Question 1

Imperfect competition is:

Accepted Answer

A)  a market structure with no more than one firm in the industry. 
B)  an industry in which all firms are price takers. 
C)  a market structure where firms have a degree of monopoly power. 
D)  described by all of the above. 
A)  a market structure with no more than one firm in the industry. 
B)  an industry in which all firms are price takers. 
C)  a market structure where firms have a degree of monopoly power. 
D)  described by all of the above.

Question 2

Collusion occurs whenever several firms in an industry charge the same price.

Accepted Answer

A) True 
 B)False

Question 3

An industry with two firms is generally termed:

Accepted Answer

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

Question 4

Oligopoly is a market structure that is characterized by a:

Accepted Answer

A)  small number of interdependent firms producing identical or differentiated products. 
B)  small number of independent firms producing identical or differentiated products. 
C)  large number of relatively small independent firms producing differentiated products. 
D)  large number of relatively small independent firms producing identical products. 
A)  small number of interdependent firms producing identical or differentiated products. 
B)  small number of independent firms producing identical or differentiated products. 
C)  large number of relatively small independent firms producing differentiated products. 
D)  large number of relatively small independent firms producing identical products.

Question 5

In general, price discrimination is based on differences in _______ among different groups of customers and the differences in _______ that will result.

Accepted Answer

A)  preferences; marginal costs 
B)  price elasticity of demand; profits 
C)  marginal revenue; marginal costs 
D)  products; marginal costs 
A)  preferences; marginal costs 
B)  price elasticity of demand; profits 
C)  marginal revenue; marginal costs 
D)  products; marginal costs

Question 6

A dominant strategy equilibrium exists in a game when:

Accepted Answer

A)  every player has no choice. 
B)  every player makes the same choice, regardless of the action of the other players. 
C)  each player makes the best choice, given the choice of the other player. 
D)  no player is able to dictate the actions of any other player. 
A)  every player has no choice. 
B)  every player makes the same choice, regardless of the action of the other players. 
C)  each player makes the best choice, given the choice of the other player. 
D)  no player is able to dictate the actions of any other player.

Question 7

The Case in Point on Car Parts Makers indicated that their price fixing led to:

Accepted Answer

A)  lower prices for car parts and for car buyers. 
B)  lower prices for car parts and higher prices for car buyers. 
C)  higher prices for car parts and lower prices for car buyers. 
D)  higher prices for car parts and car buyers. 
A)  lower prices for car parts and for car buyers. 
B)  lower prices for car parts and higher prices for car buyers. 
C)  higher prices for car parts and lower prices for car buyers. 
D)  higher prices for car parts and car buyers.

Question 8

Use the following to answer question(s): Monopoly Through Collusion
  
-(Exhibit: Monopoly Through Collusion) An exhibit similar to this one was used by the authors of the text to illustrate:

Accepted Answer

A)  game theory and oligopoly behavior. 
B)  the prisoner's dilemma. 
C)  how two identical firms could collude to maximize joint profits. 
D)  how to measure the Herfindahl-Hirschman Index using demand, marginal revenue, and marginal cost curves. 
A)  game theory and oligopoly behavior. 
B)  the prisoner's dilemma. 
C)  how two identical firms could collude to maximize joint profits. 
D)  how to measure the Herfindahl-Hirschman Index using demand, marginal revenue, and marginal cost curves.

Question 9

The entry of new firms into a monopolistically competitive industry is generally more difficult than is the entry of new firms into an oligopolistic industry.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

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

Question 11

The main characteristic that distinguishes monopolistic competition from perfect competition is:

Accepted Answer

A)  easy entry and exit. 
B)  many firms. 
C)  differentiated products. 
D)  that in perfect competition to maximize profits, a firm will produce where MR = MC. 
A)  easy entry and exit. 
B)  many firms. 
C)  differentiated products. 
D)  that in perfect competition to maximize profits, a firm will produce where MR = MC.

Question 12

Price discrimination is seldom done by the airlines.

Accepted Answer

A) True 
 B)False

Question 13

When the profit-maximizing level of output is less than the output associated with the minimum possible average total cost of production, a firm is said to have:

Accepted Answer

A)  economic profits. 
B)  excess capacity. 
C)  advertising. 
D)  excess production. 
A)  economic profits. 
B)  excess capacity. 
C)  advertising. 
D)  excess production.

Question 14

The HHI for _______ where _______ have (has) _______ of the market is _______ .

Accepted Answer

A)  monopolistic competition; four firms each; 25%; 10,000 
B)  oligopoly; three firms each; 50%; 5,000 
C)  oligopoly; two firms each; 50%; 5,000 
D)  monopoly; one firm; 100%; 100,000 
A)  monopolistic competition; four firms each; 25%; 10,000 
B)  oligopoly; three firms each; 50%; 5,000 
C)  oligopoly; two firms each; 50%; 5,000 
D)  monopoly; one firm; 100%; 100,000

Question 15

A dominant strategy is a special type of trigger strategy.

Accepted Answer

A) True 
 B)False

Question 16

Use the following for questions 22-31.
Exhibit: Profit Maximization in Monopolistic Competition
  
-(Exhibit: Profit Maximization in Monopolistic Competition) In Panel (a), the profit-maximizing price and quantity are _______ and _______ .

Accepted Answer

A)  S; M 
B)  P; M 
C)  P; Q 
D)  T; Q 
A)  S; M 
B)  P; M 
C)  P; Q 
D)  T; Q

Question 17

Tacit collusion occurs if:

Accepted Answer

A)  smaller firms in an industry silently agree to charge the same price as the largest firm. 
B)  two or more firms in an industry agree to fix the price at a given level. 
C)  competition among a large number of small firms generates a stable market price. 
D)  competition among a large number of small firms generates similar, but slightly different, prices. 
A)  smaller firms in an industry silently agree to charge the same price as the largest firm. 
B)  two or more firms in an industry agree to fix the price at a given level. 
C)  competition among a large number of small firms generates a stable market price. 
D)  competition among a large number of small firms generates similar, but slightly different, prices.

Question 18

To practice effective price discrimination, a firm must have:

Accepted Answer

A)  identical tastes among buyers. 
B)  differences in demand elasticity among buyers. 
C)  identical demand elasticities among buyers. 
D)  two or more markets with no economic restrictions between them. 
A)  identical tastes among buyers. 
B)  differences in demand elasticity among buyers. 
C)  identical demand elasticities among buyers. 
D)  two or more markets with no economic restrictions between them.

Question 19

Use the following for questions 22-31.
Exhibit: Profit Maximization in Monopolistic Competition
  
-(Exhibit: Profit Maximization in Monopolistic Competition) In the short run, a firm in monopolistic competition may experience economic profits as shown in Panel (a) as the distance:

Accepted Answer

A)  PS. 
B)  PS times the quantity 0M. 
C)  PS times the quantity Q. 
D)  PT times the quantity Q. 
A)  PS. 
B)  PS times the quantity 0M. 
C)  PS times the quantity Q. 
D)  PT times the quantity Q.

Question 20

The HHI for an industry with 10,000 firms where each has a 0.01 percent share of the market is 0.

Accepted Answer

A) True 
 B)False

Imperfect competition is:

Collusion occurs whenever several firms in an industry charge the same price.

An industry with two firms is generally termed:

Oligopoly is a market structure that is characterized by a:

In general, price discrimination is based on differences in _ among different groups of customers and the differences in _ that will result.

A dominant strategy equilibrium exists in a game when:

The Case in Point on Car Parts Makers indicated that their price fixing led to:

Use the following to answer question(s): Monopoly Through Collusion -(Exhibit: Monopoly Through Collusion) An exhibit similar to this one was used by the authors of the text to illustrate:

The entry of new firms into a monopolistically competitive industry is generally more difficult than is the entry of new firms into an oligopolistic industry.

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

The main characteristic that distinguishes monopolistic competition from perfect competition is:

Price discrimination is seldom done by the airlines.

When the profit-maximizing level of output is less than the output associated with the minimum possible average total cost of production, a firm is said to have:

The HHI for ___ where _ have (has) _ of the market is ___ .

A dominant strategy is a special type of trigger strategy.

Use the following for questions 22-31. Exhibit: Profit Maximization in Monopolistic Competition -(Exhibit: Profit Maximization in Monopolistic Competition) In Panel (a), the profit-maximizing price and quantity are _ and _ .

Tacit collusion occurs if:

To practice effective price discrimination, a firm must have:

Use the following for questions 22-31. Exhibit: Profit Maximization in Monopolistic Competition -(Exhibit: Profit Maximization in Monopolistic Competition) In the short run, a firm in monopolistic competition may experience economic profits as shown in Panel (a) as the distance:

The HHI for an industry with 10,000 firms where each has a 0.01 percent share of the market is 0.

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

Imperfect competition is:

Collusion occurs whenever several firms in an industry charge the same price.

An industry with two firms is generally termed:

Oligopoly is a market structure that is characterized by a:

In general, price discrimination is based on differences in _______ among different groups of customers and the differences in _______ that will result.

A dominant strategy equilibrium exists in a game when:

The Case in Point on Car Parts Makers indicated that their price fixing led to:

Use the following to answer question(s): Monopoly Through Collusion -(Exhibit: Monopoly Through Collusion) An exhibit similar to this one was used by the authors of the text to illustrate:

The entry of new firms into a monopolistically competitive industry is generally more difficult than is the entry of new firms into an oligopolistic industry.

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

The main characteristic that distinguishes monopolistic competition from perfect competition is:

Price discrimination is seldom done by the airlines.

When the profit-maximizing level of output is less than the output associated with the minimum possible average total cost of production, a firm is said to have:

The HHI for _______ where _______ have (has) _______ of the market is _______ .

A dominant strategy is a special type of trigger strategy.

Use the following for questions 22-31. Exhibit: Profit Maximization in Monopolistic Competition -(Exhibit: Profit Maximization in Monopolistic Competition) In Panel (a), the profit-maximizing price and quantity are _______ and _______ .

Tacit collusion occurs if:

To practice effective price discrimination, a firm must have:

Use the following for questions 22-31. Exhibit: Profit Maximization in Monopolistic Competition -(Exhibit: Profit Maximization in Monopolistic Competition) In the short run, a firm in monopolistic competition may experience economic profits as shown in Panel (a) as the distance:

The HHI for an industry with 10,000 firms where each has a 0.01 percent share of the market is 0.

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

In general, price discrimination is based on differences in _ among different groups of customers and the differences in _ that will result.

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

The HHI for ___ where _ have (has) _ of the market is ___ .

Use the following for questions 22-31. Exhibit: Profit Maximization in Monopolistic Competition -(Exhibit: Profit Maximization in Monopolistic Competition) In Panel (a), the profit-maximizing price and quantity are _ and _ .