Exam 11: The World of Imperfect Competition

Use the following to answer question(s): Monopoly Through Collusion -(Exhibit: Monopoly Through Collusion) Given the duopoly industry illustrated in the exhibit, if the two firms colluded to maximize their joint profits, the market price they would set would be _______ and each firm's economic profit would be _______ .

When firms openly agree on price, output, and other decisions aimed at achieving monopoly profits, those firms are practicing:

If a firm wants to discriminate in regard to prices, it must be a price setter.

A monopolist or an imperfectly competitive firm practices price discrimination primarily to:

Concentration ratios are:

Except for the number of firms in the industry, monopolistic competition and perfect competition are identical market structures.

Price leadership refers to the tendency of oligopolistic firms to follow the MC = MR principle of price and output determination.

Monopolistic competition is an industry characterized by:

Use the following to answer question(s): The Restaurant Model -(Exhibit: The Restaurant Market) The exhibit shows curves facing a typical restaurant in a community.Assume that the market is characterized by many firms, differentiated products, easy entry and easy exit.If the restaurant shown here is typical of others in the community, then in the long-run, prices charged by firms in the market are likely to:

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 2 under collusion is given by:

The Case in Point on Craft Brewers suggested that this industry is an example of:

In the long run, monopolistically competitive firms tend to experience:

If advertising _______ competition, it tends to _______ prices.

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 short run the price:

A duopoly is an industry that consists of:

Because tourist demand for airline flights is relatively _______ , small _______ in price will result in relatively _______ in additional tourists.

Use the following to answer question(s): Monopoly Through Collusion -(Exhibit: Monopoly Through Collusion) Given the duopoly industry illustrated in the exhibit, if the two firms colluded to maximize their combined economic profits, the market price they would set would be _______ and combined economic profits of the firms would be _______ .

Use the following for questions 22-31. Exhibit: Profit Maximization in Monopolistic Competition -(Exhibit: Profit Maximization in Monopolistic Competition) In Panel (a), if the firm raises its price above P, it will:

The city bus system charges lower fares to senior citizens than to other passengers.Assuming that this pricing strategy increases the profits of the bus system, we can conclude that senior citizens must have a _______ for bus service than other passengers.

A concentration ratio is used to measure: