Question 1

Suppose that the concentration ratio of an industry is high.Which of the following statements would be correct?

Accepted Answer

A) Increasing returns to scale are insignificant for the firms within the industry. 
B) Increasing returns to scale are significant for the firms within the industry. 
C) The industry will have many firms within it. 
D) The firms within the industry will have all achieved their minimum efficient scale. 
E) All the firms must be of a similar size. 
A) Increasing returns to scale are insignificant for the firms within the industry. 
B) Increasing returns to scale are significant for the firms within the industry. 
C) The industry will have many firms within it. 
D) The firms within the industry will have all achieved their minimum efficient scale. 
E) All the firms must be of a similar size.

Question 2

Who challenged the fundament assumption of profit maximization?

Accepted Answer

A) John Galbraith. 
B) George Stigler. 
C) Adam Smith. 
D) John Maynard Keynes. 
A) John Galbraith. 
B) George Stigler. 
C) Adam Smith. 
D) John Maynard Keynes.

Question 3

What is meant by the term "allocative efficiency"?

Accepted Answer

A) When a firm is producing an output that equals minimum AC. 
B) When a firm is producing an output and charging a price that equals minimum AC. 
C) When a firm is charging a price equal to MC. 
D) When a firm has achieved its MES. 
A) When a firm is producing an output that equals minimum AC. 
B) When a firm is producing an output and charging a price that equals minimum AC. 
C) When a firm is charging a price equal to MC. 
D) When a firm has achieved its MES.

Question 4

The following graph shows the costs and revenues of a typical firm operating in a monopolistically competitive industry.
  
-Refer to the graph above to answer this question.Which of the following statements is correct?

Accepted Answer

A) This is a short-run situation and the firm is making economic profits. 
B) This is a short-run situation and the firm is experiencing a loss. 
C) This is a long-run situation and the firm is making economic profits. 
D) This is a long-run situation but the firm is making no economic profits. 
E) This is a long-run situation but no comment on profits is possible. 
A) This is a short-run situation and the firm is making economic profits. 
B) This is a short-run situation and the firm is experiencing a loss. 
C) This is a long-run situation and the firm is making economic profits. 
D) This is a long-run situation but the firm is making no economic profits. 
E) This is a long-run situation but no comment on profits is possible.

Question 5

Compare how P,ATC,MC,and MR are related to each other in the long-run equilibrium setting for a perfectly competitive firm and a monopolistically competitive firm.

Accepted Answer

In perfect competition we know the firm

Question 6

Define 'concentration ratio' and describe how can it be used to distinguish different types of market structures?

Accepted Answer

A concentration ratio is a measurement o

Question 7

The following graph shows the costs and revenues of a typical firm operating in a monopolistically competitive industry.
  
-Refer to the graph above to answer this question.Which of the following will be the result of the situation illustrated in the graph?

Accepted Answer

A) New firms will enter the industry and this will shift the market supply curve to the right. 
B) New firms will enter the industry and this will shift the market supply curve to the left. 
C) Some firms will exit from the industry and this will shift the market supply curve to the right. 
D) Some firms will exit from the industry and this will shift the market supply curve to the left. 
E) Long run equilibrium has been achieved and no new entry or exit of firms will occur. 
A) New firms will enter the industry and this will shift the market supply curve to the right. 
B) New firms will enter the industry and this will shift the market supply curve to the left. 
C) Some firms will exit from the industry and this will shift the market supply curve to the right. 
D) Some firms will exit from the industry and this will shift the market supply curve to the left. 
E) Long run equilibrium has been achieved and no new entry or exit of firms will occur.

Question 8

What does excess capacity mean?

Accepted Answer

A) The situation where a firm's output is below economic capacity. 
B) The situation where a firm's output is above economic capacity. 
C) The situation where a firm is producing an output below equilibrium. 
D) The situation where a firm is producing an output above equilibrium. 
A) The situation where a firm's output is below economic capacity. 
B) The situation where a firm's output is above economic capacity. 
C) The situation where a firm is producing an output below equilibrium. 
D) The situation where a firm is producing an output above equilibrium.

Question 9

Define product differentiation.

Accepted Answer

The attempt by a fir

Question 10

Explain why monopolistically competitive firms do not earn economic profits in the long-run.

Accepted Answer

A monopolistically competitive market st

Question 11

Below is a graphical illustration of a typical firm operating in a monopolistically competitive industry:
  
-Refer to the graph above to answer this question.Which of the following statements is correct?

Accepted Answer

A) This graph illustrates a short-run situation and the firm will soon be producing more. 
B) This graph illustrates a short-run situation and the firm will soon be charging a higher price. 
C) This graph illustrates a short-run situation and the firm will soon be producing less. 
D) This graph illustrates a long-run situation the and firm will soon be producing more. 
E) This graph illustrates a long-run situation and the and firm will soon be charging a higher price. 
A) This graph illustrates a short-run situation and the firm will soon be producing more. 
B) This graph illustrates a short-run situation and the firm will soon be charging a higher price. 
C) This graph illustrates a short-run situation and the firm will soon be producing less. 
D) This graph illustrates a long-run situation the and firm will soon be producing more. 
E) This graph illustrates a long-run situation and the and firm will soon be charging a higher price.

Question 12

All of the following statements,except one,are correct about a firm operating under conditions of either monopolistic competition or oligopoly.Which is the exception?

Accepted Answer

A) Graphically,it faces a downward-sloping demand curve. 
B) It charges a price above marginal cost in both the short run and the long run. 
C) It charges a price equal to average cost in both the short run and the long run. 
D) It fails to achieve economic efficiency. 
E) It fails to achieve productive efficiency. 
A) Graphically,it faces a downward-sloping demand curve. 
B) It charges a price above marginal cost in both the short run and the long run. 
C) It charges a price equal to average cost in both the short run and the long run. 
D) It fails to achieve economic efficiency. 
E) It fails to achieve productive efficiency.

Question 13

What is the term for an industry which is dominated by a few large firms?

Accepted Answer

A) Monopoly. 
B) Oligopoly. 
C) Monopolistic competition. 
D) Perfect competition. 
A) Monopoly. 
B) Oligopoly. 
C) Monopolistic competition. 
D) Perfect competition.

Question 14

Of which of the following is OPEC an example?

Accepted Answer

A) A non-colluding oligopoly. 
B) A cartel. 
C) A differentiated oligopoly. 
D) A duopoly. 
A) A non-colluding oligopoly. 
B) A cartel. 
C) A differentiated oligopoly. 
D) A duopoly.

Question 15

Faced with a kinked demand curve,what action will an oligopolist take if the costs of production increase?

Accepted Answer

A) Increase the price 
B) Decrease the price,but only if the demand is elastic. 
C) Decrease the price,but only if the demand is inelastic. 
D) Decrease the price but only if it is a big increase in costs. 
E) Nothing,unless it is a very big increase in costs. 
A) Increase the price 
B) Decrease the price,but only if the demand is elastic. 
C) Decrease the price,but only if the demand is inelastic. 
D) Decrease the price but only if it is a big increase in costs. 
E) Nothing,unless it is a very big increase in costs.

Question 16

Which of the following variants of oligopoly theory assume that there is no collusion between firms?

Accepted Answer

A) The price leadership variant only. 
B) Both the price leadership and the kinked-demand curve variant. 
C) The price leadership,kinked-demand curve and cartel variants. 
D) The kinked-demand curve variant only. 
A) The price leadership variant only. 
B) Both the price leadership and the kinked-demand curve variant. 
C) The price leadership,kinked-demand curve and cartel variants. 
D) The kinked-demand curve variant only.

Question 17

The actual owners of most oligopoly firms are made up of many diverse shareholders who are unknown to each other.The people who run the companies---hired executives---are few and they all know one another.What,if anything,might prevent these managers from enriching themselves at the expense of the shareholders?

Accepted Answer

Economists would call this an example of

Question 18

What is the level of economic profits earned by a firm operating in the short-run under conditions of monopolistic competition?

Accepted Answer

A) It is positive. 
B) It is likely to be positive,but could be negative. 
C) It is zero. 
D) It is negative. 
A) It is positive. 
B) It is likely to be positive,but could be negative. 
C) It is zero. 
D) It is negative.

Question 19

Table 11.2
  
-Refer to Table 11.2 to answer this question.If the firm produces its profit-maximizing output,how much excess capacity will it have?

Accepted Answer

A) 60. 
B) 120. 
C) 300. 
D) More information is needed to answer the question. 
A) 60. 
B) 120. 
C) 300. 
D) More information is needed to answer the question.

Question 20

Canada Cement,Canadian General Electric and American Airlines are all examples of which variant of oligopoly theory?

Accepted Answer

A) Price Leadership. 
B) Kinked-demand curve. 
C) Cartel. 
D) None of the choices are correct. 
A) Price Leadership. 
B) Kinked-demand curve. 
C) Cartel. 
D) None of the choices are correct.

Suppose that the concentration ratio of an industry is high.Which of the following statements would be correct?

Who challenged the fundament assumption of profit maximization?

What is meant by the term "allocative efficiency"?

The following graph shows the costs and revenues of a typical firm operating in a monopolistically competitive industry. -Refer to the graph above to answer this question.Which of the following statements is correct?

Compare how P,ATC,MC,and MR are related to each other in the long-run equilibrium setting for a perfectly competitive firm and a monopolistically competitive firm.

Define 'concentration ratio' and describe how can it be used to distinguish different types of market structures?

The following graph shows the costs and revenues of a typical firm operating in a monopolistically competitive industry. -Refer to the graph above to answer this question.Which of the following will be the result of the situation illustrated in the graph?

What does excess capacity mean?

Define product differentiation.

Explain why monopolistically competitive firms do not earn economic profits in the long-run.

Below is a graphical illustration of a typical firm operating in a monopolistically competitive industry: -Refer to the graph above to answer this question.Which of the following statements is correct?

All of the following statements,except one,are correct about a firm operating under conditions of either monopolistic competition or oligopoly.Which is the exception?

What is the term for an industry which is dominated by a few large firms?

Of which of the following is OPEC an example?

Faced with a kinked demand curve,what action will an oligopolist take if the costs of production increase?

Which of the following variants of oligopoly theory assume that there is no collusion between firms?

What is the level of economic profits earned by a firm operating in the short-run under conditions of monopolistic competition?

Table 11.2 -Refer to Table 11.2 to answer this question.If the firm produces its profit-maximizing output,how much excess capacity will it have?

Canada Cement,Canadian General Electric and American Airlines are all examples of which variant of oligopoly theory?

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

Suppose that the concentration ratio of an industry is high.Which of the following statements would be correct?

Who challenged the fundament assumption of profit maximization?

What is meant by the term "allocative efficiency"?

The following graph shows the costs and revenues of a typical firm operating in a monopolistically competitive industry. -Refer to the graph above to answer this question.Which of the following statements is correct?

Compare how P,ATC,MC,and MR are related to each other in the long-run equilibrium setting for a perfectly competitive firm and a monopolistically competitive firm.

Define 'concentration ratio' and describe how can it be used to distinguish different types of market structures?

The following graph shows the costs and revenues of a typical firm operating in a monopolistically competitive industry. -Refer to the graph above to answer this question.Which of the following will be the result of the situation illustrated in the graph?

What does excess capacity mean?

Define product differentiation.

Explain why monopolistically competitive firms do not earn economic profits in the long-run.

Below is a graphical illustration of a typical firm operating in a monopolistically competitive industry: -Refer to the graph above to answer this question.Which of the following statements is correct?

All of the following statements,except one,are correct about a firm operating under conditions of either monopolistic competition or oligopoly.Which is the exception?

What is the term for an industry which is dominated by a few large firms?

Of which of the following is OPEC an example?

Faced with a kinked demand curve,what action will an oligopolist take if the costs of production increase?

Which of the following variants of oligopoly theory assume that there is no collusion between firms?

What is the level of economic profits earned by a firm operating in the short-run under conditions of monopolistic competition?

Table 11.2 -Refer to Table 11.2 to answer this question.If the firm produces its profit-maximizing output,how much excess capacity will it have?

Canada Cement,Canadian General Electric and American Airlines are all examples of which variant of oligopoly theory?

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