Question 1

Government intervention in monopolistically competitive industries is probably not warranted because:

Accepted Answer

A) monopolistic firms produce the efficient level of output. 
B) deadweight losses from monopolistic competition are hard to quantify. 
C) the cost of regulation may be higher than the deadweight loss. 
D) price regulation usually leads to a decline in total surplus . 
A) monopolistic firms produce the efficient level of output. 
B) deadweight losses from monopolistic competition are hard to quantify. 
C) the cost of regulation may be higher than the deadweight loss. 
D) price regulation usually leads to a decline in total surplus .

Question 2

In the dominant firm model of oligopoly,the dominant firm assumes that the other firms in the market:

Accepted Answer

A) will charge a higher price than it does. 
B) will together produce a lower quantity of output than it does. 
C) behave like competitive firms. 
D) behave like monopolistic firms. 
A) will charge a higher price than it does. 
B) will together produce a lower quantity of output than it does. 
C) behave like competitive firms. 
D) behave like monopolistic firms.

Question 3

The demand curve that a monopolistically competitive firm faces is _____.

Accepted Answer

A) downward-sloping but fairly elastic 
B) upward-sloping but fairly inelastic 
C) horizontal 
D) vertical 
A) downward-sloping but fairly elastic 
B) upward-sloping but fairly inelastic 
C) horizontal 
D) vertical

Question 4

For a monopolistically competitive firm,excess capacity is the difference between the equilibrium level of output and the level of output where:

Accepted Answer

A) marginal cost is minimum. 
B) average total cost is minimum. 
C) marginal revenue is maximum. 
D) total revenue is maximum. 
A) marginal cost is minimum. 
B) average total cost is minimum. 
C) marginal revenue is maximum. 
D) total revenue is maximum.

Question 5

When a firm in a monopolistically competitive market is operating at excess capacity it implies that:

Accepted Answer

A) it is producing the efficient level of output. 
B) it is producing more than the competitive level of output 
C) it can produce output at a lower cost 
D) it is facing an upward-sloping average cost curve 
A) it is producing the efficient level of output. 
B) it is producing more than the competitive level of output 
C) it can produce output at a lower cost 
D) it is facing an upward-sloping average cost curve

Question 6

(
A)Draw the diagram of a monopolistically competitive firm which makes positive economic profits and one which is in long-run equilibrium.In each case,identify the area that represents the profit earned by the firm in the short run and the long run.

Accepted Answer

The demand curve of a monopolistically c

Question 7

A monopolistically competitive industry is similar to a perfectly competitive industry in that:

Accepted Answer

A) there is free entry and exit in both markets. 
B) products are differentiated in both markets. 
C) firms in both markets decide output and prices on the basis of strategic interaction. 
D) the demand curves in both markets are downward-sloping. 
A) there is free entry and exit in both markets. 
B) products are differentiated in both markets. 
C) firms in both markets decide output and prices on the basis of strategic interaction. 
D) the demand curves in both markets are downward-sloping.

Question 8

A duopoly is defined as an industry with _____.

Accepted Answer

A) two distinct types of buyers 
B) two sellers 
C) multiple product lines 
D) a homogeneous product 
A) two distinct types of buyers 
B) two sellers 
C) multiple product lines 
D) a homogeneous product

Question 9

One of the earliest oligopoly models,as explained by Augustin Cournot,took the example of two firms that produced a homogeneous product: bottled spring water.Both firms faced zero marginal costs and a linear demand curve.Using this information,show that the Cournot equilibrium output is 2/3rd of the perfectly competitive equilibrium output.

Accepted Answer

The assumptions of linear demand and con

Question 10

Suppose ABC Concrete is the dominant firm in a market consisting of five firms.ABC's market share is 40% of the market.The elasticity of market demand is 0.8 and the elasticity of supply for the remaining firms is 6.What is the elasticity of demand for ABC's product?

Accepted Answer

A) 6 
B) 8 
C) 11 
D) 13 
A) 6 
B) 8 
C) 11 
D) 13

Question 11

Consider a dominant firm model in which the elasticity of market demand is 1,the dominant firm's market share is 0.5,and the elasticity of supply of the competitive fringe firms is 4.What would be the dominant firm's elasticity of demand?

Accepted Answer

A) 2 
B) 4 
C) 6 
D) 8 
A) 2 
B) 4 
C) 6 
D) 8

Question 12

Long-run equilibrium in a monopolistically competitive market satisfies all of the following conditions,except:

Accepted Answer

A) zero economic profit. 
B) excess capacity. 
C) price equal to marginal cost. 
D) marginal revenue equal to marginal cost. 
A) zero economic profit. 
B) excess capacity. 
C) price equal to marginal cost. 
D) marginal revenue equal to marginal cost.

Question 13

Which of the following is true of a firm in an oligopoly market?

Accepted Answer

A) Each firm faces a downward-sloping demand curve with a kink at the current price. 
B) Firms in oligopoly markets are very small relative to the market. 
C) Products in oligopoly markets could either be differentiated or homogeneous. 
D) The profit-maximizing output is determined by equating price and marginal cost. 
A) Each firm faces a downward-sloping demand curve with a kink at the current price. 
B) Firms in oligopoly markets are very small relative to the market. 
C) Products in oligopoly markets could either be differentiated or homogeneous. 
D) The profit-maximizing output is determined by equating price and marginal cost.

Question 14

In the Stackelberg model,the leader firm's residual demand curve _____.

Accepted Answer

A) has a slope that is twice that of the market demand curve 
B) has a slope that is half the slope of the market demand curve 
C) is the same as the market demand curve 
D) is more inelastic than the market demand curve 
A) has a slope that is twice that of the market demand curve 
B) has a slope that is half the slope of the market demand curve 
C) is the same as the market demand curve 
D) is more inelastic than the market demand curve

Question 15

Product differentiation in monopolistically competitive markets:

Accepted Answer

A) can reflect real or perceived differences in the product. 
B) cannot be done on the basis of a simple difference in packaging. 
C) is not easily identifiable. 
D) reduces each firm's ability to control prices. 
A) can reflect real or perceived differences in the product. 
B) cannot be done on the basis of a simple difference in packaging. 
C) is not easily identifiable. 
D) reduces each firm's ability to control prices.

Question 16

Which of the following will determine the elasticity of a dominant firm's demand curve?

Accepted Answer

A) The dominant firm's marginal cost of production 
B) The demand elasticity of the fringe firms 
C) The total output in the market 
D) The supply elasticity of the fringe firms 
A) The dominant firm's marginal cost of production 
B) The demand elasticity of the fringe firms 
C) The total output in the market 
D) The supply elasticity of the fringe firms

Question 17

Oligopoly cannot be explained using a single theoretical model because:

Accepted Answer

A) oligopolistic markets are not really found in the real world. 
B) the assumptions of the oligopoly model are not realistic. 
C) product differentiation makes the model too complex. 
D) mutual interdependence makes it difficult to analyze strategic behavior. 
A) oligopolistic markets are not really found in the real world. 
B) the assumptions of the oligopoly model are not realistic. 
C) product differentiation makes the model too complex. 
D) mutual interdependence makes it difficult to analyze strategic behavior.

Question 18

ABC Inc. ,is a leading consumer goods conglomerate.ABC launched a new variant of their existing brand of toothpaste that claimed not only to whiten teeth within 4 weeks but also fight cavities.In other words,ABC was practicing _____.

Accepted Answer

A) market segmentation 
B) product differentiation 
C) product customization 
D) price skimming 
A) market segmentation 
B) product differentiation 
C) product customization 
D) price skimming

Question 19

Given the same demand and cost conditions,_____ for a Stackelberg model as compared to a Cournot duopoly model.

Accepted Answer

A) total output is lower and price is higher 
B) total output is higher and price is lower 
C) total output and price are both lower 
D) total output and price are both higher 
A) total output is lower and price is higher 
B) total output is higher and price is lower 
C) total output and price are both lower 
D) total output and price are both higher

Question 20

Which of the following is true of product differentiation?

Accepted Answer

A) Product differentiation ensures that firms face a horizontal market demand curve. 
B) Product differentiation allows monopolistically competitive firms to make positive economic profits in the long run. 
C) Prices of differentiated products have to vary substantially for product differentiation to be successful. 
D) Successful product differentiation can be based on differences that are perceived by consumers. 
A) Product differentiation ensures that firms face a horizontal market demand curve. 
B) Product differentiation allows monopolistically competitive firms to make positive economic profits in the long run. 
C) Prices of differentiated products have to vary substantially for product differentiation to be successful. 
D) Successful product differentiation can be based on differences that are perceived by consumers.

Government intervention in monopolistically competitive industries is probably not warranted because:

In the dominant firm model of oligopoly,the dominant firm assumes that the other firms in the market:

The demand curve that a monopolistically competitive firm faces is _____.

For a monopolistically competitive firm,excess capacity is the difference between the equilibrium level of output and the level of output where:

When a firm in a monopolistically competitive market is operating at excess capacity it implies that:

( A)Draw the diagram of a monopolistically competitive firm which makes positive economic profits and one which is in long-run equilibrium.In each case,identify the area that represents the profit earned by the firm in the short run and the long run.

A monopolistically competitive industry is similar to a perfectly competitive industry in that:

A duopoly is defined as an industry with _____.

Suppose ABC Concrete is the dominant firm in a market consisting of five firms.ABC's market share is 40% of the market.The elasticity of market demand is 0.8 and the elasticity of supply for the remaining firms is 6.What is the elasticity of demand for ABC's product?

Consider a dominant firm model in which the elasticity of market demand is 1,the dominant firm's market share is 0.5,and the elasticity of supply of the competitive fringe firms is 4.What would be the dominant firm's elasticity of demand?

Long-run equilibrium in a monopolistically competitive market satisfies all of the following conditions,except:

Which of the following is true of a firm in an oligopoly market?

In the Stackelberg model,the leader firm's residual demand curve _____.

Product differentiation in monopolistically competitive markets:

Which of the following will determine the elasticity of a dominant firm's demand curve?

Oligopoly cannot be explained using a single theoretical model because:

ABC Inc. ,is a leading consumer goods conglomerate.ABC launched a new variant of their existing brand of toothpaste that claimed not only to whiten teeth within 4 weeks but also fight cavities.In other words,ABC was practicing _____.

Given the same demand and cost conditions,_____ for a Stackelberg model as compared to a Cournot duopoly model.

Which of the following is true of product differentiation?

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

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Exam 13: Monopolistic Competition and Oligopoly

Government intervention in monopolistically competitive industries is probably not warranted because:

In the dominant firm model of oligopoly,the dominant firm assumes that the other firms in the market:

The demand curve that a monopolistically competitive firm faces is _____.

For a monopolistically competitive firm,excess capacity is the difference between the equilibrium level of output and the level of output where:

When a firm in a monopolistically competitive market is operating at excess capacity it implies that:

( A)Draw the diagram of a monopolistically competitive firm which makes positive economic profits and one which is in long-run equilibrium.In each case,identify the area that represents the profit earned by the firm in the short run and the long run.

A monopolistically competitive industry is similar to a perfectly competitive industry in that:

A duopoly is defined as an industry with _____.

Suppose ABC Concrete is the dominant firm in a market consisting of five firms.ABC's market share is 40% of the market.The elasticity of market demand is 0.8 and the elasticity of supply for the remaining firms is 6.What is the elasticity of demand for ABC's product?

Consider a dominant firm model in which the elasticity of market demand is 1,the dominant firm's market share is 0.5,and the elasticity of supply of the competitive fringe firms is 4.What would be the dominant firm's elasticity of demand?

Long-run equilibrium in a monopolistically competitive market satisfies all of the following conditions,except:

Which of the following is true of a firm in an oligopoly market?

In the Stackelberg model,the leader firm's residual demand curve _____.

Product differentiation in monopolistically competitive markets:

Which of the following will determine the elasticity of a dominant firm's demand curve?

Oligopoly cannot be explained using a single theoretical model because:

ABC Inc. ,is a leading consumer goods conglomerate.ABC launched a new variant of their existing brand of toothpaste that claimed not only to whiten teeth within 4 weeks but also fight cavities.In other words,ABC was practicing _____.

Given the same demand and cost conditions,_____ for a Stackelberg model as compared to a Cournot duopoly model.

Which of the following is true of product differentiation?

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters