Question 1

Define and explain the difference between concentration ratios and the Herfindahl-Hirschman Index.

Accepted Answer

Concentration ratios and the Herfindahl-

Question 2

Mutually assured destruction among nuclear powers is an example of the tit-for-tat game theory strategy.

Accepted Answer

A) True 
 B)False

Question 3

Assuming identical production functions and cost curves, the long-run equilibrium of a monopolistically competitive firm, as compared with a perfectly competitive firm, is such that, for the former, price is:

Accepted Answer

A)  higher and output is greater. 
B)  higher and output is smaller. 
C)  lower and output is greater. 
D)  lower and output is smaller. 
A)  higher and output is greater. 
B)  higher and output is smaller. 
C)  lower and output is greater. 
D)  lower and output is smaller.

Question 4

On the spectrum of market structures, oligopoly lies:

Accepted Answer

A)  between perfect competition and monopoly. 
B)  to the left of both perfect competition and monopoly. 
C)  to the right of both perfect competition and monopoly. 
D)  at the same location as monopoly. 
A)  between perfect competition and monopoly. 
B)  to the left of both perfect competition and monopoly. 
C)  to the right of both perfect competition and monopoly. 
D)  at the same location as monopoly.

Question 5

In large shopping areas, the retail market is most illustrative of:

Accepted Answer

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

Question 6

Use the following to answer question(s): Monopoly Through Collusion
  
-(Exhibit: Monopoly Through Collusion) The exhibit illustrates the situation in an industry that consists of two firms facing identical demand curves; the demand curve for each firm is D₁.If the firms collude and agree to share the market demand equally, then each firm will act as if its demand curve is given by _______ and the market demand curve is given by _______ .

Accepted Answer

A)  D₁; MR₂ 
B)  D₂; D₁ 
C)  D₁; D₂ 
D)  MR₁; MR₂ 
A)  D₁; MR₂ 
B)  D₂; D₁ 
C)  D₁; D₂ 
D)  MR₁; MR₂

Question 7

Use the following to answer question(s): Monopoly Through Collusion
  
-(Exhibit: Monopoly Through Collusion) The exhibit illustrates the situation in an industry that consists of two firms facing identical demand curves; the demand curve for each firm is D₁.Which of the following assumptions is not a part of the analysis illustrated by the model?

Accepted Answer

A)  The two firms are identical. 
B)  The two firms sell identical products. 
C)  While the firms face the same MC curves, their respective TC curves have unequal slopes. 
D)  Each firm has a horizontal marginal cost curve. 
A)  The two firms are identical. 
B)  The two firms sell identical products. 
C)  While the firms face the same MC curves, their respective TC curves have unequal slopes. 
D)  Each firm has a horizontal marginal cost curve.

Question 8

In game theory, a trigger strategy is the equivalent of a dominant strategy.

Accepted Answer

A) True 
 B)False

Question 9

An industry with a large number of relatively small firms producing differentiated products in a market with easy entry and exit firms is:

Accepted Answer

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

Question 10

A study of advertising and the prices of eyeglasses found that the cost of prescription eyeglasses in states that _______ advertising was _______ than in the states that ________ advertising.

Accepted Answer

A)  allowed; higher; did not allow 
B)  allowed; lower; did not allow 
C)  did not allow; no different; did allow 
D)  did not allow; lower; did allow 
A)  allowed; higher; did not allow 
B)  allowed; lower; did not allow 
C)  did not allow; no different; did allow 
D)  did not allow; lower; did allow

Question 11

In monopolistic competition, in the long run it is most likely that P = ATC and that there will be no excess capacity.

Accepted Answer

A) True 
 B)False

Question 12

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 price charged by the industry under collusion is given by:

Accepted Answer

A)  W. 
B)  X. 
C)  Y. 
D)  Z. 
A)  W. 
B)  X. 
C)  Y. 
D)  Z.

Question 13

Discuss and explain how concentration ratios are used by economists in their analyses of industries.What are the strengths and weaknesses of concentration ratios?

Accepted Answer

Concentration ratios are used by economi

Question 14

Monopolistic competition is an industry characterized by:

Accepted Answer

A)  a product with no close substitutes. 
B)  a horizontal demand curve. 
C)  a large number of firms. 
D)  significant barriers to entry and exit. 
A)  a product with no close substitutes. 
B)  a horizontal demand curve. 
C)  a large number of firms. 
D)  significant barriers to entry and exit.

Question 15

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 Firm 1 under collusion is given by:

Accepted Answer

A)  F. 
B)  G. 
C)  H. 
D)  K. 
A)  F. 
B)  G. 
C)  H. 
D)  K.

Question 16

If a firm under monopolistic competition is producing a quantity that generates MC < MR, then the marginal decision rule tells us that profit:

Accepted Answer

A)  can be increased by increasing production. 
B)  can be increased by decreasing production. 
C)  can be increased by increasing the price. 
D)  is maximized only if MC = P. 
A)  can be increased by increasing production. 
B)  can be increased by decreasing production. 
C)  can be increased by increasing the price. 
D)  is maximized only if MC = P.

Question 17

If a firm under monopolistic competition is producing a quantity that generates MC = MR, then the marginal decision rule tells us that profit:

Accepted Answer

A)  is maximized. 
B)  can be increased by decreasing production. 
C)  can be increased by decreasing the price. 
D)  is maximized only if MC = P. 
A)  is maximized. 
B)  can be increased by decreasing production. 
C)  can be increased by decreasing the price. 
D)  is maximized only if MC = P.

Question 18

Use the following to answer question(s): Monopoly Through Collusion
  
-(Exhibit: Monopoly Through Collusion) The exhibit illustrates the situation in an industry that consists of two firms facing identical demand curves; the demand curve for each firm is D₁.Which of the following assumptions is part of the analysis illustrated by the model?

Accepted Answer

A)  The two firms sell differentiated products. 
B)  The ATC curve of each firm lies exactly twice as high as the MC curve. 
C)  If the two firms collude in order to maximize their combined economic profits, each firm will operate as if its demand curve is given by D₂. 
D)  Both firms have the same marginal revenue curve. 
A)  The two firms sell differentiated products. 
B)  The ATC curve of each firm lies exactly twice as high as the MC curve. 
C)  If the two firms collude in order to maximize their combined economic profits, each firm will operate as if its demand curve is given by D₂. 
D)  Both firms have the same marginal revenue curve.

Question 19

The market for plumbing services in a city can be characterized by the model of monopolistic competition.Suppose that the market is initially in long-run equilibrium, and then there is an increase in demand for plumbing services.We expect that in the long run:

Accepted Answer

A)  firms will leave the plumbing market. 
B)  there will be a short-run increase in the number of firms, but then the number will return to the original level. 
C)  new firms will enter the plumbing market. 
D)  firms will shut down, but they will not leave the industry. 
A)  firms will leave the plumbing market. 
B)  there will be a short-run increase in the number of firms, but then the number will return to the original level. 
C)  new firms will enter the plumbing market. 
D)  firms will shut down, but they will not leave the industry.

Question 20

Game theory is an analysis that provides insight into the behavior of firms in oligopoly.

Accepted Answer

A) True 
 B)False

Define and explain the difference between concentration ratios and the Herfindahl-Hirschman Index.

Mutually assured destruction among nuclear powers is an example of the tit-for-tat game theory strategy.

Assuming identical production functions and cost curves, the long-run equilibrium of a monopolistically competitive firm, as compared with a perfectly competitive firm, is such that, for the former, price is:

On the spectrum of market structures, oligopoly lies:

In large shopping areas, the retail market is most illustrative of:

In game theory, a trigger strategy is the equivalent of a dominant strategy.

An industry with a large number of relatively small firms producing differentiated products in a market with easy entry and exit firms is:

A study of advertising and the prices of eyeglasses found that the cost of prescription eyeglasses in states that ___ advertising was _ than in the states that ______ advertising.

In monopolistic competition, in the long run it is most likely that P = ATC and that there will be no excess capacity.

Discuss and explain how concentration ratios are used by economists in their analyses of industries.What are the strengths and weaknesses of concentration ratios?

Monopolistic competition is an industry characterized by:

If a firm under monopolistic competition is producing a quantity that generates MC < MR, then the marginal decision rule tells us that profit:

If a firm under monopolistic competition is producing a quantity that generates MC = MR, then the marginal decision rule tells us that profit:

The market for plumbing services in a city can be characterized by the model of monopolistic competition.Suppose that the market is initially in long-run equilibrium, and then there is an increase in demand for plumbing services.We expect that in the long run:

Game theory is an analysis that provides insight into the behavior of firms in oligopoly.

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

Define and explain the difference between concentration ratios and the Herfindahl-Hirschman Index.

Mutually assured destruction among nuclear powers is an example of the tit-for-tat game theory strategy.

Assuming identical production functions and cost curves, the long-run equilibrium of a monopolistically competitive firm, as compared with a perfectly competitive firm, is such that, for the former, price is:

On the spectrum of market structures, oligopoly lies:

In large shopping areas, the retail market is most illustrative of:

In game theory, a trigger strategy is the equivalent of a dominant strategy.

An industry with a large number of relatively small firms producing differentiated products in a market with easy entry and exit firms is:

A study of advertising and the prices of eyeglasses found that the cost of prescription eyeglasses in states that _______ advertising was _______ than in the states that ________ advertising.

In monopolistic competition, in the long run it is most likely that P = ATC and that there will be no excess capacity.

Discuss and explain how concentration ratios are used by economists in their analyses of industries.What are the strengths and weaknesses of concentration ratios?

Monopolistic competition is an industry characterized by:

If a firm under monopolistic competition is producing a quantity that generates MC < MR, then the marginal decision rule tells us that profit:

If a firm under monopolistic competition is producing a quantity that generates MC = MR, then the marginal decision rule tells us that profit:

The market for plumbing services in a city can be characterized by the model of monopolistic competition.Suppose that the market is initially in long-run equilibrium, and then there is an increase in demand for plumbing services.We expect that in the long run:

Game theory is an analysis that provides insight into the behavior of firms in oligopoly.

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

A study of advertising and the prices of eyeglasses found that the cost of prescription eyeglasses in states that ___ advertising was _ than in the states that ______ advertising.