question 5

Producing a differentiated product occurs in which of the following industries?

Accepted Answer

A)  oligopoly, monopolistic competition, and perfect competition 
B)  monopolistic competition only 
C)  oligopoly only 
D)  monopolistic competition and oligopoly 
A)  oligopoly, monopolistic competition, and perfect competition 
B)  monopolistic competition only 
C)  oligopoly only 
D)  monopolistic competition and oligopoly

Question 6

Figure 11-4
   Figure 11-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 11-4.What is the area that represents the total variable cost of production?

Accepted Answer

A)  0P₀aQₐ 
B)  0P₁bQₐ 
C)  P₀abP₁ 
D)  P₁bdP₃ 
A)  0P₀aQₐ 
B)  0P₁bQₐ 
C)  P₀abP₁ 
D)  P₁bdP₃

Question 7

Because the monopolistically competitive firm faces a ________ demand curve for its product,it ________ the price of its output.

Accepted Answer

A)  downward-sloping; cannot influence 
B)  horizontal; can influence 
C)  horizontal; cannot influence 
D)  downward-sloping; can influence 
A)  downward-sloping; cannot influence 
B)  horizontal; can influence 
C)  horizontal; cannot influence 
D)  downward-sloping; can influence

Question 8

The DeBeers Company of South Africa was able to block competition through

Accepted Answer

A)  economies of scale. 
B)  ownership of an essential input. 
C)  government-imposed barriers. 
D)  differentiating its product. 
A)  economies of scale. 
B)  ownership of an essential input. 
C)  government-imposed barriers. 
D)  differentiating its product.

Question 9

Table 11-10
   Martin and Lewis each run one of the two bingo parlors in Schenectady. Both consider offering free rides to and from the parlors. Table 11-10 shows the payoff matrix containing the expected weekly profits for each bingo parlor.
-Refer to Table 11-10.What is the Nash equilibrium in this game?

Accepted Answer

A)  There is no Nash equilibrium. 
B)  Martin offers free rides, but Lewis does not. 
C)  Lewis offers free rides, but Martin does not. 
D)  Both Martin and Lewis offer free rides. 
A)  There is no Nash equilibrium. 
B)  Martin offers free rides, but Lewis does not. 
C)  Lewis offers free rides, but Martin does not. 
D)  Both Martin and Lewis offer free rides.

Question 10

Figure 11-2
-Refer to Figure 11-2.The marginal revenue from selling the additional unit Qb instead of Qₐ equals

Accepted Answer

A) the area (G + H). 
B) the area (H - 
E) . 
C) the area (E + F)- (G + H). 
D) the area G. 
A) the area (G + H). 
B) the area (H - 
E) . 
C) the area (E + F)- (G + H). 
D) the area G.

Question 11

An example of a barrier to entry is

Accepted Answer

A)  product differentiation. 
B)  high profits. 
C)  occupational licensing. 
D)  increasing marginal costs. 
A)  product differentiation. 
B)  high profits. 
C)  occupational licensing. 
D)  increasing marginal costs.

Question 12

The approach economists use to analyze competition among oligopolists is called

Accepted Answer

A)  marginal analysis. 
B)  game theory. 
C)  oligopoly theory. 
D)  competition among the few. 
A)  marginal analysis. 
B)  game theory. 
C)  oligopoly theory. 
D)  competition among the few.

Question 13

All of the following are characteristics of game theory except

Accepted Answer

A)  rules that determine what actions are allowable. 
B)  payoffs that are the results of the interaction among players' strategies. 
C)  strategies that players employ to attain their objectives. 
D)  independence among players. 
A)  rules that determine what actions are allowable. 
B)  payoffs that are the results of the interaction among players' strategies. 
C)  strategies that players employ to attain their objectives. 
D)  independence among players.

Question 14

Table 11-7
   Table 11-7 shows the payoff matrix for Walmart and Target from every combination of pricing strategies for the popular PlayStation 4. At the start of the game each firm charges a low price and each earns a profit of $7,000.
-Refer to Table 11-7.Suppose Walmart and Target both advertise that they will match the lowest price offered by any competitor.What is the purpose of such a strategy?

Accepted Answer

A)  to signal to each other not to charge below the current low price 
B)  to signal to each other that they will not hesitate to initiate a price war 
C)  to signal to each other that they intend to charge the high price 
D)  to signal to each other to share the market equally 
A)  to signal to each other not to charge below the current low price 
B)  to signal to each other that they will not hesitate to initiate a price war 
C)  to signal to each other that they intend to charge the high price 
D)  to signal to each other to share the market equally

Question 15

When a monopolistically competitive firm cuts its price to increase its sales,it experiences a loss in revenue due to the

Accepted Answer

A)  substitution effect. 
B)  income effect. 
C)  price effect. 
D)  output effect. 
A)  substitution effect. 
B)  income effect. 
C)  price effect. 
D)  output effect.

Question 16

The people firms hire to attempt to convince state legislators and members of Congress to pass laws that are favorable to the economic interests of the firms are called

Accepted Answer

A)  economic advisors. 
B)  legislative assistants. 
C)  government bureaucrats. 
D)  lobbyists. 
A)  economic advisors. 
B)  legislative assistants. 
C)  government bureaucrats. 
D)  lobbyists.

Question 17

What is the difference between explicit collusion and implicit collusion?

Accepted Answer

Explicit collusion involves ma

Question 18

If a monopolistically competitive firm has excess capacity

Accepted Answer

A)  it has exhausted all economies of scale. 
B)  it is producing beyond the minimum efficient scale. 
C)  it is experiencing diseconomies of scale. 
D)  it produces a level of output that places it on the negatively sloped portion of its average total cost curve. 
A)  it has exhausted all economies of scale. 
B)  it is producing beyond the minimum efficient scale. 
C)  it is experiencing diseconomies of scale. 
D)  it produces a level of output that places it on the negatively sloped portion of its average total cost curve.

Question 19

Central Grocery in New Orleans is famous for its muffaletta,a large round sandwich filled with deli meats and topped with a tangy olive salad.Suppose the following table represents cost and revenue data for Central Grocery.Fill in the columns for TR,MR,MC,ATC,and profit.If Central Grocery wants to maximize profits,what price should it charge for a muffaletta,what quantity should it sell,and what will be the amount of its total profit?
 $\begin{array}{|c|c|c|c|c|c|c|c|}
\hline \begin{array}{c}
\text { Muffalettas } \
\text { Sold per } \
\text { Day }
\end{array} & \begin{array}{c}
\text { Price } \
(P)
\end{array} & \begin{array}{c}
\text { Total } \
\text { Revenue } \
(T R)
\end{array} & \begin{array}{c}
\text { Marginal } \
\text { Revenue } \
(M R)
\end{array} & \begin{array}{c}
\text { Total } \
\text { Cost }(T C)
\end{array} & \begin{array}{c}
\text { Marginal } \
\text { Cost }(M C)
\end{array} & \begin{array}{c}
\text { Total Cost } \
(A T C)
\end{array} & \text { Profit } \
\hline 0 & \$ 15 & & & \$ 12 & & & \
\hline 1 & 14 & & & 18 & & & \
\hline 2 & 13 & & & 20 & & & \
\hline 3 & 12 & & & 21 & & & \
\hline 4 & 11 & & & 23 & & & \
\hline 5 & 10 & & & 26 & & & \
\hline 6 & 9 & & & 30 & & & \
\hline 7 & 8 & & & 35 & & & \
\hline 8 & 7 & & & 42 & & & \
\hline 9 & 6 & & & 52 & & & \
\hline 10 & 5 & & & 78 & & & \
\hline
\end{array}$

Accepted Answer

To maximize profits,Central Gr

Question 20

Figure 11-9
  
-Refer to Figure 11-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is earning economic profits?

Accepted Answer

A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel A and Panel B 
A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel A and Panel B

Which of the following statements about the prisoner's dilemma is false?

Table 11-5 Quantity Price Total Cost 1 \ 18 \ 14 2 16 20 3 14 26 4 12 32 5 10 38 6 8 44 Table 11-5 shows the demand and cost data facing a monopolistically competitive producer of canvas bags. -Refer to Table 11-5.What are the firm's profit-maximizing or loss-minimizing price and quantity?

A monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing and becoming more elastic in the long run as new firms move into the industry until

We can draw demand curves for firms in perfectly competitive and monopolistically competitive industries,but not for oligopoly firms.The reason for this is

Producing a differentiated product occurs in which of the following industries?

Figure 11-4 Figure 11-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 11-4.What is the area that represents the total variable cost of production?

Because the monopolistically competitive firm faces a demand curve for its product,it the price of its output.

The DeBeers Company of South Africa was able to block competition through

Figure 11-2 -Refer to Figure 11-2.The marginal revenue from selling the additional unit Qb instead of Qₐ equals

An example of a barrier to entry is

The approach economists use to analyze competition among oligopolists is called

All of the following are characteristics of game theory except

When a monopolistically competitive firm cuts its price to increase its sales,it experiences a loss in revenue due to the

The people firms hire to attempt to convince state legislators and members of Congress to pass laws that are favorable to the economic interests of the firms are called

What is the difference between explicit collusion and implicit collusion?

If a monopolistically competitive firm has excess capacity

Figure 11-9 -Refer to Figure 11-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is earning economic profits?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters

Exam 11: Monopolistic Competition and Oligopoly

Which of the following statements about the prisoner's dilemma is false?

Table 11-5 Quantity Price Total Cost 1 \ 18 \ 14 2 16 20 3 14 26 4 12 32 5 10 38 6 8 44 Table 11-5 shows the demand and cost data facing a monopolistically competitive producer of canvas bags. -Refer to Table 11-5.What are the firm's profit-maximizing or loss-minimizing price and quantity?

A monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing and becoming more elastic in the long run as new firms move into the industry until

We can draw demand curves for firms in perfectly competitive and monopolistically competitive industries,but not for oligopoly firms.The reason for this is

Producing a differentiated product occurs in which of the following industries?

Figure 11-4 Figure 11-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 11-4.What is the area that represents the total variable cost of production?

Because the monopolistically competitive firm faces a ________ demand curve for its product,it ________ the price of its output.

The DeBeers Company of South Africa was able to block competition through

Figure 11-2 -Refer to Figure 11-2.The marginal revenue from selling the additional unit Qb instead of Qₐ equals

An example of a barrier to entry is

The approach economists use to analyze competition among oligopolists is called

All of the following are characteristics of game theory except

When a monopolistically competitive firm cuts its price to increase its sales,it experiences a loss in revenue due to the

The people firms hire to attempt to convince state legislators and members of Congress to pass laws that are favorable to the economic interests of the firms are called

What is the difference between explicit collusion and implicit collusion?

If a monopolistically competitive firm has excess capacity

Figure 11-9 -Refer to Figure 11-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is earning economic profits?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters

Because the monopolistically competitive firm faces a demand curve for its product,it the price of its output.