Question 1

An example of monopolistic competition is the _______ market.

Accepted Answer

A)  restaurant 
B)  soft drink 
C)  automobile 
D)  breakfast cereal 
A)  restaurant 
B)  soft drink 
C)  automobile 
D)  breakfast cereal

Question 2

The largest HHI possible is in the case of _______ and the index is _______ .

Accepted Answer

A)  monopoly; 10 
B)  monopoly; 10,000 
C)  monopoly; 100,000 
D)  oligopoly; 100,000 
A)  monopoly; 10 
B)  monopoly; 10,000 
C)  monopoly; 100,000 
D)  oligopoly; 100,000

Question 3

The Case in Point on Costa Rica's National Parks indicated that the parks charged _____ prices for foreign visitors because their demand was more _____ than that of local citizens.

Accepted Answer

A)  higher; inelastic 
B)  higher; elastic 
C)  lower; inelastic 
D)  lower; elastic 
A)  higher; inelastic 
B)  higher; elastic 
C)  lower; inelastic 
D)  lower; elastic

Question 4

Use the following for questions 22-31.
Exhibit: Profit Maximization in Monopolistic Competition
  
-(Exhibit: Profit Maximization in Monopolistic Competition) In monopolistic competition, long-run equilibrium is characterized by:

Accepted Answer

A) P > MR. B) P < MR. C) P = MR. D) profit maximization, which occurs where P = MR = MC. A) P > MR. B) P < MR. C) P = MR. D) profit maximization, which occurs where P = MR = MC.

Question 5

Which of the following is (are) true?

Accepted Answer

A)  Every instance of firms charging different prices is price discrimination. 
B)  Different prices may reflect different costs. 
C)  Price differentials based on differences in production costs are examples of price discrimination. 
D)  B and C are true. 
A)  Every instance of firms charging different prices is price discrimination. 
B)  Different prices may reflect different costs. 
C)  Price differentials based on differences in production costs are examples of price discrimination. 
D)  B and C are true.

Question 6

In the eyeglasses industry, it was found that advertising led to lower prices.

Accepted Answer

A) True 
 B)False

Question 7

The industry characterized by a few interdependent firms where there are barriers to entry is called:

Accepted Answer

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

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 how firms might operate in an industry characterized as:

Accepted Answer

A)  perfect competition. 
B)  duopoly. 
C)  monopolistic competition. 
D)  having a four-firm concentration ratio of 100. 
A)  perfect competition. 
B)  duopoly. 
C)  monopolistic competition. 
D)  having a four-firm concentration ratio of 100.

Question 9

Oligopoly is a market structure characterized by:

Accepted Answer

A)  a horizontal demand curve. 
B)  a large number of small firms. 
C)  interdependence in decisionmaking. 
D)  relatively easy entry and exit. 
A)  a horizontal demand curve. 
B)  a large number of small firms. 
C)  interdependence in decisionmaking. 
D)  relatively easy entry and exit.

Question 10

An unwritten, unspoken agreement through which firms limit competition among themselves is:

Accepted Answer

A)  satisficing. 
B)  tacit collusion. 
C)  overt collusion. 
D)  a cartel. 
A)  satisficing. 
B)  tacit collusion. 
C)  overt collusion. 
D)  a cartel.

Question 11

The demand curve for a firm under monopolistic competition is:

Accepted Answer

A)  downward sloping, unlike the horizontal demand curve facing a perfectly competitive firm. 
B)  horizontal, unlike the downward-sloping demand curve facing a perfectly competitive firm. 
C)  horizontal, the same as that facing a perfectly competitive firm. 
D)  downward sloping, the same as that facing a perfectly competitive firm. 
A)  downward sloping, unlike the horizontal demand curve facing a perfectly competitive firm. 
B)  horizontal, unlike the downward-sloping demand curve facing a perfectly competitive firm. 
C)  horizontal, the same as that facing a perfectly competitive firm. 
D)  downward sloping, the same as that facing a perfectly competitive firm.

Question 12

Monopolistic competition is an industry characterized by:

Accepted Answer

A)  a product with many close substitutes. 
B)  a horizontal demand curve. 
C)  a small number of firms. 
D)  barriers to entry and exit. 
A)  a product with many close substitutes. 
B)  a horizontal demand curve. 
C)  a small number of firms. 
D)  barriers to entry and exit.

Question 13

A key characteristic of monopolistic competition is product differentiation.

Accepted Answer

A) True 
 B)False

Question 14

Firms in an industry that informally agree to charge the same price as the largest firm is an example of:

Accepted Answer

A)  satisfying. 
B)  price extortion. 
C)  overt collusion. 
D)  tacit collusion. 
A)  satisfying. 
B)  price extortion. 
C)  overt collusion. 
D)  tacit collusion.

Question 15

Use the following for questions 22-31.
Exhibit: Profit Maximization in Monopolistic Competition
  
-(Exhibit: Profit Maximization in Monopolistic Competition) A firm in monopolistic competition will maximize profits by producing the level of output where:

Accepted Answer

A)  P = MC 
B)  MR = MC 
C)  P = MR 
D)  price minus ATC (i.e., economic profit per unit) is the largest. 
A)  P = MC 
B)  MR = MC 
C)  P = MR 
D)  price minus ATC (i.e., economic profit per unit) is the largest.

Question 16

In monopolistic competition:

Accepted Answer

A)  to maximize profits MR = MC, yet P > MC. 
B)  people would be better off if output were reduced. 
C)  output could be increased without an increase in total cost. 
D)  A and B are true. 
A)  to maximize profits MR = MC, yet P > MC. 
B)  people would be better off if output were reduced. 
C)  output could be increased without an increase in total cost. 
D)  A and B are true.

Question 17

Unwritten or unspoken understandings through which firms collude to restrict competition are called:

Accepted Answer

A)  cartelization. 
B)  oligopolization. 
C)  overt collusion. 
D)  tacit collusion. 
A)  cartelization. 
B)  oligopolization. 
C)  overt collusion. 
D)  tacit collusion.

Question 18

The concentration ratio in a duopoly industry is likely to be lower than industries characterized by monopolistic competition.

Accepted Answer

A) True 
 B)False

Question 19

An industry that consists of two firms is:

Accepted Answer

A)  a duopoly. 
B)  a monopoly. 
C)  a monopsony. 
D)  monopolistic competition. 
A)  a duopoly. 
B)  a monopoly. 
C)  a monopsony. 
D)  monopolistic competition.

Question 20

Use the following for questions 43-51.
Exhibit: Firms in Monopolistic Competition
  
-(Exhibit: Firms in Monopolistic Competition) In Panel (a), economic profit per unit is amount:

Accepted Answer

A)  KL. 
B)  LM. 
C)  MN. 
D)  NO. 
A)  KL. 
B)  LM. 
C)  MN. 
D)  NO.

An example of monopolistic competition is the _______ market.

The largest HHI possible is in the case of _ and the index is _ .

The Case in Point on Costa Rica's National Parks indicated that the parks charged _ prices for foreign visitors because their demand was more _ than that of local citizens.

Use the following for questions 22-31. Exhibit: Profit Maximization in Monopolistic Competition -(Exhibit: Profit Maximization in Monopolistic Competition) In monopolistic competition, long-run equilibrium is characterized by:

Which of the following is (are) true?

In the eyeglasses industry, it was found that advertising led to lower prices.

The industry characterized by a few interdependent firms where there are barriers to entry is called:

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 how firms might operate in an industry characterized as:

Oligopoly is a market structure characterized by:

An unwritten, unspoken agreement through which firms limit competition among themselves is:

The demand curve for a firm under monopolistic competition is:

Monopolistic competition is an industry characterized by:

A key characteristic of monopolistic competition is product differentiation.

Firms in an industry that informally agree to charge the same price as the largest firm is an example of:

Use the following for questions 22-31. Exhibit: Profit Maximization in Monopolistic Competition -(Exhibit: Profit Maximization in Monopolistic Competition) A firm in monopolistic competition will maximize profits by producing the level of output where:

In monopolistic competition:

Unwritten or unspoken understandings through which firms collude to restrict competition are called:

The concentration ratio in a duopoly industry is likely to be lower than industries characterized by monopolistic competition.

An industry that consists of two firms is:

Use the following for questions 43-51. Exhibit: Firms in Monopolistic Competition -(Exhibit: Firms in Monopolistic Competition) In Panel (a), economic profit per unit is amount:

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

An example of monopolistic competition is the _______ market.

The largest HHI possible is in the case of _______ and the index is _______ .

The Case in Point on Costa Rica's National Parks indicated that the parks charged _____ prices for foreign visitors because their demand was more _____ than that of local citizens.

Use the following for questions 22-31. Exhibit: Profit Maximization in Monopolistic Competition -(Exhibit: Profit Maximization in Monopolistic Competition) In monopolistic competition, long-run equilibrium is characterized by:

Which of the following is (are) true?

In the eyeglasses industry, it was found that advertising led to lower prices.

The industry characterized by a few interdependent firms where there are barriers to entry is called:

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 how firms might operate in an industry characterized as:

Oligopoly is a market structure characterized by:

An unwritten, unspoken agreement through which firms limit competition among themselves is:

The demand curve for a firm under monopolistic competition is:

Monopolistic competition is an industry characterized by:

A key characteristic of monopolistic competition is product differentiation.

Firms in an industry that informally agree to charge the same price as the largest firm is an example of:

Use the following for questions 22-31. Exhibit: Profit Maximization in Monopolistic Competition -(Exhibit: Profit Maximization in Monopolistic Competition) A firm in monopolistic competition will maximize profits by producing the level of output where:

In monopolistic competition:

Unwritten or unspoken understandings through which firms collude to restrict competition are called:

The concentration ratio in a duopoly industry is likely to be lower than industries characterized by monopolistic competition.

An industry that consists of two firms is:

Use the following for questions 43-51. Exhibit: Firms in Monopolistic Competition -(Exhibit: Firms in Monopolistic Competition) In Panel (a), economic profit per unit is amount:

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

The largest HHI possible is in the case of _ and the index is _ .

The Case in Point on Costa Rica's National Parks indicated that the parks charged _ prices for foreign visitors because their demand was more _ than that of local citizens.