Question 1

Oligopolistic firms engage in collusion to:

Accepted Answer

A)  minimize unit costs of production. 
B)  realize allocative efficiency,that is,the P = MC level of output. 
C)  earn greater profits. 
D)  increase production. 
A)  minimize unit costs of production. 
B)  realize allocative efficiency,that is,the P = MC level of output. 
C)  earn greater profits. 
D)  increase production.

Question 2

Which of the following industries is an illustration of homogeneous oligopoly?

Accepted Answer

A)  Household laundry products. 
B)  Personal computers. 
C)  Aluminum. 
D)  The auto industry. 
A)  Household laundry products. 
B)  Personal computers. 
C)  Aluminum. 
D)  The auto industry.

Question 3

Repeated games may involve either simultaneous or sequential decision making.

Accepted Answer

A) True 
 B)False

Question 4

OPEC provides an example of:

Accepted Answer

A)  an unwritten,informal understanding. 
B)  noncollusive oligopoly. 
C)  an international cartel. 
D)  a monopolistically competitive industry. 
A)  an unwritten,informal understanding. 
B)  noncollusive oligopoly. 
C)  an international cartel. 
D)  a monopolistically competitive industry.

Question 5

If neither player has an incentive to deviate from the outcome of a game,the outcome is a Nash equilibrium.

Accepted Answer

A) True 
 B)False

Question 6

Monopolistically competitive and purely competitive industries are similar in that:

Accepted Answer

A)  both are assured of short-run economic profits. 
B)  both produce differentiated products. 
C)  the demand curves facing individual firms are perfectly elastic in both industries. 
D)  there are few,if any,barriers to entry. 
A)  both are assured of short-run economic profits. 
B)  both produce differentiated products. 
C)  the demand curves facing individual firms are perfectly elastic in both industries. 
D)  there are few,if any,barriers to entry.

Question 7

The more elastic a monopolistic competitor's long-run demand curve,the:

Accepted Answer

A)  greater its excess capacity. 
B)  higher its price relative to that of a pure competitor having the same cost curves. 
C)  lower its long-run profit. 
D)  lower its average total cost at its profit-maximizing level of output. 
A)  greater its excess capacity. 
B)  higher its price relative to that of a pure competitor having the same cost curves. 
C)  lower its long-run profit. 
D)  lower its average total cost at its profit-maximizing level of output.

Question 8

Homogeneous oligopoly exists where a small number of firms are:

Accepted Answer

A)  producing virtually identical products. 
B)  setting price and output independently. 
C)  setting price and output collusively. 
D)  producing differentiated products. 
A)  producing virtually identical products. 
B)  setting price and output independently. 
C)  setting price and output collusively. 
D)  producing differentiated products.

Question 9

Suppose an oligopolistic producer assumes its rivals will ignore a price increase but match a price cut.In this case the firm perceives its:

Accepted Answer

A)  demand curve as being of unit elasticity throughout. 
B)  supply curve as kinked,being steeper below the going price than above. 
C)  demand curve as kinked,being steeper below the going price than above. 
D)  demand curve as kinked,being steeper above the going price than below. 
A)  demand curve as being of unit elasticity throughout. 
B)  supply curve as kinked,being steeper below the going price than above. 
C)  demand curve as kinked,being steeper below the going price than above. 
D)  demand curve as kinked,being steeper above the going price than below.

Question 10

(Last Word)Major Internet-related firms such as Google,Apple,Amazon,Microsoft,and Facebook each has an area of the market that it dominates.Which of the following is true about their interaction in the market?

Accepted Answer

A)  They tend to act independently,paying little attention to what the other firms do. 
B)  They collude so that each firm retains a near-monopoly in a particular sector without facing threats from the other major firms. 
C)  They behave according to a price leadership model,with each firm taking a leadership role in the particular sector it dominates. 
D)  They compete fiercely as each looks for ways to increase profits by expanding into rivals' markets. 
A)  They tend to act independently,paying little attention to what the other firms do. 
B)  They collude so that each firm retains a near-monopoly in a particular sector without facing threats from the other major firms. 
C)  They behave according to a price leadership model,with each firm taking a leadership role in the particular sector it dominates. 
D)  They compete fiercely as each looks for ways to increase profits by expanding into rivals' markets.

Question 11

Oligopolists use limit pricing to maximize short-run profits.

Accepted Answer

A) True 
 B)False

Question 12

For a monopolistically competitive firm in long-run equilibrium:

Accepted Answer

A)  price will equal marginal cost. 
B)  price will equal average total cost. 
C)  marginal revenue will exceed marginal cost. 
D)  economic profits will be some positive amount. 
A)  price will equal marginal cost. 
B)  price will equal average total cost. 
C)  marginal revenue will exceed marginal cost. 
D)  economic profits will be some positive amount.

Question 13

In the long run a monopolistically competitive firm:

Accepted Answer

A)  earns an economic profit. 
B)  produces where P = ATC. 
C)  produces where MR exceeds MC. 
D)  achieves allocative efficiency. 
A)  earns an economic profit. 
B)  produces where P = ATC. 
C)  produces where MR exceeds MC. 
D)  achieves allocative efficiency.

Question 14

Monopolistically competitive sellers realize economic profits in the long run because entry barriers are significant.

Accepted Answer

A) True 
 B)False

Question 15

All other things equal,the larger the number of firms in an oligopolistic industry,the more difficult it is for those firms to collude.

Accepted Answer

A) True 
 B)False

Question 16

Advertising can enhance economic efficiency when it:

Accepted Answer

A)  increases brand loyalty. 
B)  expands sales such that firms achieve substantial economies of scale. 
C)  keeps new firms from entering profitable industries. 
D)  is undertaken by pure competitors. 
A)  increases brand loyalty. 
B)  expands sales such that firms achieve substantial economies of scale. 
C)  keeps new firms from entering profitable industries. 
D)  is undertaken by pure competitors.

Question 17

The demand curve of a monopolistically competitive producer is less elastic than that of a purely competitive producer.

Accepted Answer

A) True 
 B)False

Question 18

The less elastic a monopolistic competitor's long-run demand curve,the:

Accepted Answer

A)  greater its excess capacity. 
B)  lower its price relative to that of a pure competitor having the same cost curves. 
C)  higher its long-run economic profit. 
D)  lower its average total cost at its equilibrium level of output. 
A)  greater its excess capacity. 
B)  lower its price relative to that of a pure competitor having the same cost curves. 
C)  higher its long-run economic profit. 
D)  lower its average total cost at its equilibrium level of output.

Question 19

A Nash equilibrium can only occur in repeated games.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is correct?

Accepted Answer

A)  The excess capacity problem diminishes as the monopolistically competitive firm's demand curve becomes less elastic. 
B)  The excess capacity problem means that monopolistically competitive firms typically produce at some point on the rising segment of their average total cost curve. 
C)  The greater the degree of product variation,the lesser is the excess capacity problem. 
D)  The greater the degree of product variation,the greater is the excess capacity problem. 
A)  The excess capacity problem diminishes as the monopolistically competitive firm's demand curve becomes less elastic. 
B)  The excess capacity problem means that monopolistically competitive firms typically produce at some point on the rising segment of their average total cost curve. 
C)  The greater the degree of product variation,the lesser is the excess capacity problem. 
D)  The greater the degree of product variation,the greater is the excess capacity problem.

Exam 13: Monopolistic Competition and Oligopoly

Oligopolistic firms engage in collusion to:

Which of the following industries is an illustration of homogeneous oligopoly?

Repeated games may involve either simultaneous or sequential decision making.

OPEC provides an example of:

If neither player has an incentive to deviate from the outcome of a game,the outcome is a Nash equilibrium.

Monopolistically competitive and purely competitive industries are similar in that:

The more elastic a monopolistic competitor's long-run demand curve,the:

Homogeneous oligopoly exists where a small number of firms are:

Suppose an oligopolistic producer assumes its rivals will ignore a price increase but match a price cut.In this case the firm perceives its:

(Last Word)Major Internet-related firms such as Google,Apple,Amazon,Microsoft,and Facebook each has an area of the market that it dominates.Which of the following is true about their interaction in the market?

Oligopolists use limit pricing to maximize short-run profits.

For a monopolistically competitive firm in long-run equilibrium:

In the long run a monopolistically competitive firm:

Monopolistically competitive sellers realize economic profits in the long run because entry barriers are significant.

All other things equal,the larger the number of firms in an oligopolistic industry,the more difficult it is for those firms to collude.

Advertising can enhance economic efficiency when it:

The demand curve of a monopolistically competitive producer is less elastic than that of a purely competitive producer.

The less elastic a monopolistic competitor's long-run demand curve,the:

A Nash equilibrium can only occur in repeated games.

Which of the following is correct?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Technology RD and Efficiency

The Demand for Resources

Wage Determination

Rent Interest and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

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