Question 1

Wal-Mart created a competitive advantage with its inventory system to reduce the ratio of cost of goods sold to sales expecting:

Accepted Answer

A) to enjoy huge economic profits forever. 
B) its rivals will never imitate their strategy and it will continue to enjoy positive economic profits. 
C) its rivals will immediately do the same thing and it will end earning zero profits. 
D) to enjoy economic profits for a few years before its rivals caught up. 
E) it will at least be able to cover its fixed costs. 
A) to enjoy huge economic profits forever. 
B) its rivals will never imitate their strategy and it will continue to enjoy positive economic profits. 
C) its rivals will immediately do the same thing and it will end earning zero profits. 
D) to enjoy economic profits for a few years before its rivals caught up. 
E) it will at least be able to cover its fixed costs.

Question 2

Actions that allow oligopoly firms to coordinate their pricing behavior without explicit collusion are referred to as _____.

Accepted Answer

A) strategic behavior 
B) differential pricing strategies 
C) facilitating practices 
D) duopoly price discrimination mechanisms 
E) independent practices 
A) strategic behavior 
B) differential pricing strategies 
C) facilitating practices 
D) duopoly price discrimination mechanisms 
E) independent practices

Question 3

The major similarity between a monopolist and a monopolistically competitive firm is:

Accepted Answer

A) both are price takers. 
B) both face a horizontal demand curve. 
C) both are the sole producers of a particular good. 
D) both face a negatively sloped demand curve. 
E) both are affected by the decision of their rivals. 
A) both are price takers. 
B) both face a horizontal demand curve. 
C) both are the sole producers of a particular good. 
D) both face a negatively sloped demand curve. 
E) both are affected by the decision of their rivals.

Question 4

When the existing firms in a monopolistically competitive industry earn above-normal profit:

Accepted Answer

A) new firms enter the market,and entry continues until firms earn normal profit. 
B) new firms have no incentive to enter the market. 
C) new firms have an incentive to enter the market but are legally barred from doing so. 
D) they increase their production and lower the price level. 
E) their cost structure automatically changes,eliminating the additional profit. 
A) new firms enter the market,and entry continues until firms earn normal profit. 
B) new firms have no incentive to enter the market. 
C) new firms have an incentive to enter the market but are legally barred from doing so. 
D) they increase their production and lower the price level. 
E) their cost structure automatically changes,eliminating the additional profit.

Question 5

Certain actions by oligopolistic firms can lead to collusion even when they formally do not agree to cooperate.

Accepted Answer

A) True 
 B)False

Question 6

The following table shows the payoff matrix of the two firms (Firm X and Firm Y) in dollars when they advertise and when they do not advertise. Table 11.1  
- Refer to Table 11.1.If firm Y follows its dominant strategy and firm X does not then:

Accepted Answer

A) firm X earns $150 and firm Y earns $200. 
B) firm X earns $50 and firm Y earns $200. 
C) firm X earns $150 and firm Y earns $180. 
D) firm X earns $50 and firm Y earns $100. 
E) firm X earns $150 and firm Y earns $100. 
A) firm X earns $150 and firm Y earns $200. 
B) firm X earns $50 and firm Y earns $200. 
C) firm X earns $150 and firm Y earns $180. 
D) firm X earns $50 and firm Y earns $100. 
E) firm X earns $150 and firm Y earns $100.

Question 7

In long-run equilibrium,each monopolistically competitive firm can earn positive economic profits due to economies of scale.

Accepted Answer

A) True 
 B)False

Question 8

Strategic behavior occurs when:

Accepted Answer

A) there are a large number of firms selling identical products. 
B) there is only one firm in the market. 
C) the firms have no command over the prices of the good they produce. 
D) the firms can take any decision irrespective of what their rival does. 
E) what is best for a firm depends on what his rival does. 
A) there are a large number of firms selling identical products. 
B) there is only one firm in the market. 
C) the firms have no command over the prices of the good they produce. 
D) the firms can take any decision irrespective of what their rival does. 
E) what is best for a firm depends on what his rival does.

Question 9

In which market structure model(s) is product differentiation a significant feature?

Accepted Answer

A) Perfect competition 
B) Monopolistic competition 
C) Monopoly 
D) Oligopoly 
E) Both perfect competition and monopolistic competition 
A) Perfect competition 
B) Monopolistic competition 
C) Monopoly 
D) Oligopoly 
E) Both perfect competition and monopolistic competition

Question 10

The oligopoly market structure model is characterized by:

Accepted Answer

A) many firms in the industry producing differentiated products. 
B) many firms in the industry producing identical products. 
C) few firms in an industry with natural barriers to entry. 
D) a single firm in an industry with barriers to entry. 
E) many firms in an industry with barriers to entry. 
A) many firms in the industry producing differentiated products. 
B) many firms in the industry producing identical products. 
C) few firms in an industry with natural barriers to entry. 
D) a single firm in an industry with barriers to entry. 
E) many firms in an industry with barriers to entry.

Question 11

If firms are successful in product differentiation:

Accepted Answer

A) their demand will become relatively elastic. 
B) consumers will believe that the firms are producing more or less identical goods. 
C) they can raise their prices without losing all of their customers to rivals. 
D) they tend to face a horizontal demand curve. 
E) they gradually emerge as price takers. 
A) their demand will become relatively elastic. 
B) consumers will believe that the firms are producing more or less identical goods. 
C) they can raise their prices without losing all of their customers to rivals. 
D) they tend to face a horizontal demand curve. 
E) they gradually emerge as price takers.

Question 12

One major similarity between perfect competition and monopolistic competition is that:

Accepted Answer

A) the firms earn above normal profits in the long run. 
B) the firms are price makers. 
C) the firms produce identical products. 
D) the firms just break even in the long run. 
E) entry of firms is barred in the long run. 
A) the firms earn above normal profits in the long run. 
B) the firms are price makers. 
C) the firms produce identical products. 
D) the firms just break even in the long run. 
E) entry of firms is barred in the long run.

Question 13

Consumer loyalty tends to be very low in markets such as cola drinks and tobacco products.

Accepted Answer

A) True 
 B)False

Question 14

The short-run equilibrium position for a firm in monopolistic competition is the point at which:

Accepted Answer

A) price equals average variable cost. 
B) marginal revenue equals rising marginal cost. 
C) price equals marginal cost. 
D) marginal revenue equals average revenue. 
E) the firm's marginal-cost curve intersects its marginal-revenue curve from above. 
A) price equals average variable cost. 
B) marginal revenue equals rising marginal cost. 
C) price equals marginal cost. 
D) marginal revenue equals average revenue. 
E) the firm's marginal-cost curve intersects its marginal-revenue curve from above.

Wal-Mart created a competitive advantage with its inventory system to reduce the ratio of cost of goods sold to sales expecting:

Actions that allow oligopoly firms to coordinate their pricing behavior without explicit collusion are referred to as _____.

The major similarity between a monopolist and a monopolistically competitive firm is:

When the existing firms in a monopolistically competitive industry earn above-normal profit:

Certain actions by oligopolistic firms can lead to collusion even when they formally do not agree to cooperate.

The following table shows the payoff matrix of the two firms (Firm X and Firm Y) in dollars when they advertise and when they do not advertise. Table 11.1 - Refer to Table 11.1.If firm Y follows its dominant strategy and firm X does not then:

In long-run equilibrium,each monopolistically competitive firm can earn positive economic profits due to economies of scale.

Strategic behavior occurs when:

In which market structure model(s) is product differentiation a significant feature?

The oligopoly market structure model is characterized by:

If firms are successful in product differentiation:

One major similarity between perfect competition and monopolistic competition is that:

Consumer loyalty tends to be very low in markets such as cola drinks and tobacco products.

The short-run equilibrium position for a firm in monopolistic competition is the point at which:

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Exam 11: Monopolistic Competition and Oligopoly

Wal-Mart created a competitive advantage with its inventory system to reduce the ratio of cost of goods sold to sales expecting:

Actions that allow oligopoly firms to coordinate their pricing behavior without explicit collusion are referred to as _____.

The major similarity between a monopolist and a monopolistically competitive firm is:

When the existing firms in a monopolistically competitive industry earn above-normal profit:

Certain actions by oligopolistic firms can lead to collusion even when they formally do not agree to cooperate.

The following table shows the payoff matrix of the two firms (Firm X and Firm Y) in dollars when they advertise and when they do not advertise. Table 11.1 - Refer to Table 11.1.If firm Y follows its dominant strategy and firm X does not then:

In long-run equilibrium,each monopolistically competitive firm can earn positive economic profits due to economies of scale.

Strategic behavior occurs when:

In which market structure model(s) is product differentiation a significant feature?

The oligopoly market structure model is characterized by:

If firms are successful in product differentiation:

One major similarity between perfect competition and monopolistic competition is that:

Consumer loyalty tends to be very low in markets such as cola drinks and tobacco products.

The short-run equilibrium position for a firm in monopolistic competition is the point at which:

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters