Question 1

A reason why there is more competition in the restaurant industry than in the music streaming industry is that restaurants

Accepted Answer

A)  have to cater to a variety of consumer tastes while music streaming companies do not. 
B)  unlike music streaming companies, have to abide by government sanitation rules. 
C)  unlike music streaming companies, do not have significant economies of scale. 
D)  have more elastic demand for their product compared to music streaming companies. 
A)  have to cater to a variety of consumer tastes while music streaming companies do not. 
B)  unlike music streaming companies, have to abide by government sanitation rules. 
C)  unlike music streaming companies, do not have significant economies of scale. 
D)  have more elastic demand for their product compared to music streaming companies.

Question 2

The economic analysis of monopolistic competition shows that market forces eliminate profits in the long run.However,it is possible for a firm to continue to earn economic profits if the firm

Accepted Answer

A)  expands its marketing budget. 
B)  adopts new technologies that enable it to lower its cost of production. 
C)  expands its product offerings to appeal to a wider range of consumers. 
D)  reduces its price to expand its market. 
A)  expands its marketing budget. 
B)  adopts new technologies that enable it to lower its cost of production. 
C)  expands its product offerings to appeal to a wider range of consumers. 
D)  reduces its price to expand its market.

Question 3

A four-firm concentration ratio measures

Accepted Answer

A)  the extent to which industry sales are concentrated among the four largest firms in the industry. 
B)  the price elasticity of demand among the four largest firms in an industry. 
C)  the number of firms in an industry. 
D)  the price elasticity of demand in an industry. 
A)  the extent to which industry sales are concentrated among the four largest firms in the industry. 
B)  the price elasticity of demand among the four largest firms in an industry. 
C)  the number of firms in an industry. 
D)  the price elasticity of demand in an industry.

Question 4

Patents,tariffs,and quotas are all examples of

Accepted Answer

A)  government-imposed barriers. 
B)  economic regulations that increase efficiency. 
C)  entry barriers that improve a country's standard of living. 
D)  entry barriers that protect consumers. 
A)  government-imposed barriers. 
B)  economic regulations that increase efficiency. 
C)  entry barriers that improve a country's standard of living. 
D)  entry barriers that protect consumers.

Question 5

An equilibrium in a game in which players pursue their own self-interest is called

Accepted Answer

A)  a Nash equilibrium. 
B)  a cooperative equilibrium. 
C)  a noncooperative equilibrium. 
D)  a prisoner's dilemma. 
A)  a Nash equilibrium. 
B)  a cooperative equilibrium. 
C)  a noncooperative equilibrium. 
D)  a prisoner's dilemma.

Question 6

What are the formulas for total revenue,average revenue,and marginal revenue.

Accepted Answer

Total revenue equals price × q

Question 7

For productive efficiency to hold

Accepted Answer

A)  price must equal the marginal cost of the last unit produced. 
B)  price must equal marginal revenue of the last unit sold. 
C)  the average variable cost must be minimized in production. 
D)  the average total cost must be minimized in production. 
A)  price must equal the marginal cost of the last unit produced. 
B)  price must equal marginal revenue of the last unit sold. 
C)  the average variable cost must be minimized in production. 
D)  the average total cost must be minimized in production.

Question 8

Which of the following is not necessarily a consequence of occupational licensing laws?

Accepted Answer

A)  They restrict competition. 
B)  Consumers pay higher prices for the services of licensed professions. 
C)  They result in a higher quality of service. 
D)  They ensure that licensed professionals meet some minimum qualifications. 
A)  They restrict competition. 
B)  Consumers pay higher prices for the services of licensed professions. 
C)  They result in a higher quality of service. 
D)  They ensure that licensed professionals meet some minimum qualifications.

Question 9

On November 7,1996,the Distilled Spirits Council of the United States decided to end its voluntary ban on television and radio liquor advertisement.The ban on hard liquor advertising had been in effect since 1936 for radio and 1948 for television.Assuming that advertising is a prisoner's dilemma,and that if one company advertises,its competitors will also choose to spend money to advertise,did the lifting of this ban likely increase or decrease the profits of hard liquor companies? Briefly explain.

Accepted Answer

If advertising is a prisoner's

Question 10

Table 11-9
   Alpha and Beta are the only firms selling gyros in the upscale town of Delphi. Each firm must decide on whether to offer a discount to students to compete for customers. If one firm offers a discount but the other does not, then the firm that offers the discount will increase its profit. Table 11-9 shows the payoff matrix for this game.
-Refer to Table 11-9.Does Alpha have a dominant strategy and if so,what is it?

Accepted Answer

A)  Yes, Alpha should offer a student discount. 
B)  Yes, Alpha should not offer a student discount. 
C)  There are two dominant strategies: if Beta offers a student discount then Alpha's best bet is to not offer a student discount, but if Beta does not offer a student discount then Alpha should offer a student discount. 
D)  No, there is no dominant strategy. 
A)  Yes, Alpha should offer a student discount. 
B)  Yes, Alpha should not offer a student discount. 
C)  There are two dominant strategies: if Beta offers a student discount then Alpha's best bet is to not offer a student discount, but if Beta does not offer a student discount then Alpha should offer a student discount. 
D)  No, there is no dominant strategy.

Question 11

What is the difference between zero accounting profit and zero economic profit?

Accepted Answer

Economic profits take into account oppor

Question 12

After selling 1,000 three-ring binders Tony DiFulvio realizes that the marginal revenue from selling the last binder was less than the marginal cost.From this we can conclude that

Accepted Answer

A)  Tony's business earns a short-run economic profit. 
B)  Tony should shut down his business temporarily. 
C)  Tony's profit fell after selling his 1,000th three-ring binder. 
D)  Tony's profit would be greater if he sold an additional three-ring binder. 
A)  Tony's business earns a short-run economic profit. 
B)  Tony should shut down his business temporarily. 
C)  Tony's profit fell after selling his 1,000th three-ring binder. 
D)  Tony's profit would be greater if he sold an additional three-ring binder.

Question 13

For a downward-sloping demand curve,the marginal revenue decreases as the quantity sold increases.

Accepted Answer

A) True 
 B)False

Question 14

The study of how people make decisions in situations in which attaining their goals depends on their interactions with others is called

Accepted Answer

A)  game theory. 
B)  oligopoly. 
C)  competitive analysis. 
D)  strategic analysis. 
A)  game theory. 
B)  oligopoly. 
C)  competitive analysis. 
D)  strategic analysis.

Question 15

Collusion makes firms better off because if they act as a single entity (a cartel)they can reduce output and increase their prices and profits.But some cartels have failed and others are unstable.Which of the following is a reason why cartels often break down?

Accepted Answer

A)  Most cartels do not have a dominant strategy. 
B)  When a cartel is profitable, the amount of competition it faces increases. 
C)  Members of a cartel may resent having to share their profits equally. 
D)  Each member of a cartel has an incentive to "cheat" on the collusive agreement by producing more than its share when everyone else sticks with the collusive agreement. 
A)  Most cartels do not have a dominant strategy. 
B)  When a cartel is profitable, the amount of competition it faces increases. 
C)  Members of a cartel may resent having to share their profits equally. 
D)  Each member of a cartel has an incentive to "cheat" on the collusive agreement by producing more than its share when everyone else sticks with the collusive agreement.

Question 16

You have just opened a new Italian restaurant in your hometown where there are three other Italian restaurants.Your restaurant is doing a brisk business and you attribute your success to your distinctive northern Italian cuisine using locally grown organic produce.What is likely to happen to your business in the long run?

Accepted Answer

A)  Your competitors are likely to change their menus to make their products more similar to yours. 
B)  Your success will invite others to open competing restaurants and ultimately your profits will be driven to zero. 
C)  If your success continues, you will be likely to establish a franchise and expand your market size. 
D)  If you continue to maintain consistent quality, you will be able to earn profits indefinitely. 
A)  Your competitors are likely to change their menus to make their products more similar to yours. 
B)  Your success will invite others to open competing restaurants and ultimately your profits will be driven to zero. 
C)  If your success continues, you will be likely to establish a franchise and expand your market size. 
D)  If you continue to maintain consistent quality, you will be able to earn profits indefinitely.

Question 17

Economists agree that a monopolistically competitive market structure

Accepted Answer

A)  lowers consumer utility because consumers pay a price higher than the marginal cost of production. 
B)  is detrimental to society because it leads to a waste of scarce resources. 
C)  benefits consumers because firms produce products that appeal to a wide range of consumer tastes. 
D)  can eliminate any excess capacity if all firms in the industry devote more funds to differentiating their products. 
A)  lowers consumer utility because consumers pay a price higher than the marginal cost of production. 
B)  is detrimental to society because it leads to a waste of scarce resources. 
C)  benefits consumers because firms produce products that appeal to a wide range of consumer tastes. 
D)  can eliminate any excess capacity if all firms in the industry devote more funds to differentiating their products.

Question 18

Table 11-8
   Suppose OPEC has only two producers, Saudi Arabia and Ecuador. Saudi Arabia has far more oil reserves and is the lower-cost producer compared to Ecuador. The payoff matrix in Table 11-8 shows the profits earned per day by each country. "Low output" corresponds to producing the OPEC assigned quota and "high output" corresponds to producing the maximum capacity beyond the assigned quota.
-Refer to Table 11-8.Is there a dominant strategy for Saudi Arabia and,if so,what is it?

Accepted Answer

A)  Yes, the dominant strategy is to produce a high output. 
B)  Yes, the dominant strategy is to produce a low output. 
C)  No, there is no dominant strategy. 
D)  Yes, it has a dominant strategy depending on what Ecuador does. 
A)  Yes, the dominant strategy is to produce a high output. 
B)  Yes, the dominant strategy is to produce a low output. 
C)  No, there is no dominant strategy. 
D)  Yes, it has a dominant strategy depending on what Ecuador does.

Question 19

If economies of scale are relatively important in an industry,the typical firm's

Accepted Answer

A)  marginal cost curve will decline continuously until it reaches minimum efficient scale. 
B)  long-run average cost curve will begin rising before it reaches minimum efficient scale. 
C)  long-run average cost curve will reach a minimum at a level of output that leaves room for a large number of firms to enter the industry. 
D)  long-run average cost curve will reach a minimum at a level of output that is a relatively large fraction of total industry sales. 
A)  marginal cost curve will decline continuously until it reaches minimum efficient scale. 
B)  long-run average cost curve will begin rising before it reaches minimum efficient scale. 
C)  long-run average cost curve will reach a minimum at a level of output that leaves room for a large number of firms to enter the industry. 
D)  long-run average cost curve will reach a minimum at a level of output that is a relatively large fraction of total industry sales.

Question 20

Natural resource cartels such as OPEC are inherently unstable because their members operate with excess capacity and have an incentive to cheat on their output quotas.

Accepted Answer

A) True 
 B)False

A reason why there is more competition in the restaurant industry than in the music streaming industry is that restaurants

The economic analysis of monopolistic competition shows that market forces eliminate profits in the long run.However,it is possible for a firm to continue to earn economic profits if the firm

A four-firm concentration ratio measures

Patents,tariffs,and quotas are all examples of

An equilibrium in a game in which players pursue their own self-interest is called

What are the formulas for total revenue,average revenue,and marginal revenue.

For productive efficiency to hold

Which of the following is not necessarily a consequence of occupational licensing laws?

What is the difference between zero accounting profit and zero economic profit?

After selling 1,000 three-ring binders Tony DiFulvio realizes that the marginal revenue from selling the last binder was less than the marginal cost.From this we can conclude that

For a downward-sloping demand curve,the marginal revenue decreases as the quantity sold increases.

The study of how people make decisions in situations in which attaining their goals depends on their interactions with others is called

Collusion makes firms better off because if they act as a single entity (a cartel)they can reduce output and increase their prices and profits.But some cartels have failed and others are unstable.Which of the following is a reason why cartels often break down?

Economists agree that a monopolistically competitive market structure

If economies of scale are relatively important in an industry,the typical firm's

Natural resource cartels such as OPEC are inherently unstable because their members operate with excess capacity and have an incentive to cheat on their output quotas.

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

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Exam 11: Monopolistic Competition and Oligopoly

A reason why there is more competition in the restaurant industry than in the music streaming industry is that restaurants

The economic analysis of monopolistic competition shows that market forces eliminate profits in the long run.However,it is possible for a firm to continue to earn economic profits if the firm

A four-firm concentration ratio measures

Patents,tariffs,and quotas are all examples of

An equilibrium in a game in which players pursue their own self-interest is called

What are the formulas for total revenue,average revenue,and marginal revenue.

For productive efficiency to hold

Which of the following is not necessarily a consequence of occupational licensing laws?

What is the difference between zero accounting profit and zero economic profit?

After selling 1,000 three-ring binders Tony DiFulvio realizes that the marginal revenue from selling the last binder was less than the marginal cost.From this we can conclude that

For a downward-sloping demand curve,the marginal revenue decreases as the quantity sold increases.

The study of how people make decisions in situations in which attaining their goals depends on their interactions with others is called

Collusion makes firms better off because if they act as a single entity (a cartel)they can reduce output and increase their prices and profits.But some cartels have failed and others are unstable.Which of the following is a reason why cartels often break down?

Economists agree that a monopolistically competitive market structure

If economies of scale are relatively important in an industry,the typical firm's

Natural resource cartels such as OPEC are inherently unstable because their members operate with excess capacity and have an incentive to cheat on their output quotas.

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