Question 1

In the long run,a profit-maximizing monopolistically competitive firm sets it price:

Accepted Answer

A)  above marginal cost. 
B)  below marginal cost. 
C)  equal to marginal revenue. 
D)  equal to marginal cost. 
A)  above marginal cost. 
B)  below marginal cost. 
C)  equal to marginal revenue. 
D)  equal to marginal cost.

Question 2

Answer the question on the basis of the following demand and cost data for a specific firm: $\begin{array}{c}
\underline{\text { Demand Data}}\quad\quad\quad\quad\quad\underline{\text { Cost Data}} \
\begin{array}{c}
\text { (1) }\
\underline{\text { Price } }\
 \$ 11.00 \
9.99 \
9.00 \
8.00 \
7.10 \
6.00 \
5.15
\end{array}
\begin{array}{c}
\text { (2)}\
\underline{\text { Price}}\
\$ 10.00 \
8.85\
8.00\
7.00\
6.10\
5.00\
4.15
\end{array}
\begin{array}{c}
\text { (3)}\
\underline{\text { Quantity}}\
6 \
7 \
8 \
9 \
10 \
11 \
12
\end{array}
\begin{array}{c}
\
\underline{\text { Output }} \
6 \
7 \
8 \
9 \
10 \
11 \
12 
\end{array}
\begin{array}{c}
\text { Total}\
\underline{\text { Cost}} \
 \$ 61 \
62 \
64 \
67 \
72 \
79 \
86
\end{array}
\end{array}$
  Refer to the data.If columns (1)and (3)of the demand data shown are this firm's demand schedule,economic profit will be:

Accepted Answer

A)  $10. 
B)  $19. 
C)  $6. 
D)  $8. 
A)  $10. 
B)  $19. 
C)  $6. 
D)  $8.

Question 3

If the firms in an oligopolistic industry can establish an effective cartel,the resulting output and price will approximate those of:

Accepted Answer

A)  a purely competitive producer. 
B)  a pure monopoly. 
C)  a monopolistically competitive producer. 
D)  an industry with a low four-firm concentration ratio. 
A)  a purely competitive producer. 
B)  a pure monopoly. 
C)  a monopolistically competitive producer. 
D)  an industry with a low four-firm concentration ratio.

Question 4

Under monopolistic competition,entry to the industry is:

Accepted Answer

A)  completely free of barriers. 
B)  more difficult than under pure competition but not nearly as difficult as under pure monopoly. 
C)  more difficult than under pure monopoly. 
D)  blocked. 
A)  completely free of barriers. 
B)  more difficult than under pure competition but not nearly as difficult as under pure monopoly. 
C)  more difficult than under pure monopoly. 
D)  blocked.

Question 5

When a monopolistically competitive firm is in long-run equilibrium:

Accepted Answer

A)  P = MC = ATC. 
B)  MR = MC and minimum ATC > P. 
C)  MR > MC and P = minimum ATC. 
D)  MR = MC and P > minimum ATC. 
A)  P = MC = ATC. 
B)  MR = MC and minimum ATC > P. 
C)  MR > MC and P = minimum ATC. 
D)  MR = MC and P > minimum ATC.

Question 6

In repeated games,players may be willing to accept lower payoffs in the short run in exchange for greater net payoffs over the long run.

Accepted Answer

A) True 
 B)False

Question 7

The four-firm sales concentration ratio for an industry measures the:

Accepted Answer

A)  geographic concentration of firms. 
B)  extent to which the four largest firms dominate the production of a good. 
C)  percentage of the industry's capital facilities owned by the four largest firms. 
D)  degree of X-inefficiency in the industry. 
A)  geographic concentration of firms. 
B)  extent to which the four largest firms dominate the production of a good. 
C)  percentage of the industry's capital facilities owned by the four largest firms. 
D)  degree of X-inefficiency in the industry.

Question 8

Answer the question on the basis of the following demand and cost data for a specific firm: $\begin{array}{c}
\underline{\text { Demand Data}}\quad\quad\quad\quad\quad\underline{\text { Cost Data}} \
\begin{array}{c}
\text { (1) }\
\underline{\text { Price } }\
 \$ 11.00 \
9.99 \
9.00 \
8.00 \
7.10 \
6.00 \
5.15
\end{array}
\begin{array}{c}
\text { (2)}\
\underline{\text { Price}}\
\$ 10.00 \
8.85\
8.00\
7.00\
6.10\
5.00\
4.15
\end{array}
\begin{array}{c}
\text { (3)}\
\underline{\text { Quantity}}\
6 \
7 \
8 \
9 \
10 \
11 \
12
\end{array}
\begin{array}{c}
\
\underline{\text { Output }} \
6 \
7 \
8 \
9 \
10 \
11 \
12 
\end{array}
\begin{array}{c}
\text { Total}\
\underline{\text { Cost}} \
 \$ 61 \
62 \
64 \
67 \
72 \
79 \
86
\end{array}
\end{array}$
  Refer to the data.Suppose that entry into the industry changes this firm's demand schedule from columns (1)and (3)shown to columns (2)and (3).Economic profit will:

Accepted Answer

A)  fall by $10. 
B)  fall to $6. 
C)  increase by $10. 
D)  decline to zero. 
A)  fall by $10. 
B)  fall to $6. 
C)  increase by $10. 
D)  decline to zero.

Question 9

(Last Word)Which of the following statements best describes the Internet market structure?

Accepted Answer

A)  It is highly competitive,with many providers and no firms in a dominant position. 
B)  There are a few large firms,such as Google,Facebook,and Amazon,but they each occupy their own niche and don't infringe on the others' territories. 
C)  There are a few large firms,such as Google,Facebook,and Amazon,each dominating a particular sector but always trying to gain market share in another sector. 
D)  It is comprised of firms that have been granted monopolies by the government and are highly regulated. 
A)  It is highly competitive,with many providers and no firms in a dominant position. 
B)  There are a few large firms,such as Google,Facebook,and Amazon,but they each occupy their own niche and don't infringe on the others' territories. 
C)  There are a few large firms,such as Google,Facebook,and Amazon,each dominating a particular sector but always trying to gain market share in another sector. 
D)  It is comprised of firms that have been granted monopolies by the government and are highly regulated.

Question 10

Generally speaking,oligopolistic industries producing raw materials and semifinished goods usually offer differentiated products,while oligopolists producing consumer goods usually offer standardized products.

Accepted Answer

A) True 
 B)False

Question 11

As a general rule,oligopoly exists when the four-firm concentration ratio:

Accepted Answer

A)  exceeds the Herfindahl index. 
B)  is less than the Herfindahl index. 
C)  is 40 percent or more. 
D)  is 15 percent or more. 
A)  exceeds the Herfindahl index. 
B)  is less than the Herfindahl index. 
C)  is 40 percent or more. 
D)  is 15 percent or more.

Question 12

Which of the following nations is not a member of the OPEC oil cartel?

Accepted Answer

A)  Saudi Arabia. 
B)  Iran. 
C)  Venezuela. 
D)  Norway. 
A)  Saudi Arabia. 
B)  Iran. 
C)  Venezuela. 
D)  Norway.

Question 13

The economic profits earned by monopolistically competitive sellers are zero in the long run.

Accepted Answer

A) True 
 B)False

Question 14

A simultaneous game is said to exist when:

Accepted Answer

A)  firms are playing pricing games in different markets at the same time. 
B)  firms choose their strategies at the same time as their rivals. 
C)  firms can set multiple prices for the same good at the same time. 
D)  strategies are set without regard to possible interactions in future time periods. 
A)  firms are playing pricing games in different markets at the same time. 
B)  firms choose their strategies at the same time as their rivals. 
C)  firms can set multiple prices for the same good at the same time. 
D)  strategies are set without regard to possible interactions in future time periods.

Question 15

The price elasticity of a monopolistically competitive firm's demand curve varies:

Accepted Answer

A)  inversely with the number of competitors and the degree of product differentiation. 
B)  directly with the number of competitors and the degree of product differentiation. 
C)  directly with the number of competitors but inversely with the degree of product differentiation. 
D)  inversely with the number of competitors but directly with the degree of product differentiation. 
A)  inversely with the number of competitors and the degree of product differentiation. 
B)  directly with the number of competitors and the degree of product differentiation. 
C)  directly with the number of competitors but inversely with the degree of product differentiation. 
D)  inversely with the number of competitors but directly with the degree of product differentiation.

Question 16

(Last Word)Microsoft:

Accepted Answer

A)  dominates the primary Internet markets. 
B)  is attempting to gain market share in the Internet,smartphone,and tablet markets in an effort to offset a shrinking PC market. 
C)  has colluded with Amazon and Google to fix online advertising prices. 
D)  holds a near-monopoly in the Internet search market. 
A)  dominates the primary Internet markets. 
B)  is attempting to gain market share in the Internet,smartphone,and tablet markets in an effort to offset a shrinking PC market. 
C)  has colluded with Amazon and Google to fix online advertising prices. 
D)  holds a near-monopoly in the Internet search market.

Question 17

Product variety is likely to be greater in:

Accepted Answer

A)  monopolistic competition than in pure competition. 
B)  pure competition than in monopolistic competition. 
C)  homogeneous oligopoly than in monopolistic competition. 
D)  homogeneous oligopoly than in differentiated oligopoly. 
A)  monopolistic competition than in pure competition. 
B)  pure competition than in monopolistic competition. 
C)  homogeneous oligopoly than in monopolistic competition. 
D)  homogeneous oligopoly than in differentiated oligopoly.

Question 18

The monopolistically competitive seller maximizes profit by producing at the point where:

Accepted Answer

A)  total revenue is at a maximum. 
B)  average costs are at a minimum. 
C)  marginal revenue equals marginal cost. 
D)  price equals marginal revenue. 
A)  total revenue is at a maximum. 
B)  average costs are at a minimum. 
C)  marginal revenue equals marginal cost. 
D)  price equals marginal revenue.

Question 19

A significant difference between a monopolistically competitive firm and a purely competitive firm is that the:

Accepted Answer

A)  former does not seek to maximize profits. 
B)  latter recognizes that price must be reduced to sell more output. 
C)  former sells similar,although not identical,products. 
D)  former's demand curve is perfectly inelastic. 
A)  former does not seek to maximize profits. 
B)  latter recognizes that price must be reduced to sell more output. 
C)  former sells similar,although not identical,products. 
D)  former's demand curve is perfectly inelastic.

Question 20

Negative-sum games do not exist because neither player has an incentive to play the game.

Accepted Answer

A) True 
 B)False

In the long run,a profit-maximizing monopolistically competitive firm sets it price:

If the firms in an oligopolistic industry can establish an effective cartel,the resulting output and price will approximate those of:

Under monopolistic competition,entry to the industry is:

When a monopolistically competitive firm is in long-run equilibrium:

In repeated games,players may be willing to accept lower payoffs in the short run in exchange for greater net payoffs over the long run.

The four-firm sales concentration ratio for an industry measures the:

(Last Word)Which of the following statements best describes the Internet market structure?

Generally speaking,oligopolistic industries producing raw materials and semifinished goods usually offer differentiated products,while oligopolists producing consumer goods usually offer standardized products.

As a general rule,oligopoly exists when the four-firm concentration ratio:

Which of the following nations is not a member of the OPEC oil cartel?

The economic profits earned by monopolistically competitive sellers are zero in the long run.

A simultaneous game is said to exist when:

The price elasticity of a monopolistically competitive firm's demand curve varies:

(Last Word)Microsoft:

Product variety is likely to be greater in:

The monopolistically competitive seller maximizes profit by producing at the point where:

A significant difference between a monopolistically competitive firm and a purely competitive firm is that the:

Negative-sum games do not exist because neither player has an incentive to play the game.

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

Filters

Exam 13: Monopolistic Competition and Oligopoly

In the long run,a profit-maximizing monopolistically competitive firm sets it price:

If the firms in an oligopolistic industry can establish an effective cartel,the resulting output and price will approximate those of:

Under monopolistic competition,entry to the industry is:

When a monopolistically competitive firm is in long-run equilibrium:

In repeated games,players may be willing to accept lower payoffs in the short run in exchange for greater net payoffs over the long run.

The four-firm sales concentration ratio for an industry measures the:

(Last Word)Which of the following statements best describes the Internet market structure?

Generally speaking,oligopolistic industries producing raw materials and semifinished goods usually offer differentiated products,while oligopolists producing consumer goods usually offer standardized products.

As a general rule,oligopoly exists when the four-firm concentration ratio:

Which of the following nations is not a member of the OPEC oil cartel?

The economic profits earned by monopolistically competitive sellers are zero in the long run.

A simultaneous game is said to exist when:

The price elasticity of a monopolistically competitive firm's demand curve varies:

(Last Word)Microsoft:

Product variety is likely to be greater in:

The monopolistically competitive seller maximizes profit by producing at the point where:

A significant difference between a monopolistically competitive firm and a purely competitive firm is that the:

Negative-sum games do not exist because neither player has an incentive to play the game.

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

Filters