Question 1

All of the following,except one,are aspects of oligopoly that can be analyzed by game theory.Which is the exception?

Accepted Answer

A) Firm interdependence. 
B) The advantages of successful collusion. 
C) That pricing decisions based on the anticipated action of rival firms will lead to low prices. 
D) The importance of trust between firms in order for collusion to be successful. 
E) Concentration ratio. 
A) Firm interdependence. 
B) The advantages of successful collusion. 
C) That pricing decisions based on the anticipated action of rival firms will lead to low prices. 
D) The importance of trust between firms in order for collusion to be successful. 
E) Concentration ratio. E

Question 2

Draw a linear demand curve,marginal revenue curve,marginal cost curve,average total cost curve,and an average variable cost curve for a monopolistically competitive firm earning an economic profit in the short run.Shade in the area of economic profit.

Accepted Answer

The answer of Draw a linear demand curve,marginal revenue curve,marginal...

Question 3

Most economic theory is based on the assumption that firms have one goal.Which of the following is that goal?

Accepted Answer

A) Profit maximization. 
B) Continued growth of the corporation's sales and size of operations. 
C) The achievement of management autonomy in decision making. 
D) Development of state-of-the art technology. 
E) Enhancement of the company's image and the management's pride. 
A) Profit maximization. 
B) Continued growth of the corporation's sales and size of operations. 
C) The achievement of management autonomy in decision making. 
D) Development of state-of-the art technology. 
E) Enhancement of the company's image and the management's pride. A

Question 4

Why do firms advertise?

Accepted Answer

Firms attempt to differentiate their pro

Question 5

Which one of the following statements is true about a monopolistically competitive firm in long-run equilibrium?

Accepted Answer

A) Its output is larger than it would be under conditions of perfect competition. 
B) Its average cost is lower that it would be under conditions of perfect competition. 
C) It is producing at economic capacity just as it would be under conditions of perfect competition. 
D) Its price is equal to its marginal cost just as it would be under conditions of perfect competition. 
E) None of the choices are correct. 
A) Its output is larger than it would be under conditions of perfect competition. 
B) Its average cost is lower that it would be under conditions of perfect competition. 
C) It is producing at economic capacity just as it would be under conditions of perfect competition. 
D) Its price is equal to its marginal cost just as it would be under conditions of perfect competition. 
E) None of the choices are correct.

Question 6

Suppose an industry has one or two successful franchises and there is a government policy which limits the number of firms in the industry.What is the likely result?

Accepted Answer

A) Consumer choice will be maximized. 
B) Productive efficiency will be achieved by most firms. 
C) Entry by new firms will be easy. 
D) The existing franchises can be sold for a price that reflects the economic profits that are being earned by the existing firms. 
E) Most existing firms will be earning normal profits only. 
A) Consumer choice will be maximized. 
B) Productive efficiency will be achieved by most firms. 
C) Entry by new firms will be easy. 
D) The existing franchises can be sold for a price that reflects the economic profits that are being earned by the existing firms. 
E) Most existing firms will be earning normal profits only.

Question 7

Identify three important aspects of the oligopoly market.

Accepted Answer

1)Competition may lead to price wars,cau

Question 8

"A monopolistically competitive firm earns zero economic profits and has no excess capacity in the long-run." Evaluate this statement.

Accepted Answer

The first part of the statement is corre

Question 9

What is product differentiation?

Accepted Answer

A) Charging different customers different prices for the same product. 
B) The attempt by a firm to distinguish its product from the competition by charging a different price. 
C) The attempt by a firm to distinguish its product from the competition using non-price methods. 
D) Charging customers different prices for different products. 
A) Charging different customers different prices for the same product. 
B) The attempt by a firm to distinguish its product from the competition by charging a different price. 
C) The attempt by a firm to distinguish its product from the competition using non-price methods. 
D) Charging customers different prices for different products.

Question 10

Which of the following statements is correct when comparing a monopoly market and an oligopoly market?

Accepted Answer

A) The price and quantity would be the same in both markets. 
B) Both price and quantity would be lower in the monopoly market than in the oligopoly market. 
C) The price would be lower and the quantity would be higher in the monopoly market than in the oligopoly market. 
D) The price would be higher and the quantity would be lower in the monopoly market than in the oligopoly market. 
A) The price and quantity would be the same in both markets. 
B) Both price and quantity would be lower in the monopoly market than in the oligopoly market. 
C) The price would be lower and the quantity would be higher in the monopoly market than in the oligopoly market. 
D) The price would be higher and the quantity would be lower in the monopoly market than in the oligopoly market.

Question 11

Which of the following statements is correct for an oligopoly firm with a kinked-demand curve?

Accepted Answer

A) It will increase its total revenue by raising its price but lower it by decreasing its price. 
B) It will decrease its total revenue by raising its price but raise it by decreasing its price. 
C) It will increase its total revenue by either raising or lowering its price. 
D) It will decrease its total revenue by either raising or lowering its price. 
E) Its total revenue will not change regardless of whether it raises or lowers its price. 
A) It will increase its total revenue by raising its price but lower it by decreasing its price. 
B) It will decrease its total revenue by raising its price but raise it by decreasing its price. 
C) It will increase its total revenue by either raising or lowering its price. 
D) It will decrease its total revenue by either raising or lowering its price. 
E) Its total revenue will not change regardless of whether it raises or lowers its price.

Question 12

What is the root cause of excess capacity in a monopolistically competitive industry?

Accepted Answer

A) Inefficient producers. 
B) Product differentiation. 
C) Free entry. 
D) Rising marginal cost. 
A) Inefficient producers. 
B) Product differentiation. 
C) Free entry. 
D) Rising marginal cost.

Question 13

What is a concentration ratio?

Accepted Answer

A) A ratio that measures the percentage of an industry's total output that is produce by the largest few firms. 
B) A ratio that measures the percentage of a firm's total output compared to its nearest rival. 
C) A ratio that measures the percentage of the economy's total output that a particular industry produces. 
D) A ratio that measures the size of each industry. 
A) A ratio that measures the percentage of an industry's total output that is produce by the largest few firms. 
B) A ratio that measures the percentage of a firm's total output compared to its nearest rival. 
C) A ratio that measures the percentage of the economy's total output that a particular industry produces. 
D) A ratio that measures the size of each industry.

Question 14

If the firms in an oligopoly industry are able to successfully form a cartel we would expect the price and output of the cartel to approximate that of which of the following?

Accepted Answer

A) A perfectly competitive industry. 
B) A monopolistically competitive industry. 
C) An oligopolistic industry that is similar to the price leadership variant. 
D) A monopoly. 
A) A perfectly competitive industry. 
B) A monopolistically competitive industry. 
C) An oligopolistic industry that is similar to the price leadership variant. 
D) A monopoly.

Question 15

Allocative efficiency is absent if price exceeds marginal cost.

Accepted Answer

A) True 
 B)False

Question 16

On which of the following does game theory focus?

Accepted Answer

A) Prices,revenues and costs. 
B) Prices,elasticity and costs. 
C) Entry,revenues and costs. 
D) Entry,interdependence and strategies. 
E) Interdependence,strategies and pay-offs. 
A) Prices,revenues and costs. 
B) Prices,elasticity and costs. 
C) Entry,revenues and costs. 
D) Entry,interdependence and strategies. 
E) Interdependence,strategies and pay-offs.

Question 17

Why is it difficult for colluding firms to maintain a cartel?

Accepted Answer

A) Because the large profits made by existing firms result in new firms entering the industry. 
B) Because cartels are illegal. 
C) Because cartels always end up producing too little with the result that at least one member firm will find it profitable to raise its price and the other firms will follow. 
D) Because member firms find the prospect of cheating too attractive to resist. 
A) Because the large profits made by existing firms result in new firms entering the industry. 
B) Because cartels are illegal. 
C) Because cartels always end up producing too little with the result that at least one member firm will find it profitable to raise its price and the other firms will follow. 
D) Because member firms find the prospect of cheating too attractive to resist.

Question 18

Galbraith argues that oligopoly firms can be efficient because of the research they engage in and the technological change they foster.

Accepted Answer

A) True 
 B)False

Question 19

A monopolistic competitive firm is producing 100 units when MR = MC = $20.At that level of output,the price is $45,average total cost is $35,and average variable cost is $25.Is the firm maximizing profits? How much?

Accepted Answer

The monopolistic competitive f

Question 20

Define and explain price leadership.

Accepted Answer

Price leadership is a situation where fi

All of the following,except one,are aspects of oligopoly that can be analyzed by game theory.Which is the exception?

Draw a linear demand curve,marginal revenue curve,marginal cost curve,average total cost curve,and an average variable cost curve for a monopolistically competitive firm earning an economic profit in the short run.Shade in the area of economic profit.

Most economic theory is based on the assumption that firms have one goal.Which of the following is that goal?

Why do firms advertise?

Which one of the following statements is true about a monopolistically competitive firm in long-run equilibrium?

Suppose an industry has one or two successful franchises and there is a government policy which limits the number of firms in the industry.What is the likely result?

Identify three important aspects of the oligopoly market.

"A monopolistically competitive firm earns zero economic profits and has no excess capacity in the long-run." Evaluate this statement.

What is product differentiation?

Which of the following statements is correct when comparing a monopoly market and an oligopoly market?

Which of the following statements is correct for an oligopoly firm with a kinked-demand curve?

What is the root cause of excess capacity in a monopolistically competitive industry?

What is a concentration ratio?

If the firms in an oligopoly industry are able to successfully form a cartel we would expect the price and output of the cartel to approximate that of which of the following?

Allocative efficiency is absent if price exceeds marginal cost.

On which of the following does game theory focus?

Why is it difficult for colluding firms to maintain a cartel?

Galbraith argues that oligopoly firms can be efficient because of the research they engage in and the technological change they foster.

A monopolistic competitive firm is producing 100 units when MR = MC = $20.At that level of output,the price is $45,average total cost is $35,and average variable cost is $25.Is the firm maximizing profits? How much?

Define and explain price leadership.

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Elasticity

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

Perfect Competition

An Evaluation of Competitive Markets

Monopoly

The Factors of Production

International Trade

Filters

Exam 11: Imperfect Competition

All of the following,except one,are aspects of oligopoly that can be analyzed by game theory.Which is the exception?

Draw a linear demand curve,marginal revenue curve,marginal cost curve,average total cost curve,and an average variable cost curve for a monopolistically competitive firm earning an economic profit in the short run.Shade in the area of economic profit.

Most economic theory is based on the assumption that firms have one goal.Which of the following is that goal?

Why do firms advertise?

Which one of the following statements is true about a monopolistically competitive firm in long-run equilibrium?

Suppose an industry has one or two successful franchises and there is a government policy which limits the number of firms in the industry.What is the likely result?

Identify three important aspects of the oligopoly market.

"A monopolistically competitive firm earns zero economic profits and has no excess capacity in the long-run." Evaluate this statement.

What is product differentiation?

Which of the following statements is correct when comparing a monopoly market and an oligopoly market?

Which of the following statements is correct for an oligopoly firm with a kinked-demand curve?

What is the root cause of excess capacity in a monopolistically competitive industry?

What is a concentration ratio?

If the firms in an oligopoly industry are able to successfully form a cartel we would expect the price and output of the cartel to approximate that of which of the following?

Allocative efficiency is absent if price exceeds marginal cost.

On which of the following does game theory focus?

Why is it difficult for colluding firms to maintain a cartel?

Galbraith argues that oligopoly firms can be efficient because of the research they engage in and the technological change they foster.

A monopolistic competitive firm is producing 100 units when MR = MC = $20.At that level of output,the price is $45,average total cost is $35,and average variable cost is $25.Is the firm maximizing profits? How much?

Define and explain price leadership.

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Elasticity

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

Perfect Competition

An Evaluation of Competitive Markets

Monopoly

The Factors of Production

International Trade

Filters