Question 1

A way to measure the degree of concentration in oligopoly is to use:

Accepted Answer

A)  an elasticity ratio. 
B)  a demand ratio. 
C)  a ratio that reports the percentage of output accounted for by the largest firms in the industry. 
D)  the ratio of MC to ATC. 
A)  an elasticity ratio. 
B)  a demand ratio. 
C)  a ratio that reports the percentage of output accounted for by the largest firms in the industry. 
D)  the ratio of MC to ATC.

Question 2

The demand curve for a firm under monopolistic competition is:

Accepted Answer

A)  U-shaped. 
B)  upward sloping. 
C)  downward sloping. 
D)  vertical. 
A)  U-shaped. 
B)  upward sloping. 
C)  downward sloping. 
D)  vertical.

Question 3

A criticism of oligopolistic firms is that they:

Accepted Answer

A)  have high concentration ratios. 
B)  are associated with unstable prices. 
C)  experience economies of scale. 
D)  retard research and development. 
A)  have high concentration ratios. 
B)  are associated with unstable prices. 
C)  experience economies of scale. 
D)  retard research and development.

Question 4

Use the following for questions 22-31.
Exhibit: Profit Maximization in Monopolistic Competition
  
-(Exhibit: Profit Maximization in Monopolistic Competition) In Panel (b), the long-run equilibrium will result in:

Accepted Answer

A)  economic profits = 0. 
B)  accounting profits = 0. 
C)  a tangency of the ATC curve with the MR curve. 
D)  A and C. 
A)  economic profits = 0. 
B)  accounting profits = 0. 
C)  a tangency of the ATC curve with the MR curve. 
D)  A and C.

Question 5

An analytical approach through which strategic choices can be assessed is called:

Accepted Answer

A)  benefit-cost analysis. 
B)  econometric theory. 
C)  game theory. 
D)  none of the above. 
A)  benefit-cost analysis. 
B)  econometric theory. 
C)  game theory. 
D)  none of the above.

Question 6

Oligopoly is a market structure characterized by:

Accepted Answer

A)  independence in decisionmaking. 
B)  barriers to entry and exit. 
C)  a horizontal demand curve. 
D)  a large number of small firms. 
A)  independence in decisionmaking. 
B)  barriers to entry and exit. 
C)  a horizontal demand curve. 
D)  a large number of small firms.

Question 7

Use the following for questions 43-51.
Exhibit: Firms in Monopolistic Competition
  
-(Exhibit: Firms in Monopolistic Competition) Negative economic profit or economic loss is incurred if the profit-maximizing price is price _______ in Panel _______ .

Accepted Answer

A)  G; (a) 
B)  H; (b) 
C)  I; (c) 
D)  J; (c) 
A)  G; (a) 
B)  H; (b) 
C)  I; (c) 
D)  J; (c)

Question 8

If the only two firms in an industry openly agree to fix the price at a given level, then this is an example of:

Accepted Answer

A)  overt collusion. 
B)  price leadership. 
C)  contestability. 
D)  tacit collusion. 
A)  overt collusion. 
B)  price leadership. 
C)  contestability. 
D)  tacit collusion.

Question 9

In oligopoly, a firm must realize:

Accepted Answer

A)  that what it does affects the other firms in the industry. 
B)  that it must pursue policies always remembering there will be a reaction to those policies by other firms in the industry. 
C)  that it is in an industry in which one major firm may dominate and the firm will need to judge its actions accordingly. 
D)  all of the above. 
A)  that what it does affects the other firms in the industry. 
B)  that it must pursue policies always remembering there will be a reaction to those policies by other firms in the industry. 
C)  that it is in an industry in which one major firm may dominate and the firm will need to judge its actions accordingly. 
D)  all of the above.

Question 10

To practice effective price discrimination, a firm must:

Accepted Answer

A)  advertise its product. 
B)  have distinguishable customers. 
C)  know the numerical demand elasticities of buyers. 
D)  match the prices of its competitors. 
A)  advertise its product. 
B)  have distinguishable customers. 
C)  know the numerical demand elasticities of buyers. 
D)  match the prices of its competitors.

Question 11

Use the following to answer question(s): Collusion
  
-(Exhibit: Collusion) Panel (c) gives the combined marginal revenue, demand, and marginal cost curves for an industry containing several firms.Panels (a) and (b) give marginal cost curves for two of those firms.The quantity of output produced by the industry under collusion is given by:

Accepted Answer

A)  Q. 
B)  R. 
C)  S. 
D)  T. 
A)  Q. 
B)  R. 
C)  S. 
D)  T.

Question 12

The census data sometimes _______ the degree to which a few firms dominate the market, for example, the _______ industry, in which the industries are defined too ________ .

Accepted Answer

A)  overstate; sporting goods; narrowly 
B)  understate; sporting goods; broadly 
C)  overstate; motor vehicles; broadly 
D)  None of the above are true. 
A)  overstate; sporting goods; narrowly 
B)  understate; sporting goods; broadly 
C)  overstate; motor vehicles; broadly 
D)  None of the above are true.

Question 13

Suppose that there is an increase in the demand for dry-cleaning services in Madison, Wisconsin.What will happen to price and output for these services in the short run and in the long run? Illustrate and explain.Defend your choice of a model to analyze this problem.

Accepted Answer

In the short run, an increase in demand

Question 14

A feature of monopolistic competition that makes it different from monopoly is the:

Accepted Answer

A)  fact that firms in the model of monopolistic competition follow the marginal decision rule while monopolies do not. 
B)  downward-sloping demand curve. 
C)  downward-sloping marginal revenue curve. 
D)  number of firms in the industry. 
A)  fact that firms in the model of monopolistic competition follow the marginal decision rule while monopolies do not. 
B)  downward-sloping demand curve. 
C)  downward-sloping marginal revenue curve. 
D)  number of firms in the industry.

Question 15

To practice effective price discrimination, a monopolist must be able to:

Accepted Answer

A)  estimate its own production and cost functions. 
B)  avoid detection by government regulatory agencies. 
C)  prevent the resale of goods between groups of buyers. 
D)  calculate the utility level of each buyer in the market. 
A)  estimate its own production and cost functions. 
B)  avoid detection by government regulatory agencies. 
C)  prevent the resale of goods between groups of buyers. 
D)  calculate the utility level of each buyer in the market.

Question 16

Use the following for questions 43-51.
Exhibit: Firms in Monopolistic Competition
  
-(Exhibit: Firms in Monopolistic Competition) In Panel (c), the profit-maximizing quantity of output is generated by the intersection at point:

Accepted Answer

A)  U. 
B)  V. 
C)  W. 
D)  X. 
A)  U. 
B)  V. 
C)  W. 
D)  X.

Question 17

Firms that openly collude are engaging in tacit collusion.

Accepted Answer

A) True 
 B)False

Question 18

To practice effective price discrimination, a firm must:

Accepted Answer

A)  advertise its product. 
B)  have identical customers. 
C)  know the numerical demand elasticities of buyers. 
D)  be a price setter. 
A)  advertise its product. 
B)  have identical customers. 
C)  know the numerical demand elasticities of buyers. 
D)  be a price setter.

Question 19

An oligopoly knows that its _______ affect(s) its _______ and that the _______ of its rivals will affect it.

Accepted Answer

A)  actions; rivals; reactions 
B)  price changes; total revenue in a positive way; reactions 
C)  actions rarely; rivals; actions 
D)  price increases; total revenue in the long run only; large but not small price changes 
A)  actions; rivals; reactions 
B)  price changes; total revenue in a positive way; reactions 
C)  actions rarely; rivals; actions 
D)  price increases; total revenue in the long run only; large but not small price changes

Question 20

According to the text exhibit on concentration ratios and Herfindahl-Hirschman Indexes, which of the following industries has the lowest HHI?

Accepted Answer

A)  dental laboratories 
B)  ice cream 
C)  automobiles 
D)  tobacco manufacturing 
A)  dental laboratories 
B)  ice cream 
C)  automobiles 
D)  tobacco manufacturing

A way to measure the degree of concentration in oligopoly is to use:

The demand curve for a firm under monopolistic competition is:

A criticism of oligopolistic firms is that they:

Use the following for questions 22-31. Exhibit: Profit Maximization in Monopolistic Competition -(Exhibit: Profit Maximization in Monopolistic Competition) In Panel (b), the long-run equilibrium will result in:

An analytical approach through which strategic choices can be assessed is called:

Oligopoly is a market structure characterized by:

Use the following for questions 43-51. Exhibit: Firms in Monopolistic Competition -(Exhibit: Firms in Monopolistic Competition) Negative economic profit or economic loss is incurred if the profit-maximizing price is price _ in Panel _ .

If the only two firms in an industry openly agree to fix the price at a given level, then this is an example of:

In oligopoly, a firm must realize:

To practice effective price discrimination, a firm must:

The census data sometimes ___ the degree to which a few firms dominate the market, for example, the _ industry, in which the industries are defined too ______ .

Suppose that there is an increase in the demand for dry-cleaning services in Madison, Wisconsin.What will happen to price and output for these services in the short run and in the long run? Illustrate and explain.Defend your choice of a model to analyze this problem.

A feature of monopolistic competition that makes it different from monopoly is the:

To practice effective price discrimination, a monopolist must be able to:

Use the following for questions 43-51. Exhibit: Firms in Monopolistic Competition -(Exhibit: Firms in Monopolistic Competition) In Panel (c), the profit-maximizing quantity of output is generated by the intersection at point:

Firms that openly collude are engaging in tacit collusion.

To practice effective price discrimination, a firm must:

An oligopoly knows that its ___ affect(s) its _ and that the _____ of its rivals will affect it.

According to the text exhibit on concentration ratios and Herfindahl-Hirschman Indexes, which of the following industries has the lowest HHI?

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 11: The World of Imperfect Competition

A way to measure the degree of concentration in oligopoly is to use:

The demand curve for a firm under monopolistic competition is:

A criticism of oligopolistic firms is that they:

Use the following for questions 22-31. Exhibit: Profit Maximization in Monopolistic Competition -(Exhibit: Profit Maximization in Monopolistic Competition) In Panel (b), the long-run equilibrium will result in:

An analytical approach through which strategic choices can be assessed is called:

Oligopoly is a market structure characterized by:

Use the following for questions 43-51. Exhibit: Firms in Monopolistic Competition -(Exhibit: Firms in Monopolistic Competition) Negative economic profit or economic loss is incurred if the profit-maximizing price is price _______ in Panel _______ .

If the only two firms in an industry openly agree to fix the price at a given level, then this is an example of:

In oligopoly, a firm must realize:

To practice effective price discrimination, a firm must:

The census data sometimes _______ the degree to which a few firms dominate the market, for example, the _______ industry, in which the industries are defined too ________ .

Suppose that there is an increase in the demand for dry-cleaning services in Madison, Wisconsin.What will happen to price and output for these services in the short run and in the long run? Illustrate and explain.Defend your choice of a model to analyze this problem.

A feature of monopolistic competition that makes it different from monopoly is the:

To practice effective price discrimination, a monopolist must be able to:

Use the following for questions 43-51. Exhibit: Firms in Monopolistic Competition -(Exhibit: Firms in Monopolistic Competition) In Panel (c), the profit-maximizing quantity of output is generated by the intersection at point:

Firms that openly collude are engaging in tacit collusion.

To practice effective price discrimination, a firm must:

An oligopoly knows that its _______ affect(s) its _______ and that the _______ of its rivals will affect it.

According to the text exhibit on concentration ratios and Herfindahl-Hirschman Indexes, which of the following industries has the lowest HHI?

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Use the following for questions 43-51. Exhibit: Firms in Monopolistic Competition -(Exhibit: Firms in Monopolistic Competition) Negative economic profit or economic loss is incurred if the profit-maximizing price is price _ in Panel _ .

The census data sometimes ___ the degree to which a few firms dominate the market, for example, the _ industry, in which the industries are defined too ______ .

An oligopoly knows that its ___ affect(s) its _ and that the _____ of its rivals will affect it.