Question 1

Which of the following statements concerning a monopolistically competitive industry is correct?

Accepted Answer

A) If there are short-run losses,firms will exit from the industry and the demand of the remaining firms will decrease. 
B) If there are short-run losses,firms will exit from the industry and the demand of the remaining firms will increase. 
C) If there are short-run profits,firms will exit from the industry and the demand of the remaining firms will increase. 
D) If there are short-run profits,firms will enter the industry and the demand of the remaining firms will increase. 
A) If there are short-run losses,firms will exit from the industry and the demand of the remaining firms will decrease. 
B) If there are short-run losses,firms will exit from the industry and the demand of the remaining firms will increase. 
C) If there are short-run profits,firms will exit from the industry and the demand of the remaining firms will increase. 
D) If there are short-run profits,firms will enter the industry and the demand of the remaining firms will increase.

Question 2

Use the kinked demand curve diagram to illustrate and describe why prices are often sticky in an oligopoly market.

Accepted Answer

The answer of Use the kinked demand curve diagram to...

Question 3

Below is a profit pay-off matrix for two oligopoly firms: Calvin Inc.and Hobbs Ltd.Calvin's profits are shown in the upper portion of each box and Hobb's are in the lower portion.
  
-Refer to the information above to answer this question.Which of the following statements is correct if no agreement between Calvin and Hobbs is in place and each is considering what to do in terms of its advertising budget?

Accepted Answer

A) If Calvin adopts a high advertising budget and Hobbs does not,then Calvin will earn $300 in profits. 
B) If Calvin adopts a high advertising budget and Hobbs does not,then Hobbs will earn $800 in profits. 
C) If Hobbs adopts a high advertising budget and Calvin does not,then Calvin will earn $800 in profits. 
D) If Hobbs adopts a high advertising budget and Calvin does not,then Hobbs will earn $300 in profits. 
E) Collusion and trust between Calvin and Hobbs is necessary if both are to adopt and maintain a low advertising budget. 
A) If Calvin adopts a high advertising budget and Hobbs does not,then Calvin will earn $300 in profits. 
B) If Calvin adopts a high advertising budget and Hobbs does not,then Hobbs will earn $800 in profits. 
C) If Hobbs adopts a high advertising budget and Calvin does not,then Calvin will earn $800 in profits. 
D) If Hobbs adopts a high advertising budget and Calvin does not,then Hobbs will earn $300 in profits. 
E) Collusion and trust between Calvin and Hobbs is necessary if both are to adopt and maintain a low advertising budget.

Question 4

Table 11.2
  
-Refer to Table 11.2 to answer this question.What output will this firm produce?

Accepted Answer

A) 700. 
B) 760. 
C) 820. 
D) 880. 
A) 700. 
B) 760. 
C) 820. 
D) 880.

Question 5

The following graph shows the costs and revenues of a typical firm operating in a monopolistically competitive industry.
  
-What is the profit maximization criterion for a monopolistically competitive firm?

Accepted Answer

A) An output level that is equal to capacity output. 
B) Price equals average cost. 
C) Price equals marginal cost. 
D) Marginal revenue equals average cost. 
E) Marginal revenue equals marginal cost. 
A) An output level that is equal to capacity output. 
B) Price equals average cost. 
C) Price equals marginal cost. 
D) Marginal revenue equals average cost. 
E) Marginal revenue equals marginal cost.

Question 6

Explain four methods of product differentiation.

Accepted Answer

The four methods of product differentiat

Question 7

Which of the following would measure excess capacity?

Accepted Answer

A) The difference between what is being produced and the level of production that maximizes profits. 
B) The difference between what is being produced and economic capacity. 
C) The difference between what is being produced and the level of production that minimizes short-run marginal cost. 
D) The difference between the level of production that minimizes short-run average cost and that achieves economic capacity. 
A) The difference between what is being produced and the level of production that maximizes profits. 
B) The difference between what is being produced and economic capacity. 
C) The difference between what is being produced and the level of production that minimizes short-run marginal cost. 
D) The difference between the level of production that minimizes short-run average cost and that achieves economic capacity.

Question 8

All of the following,except one,are oligopoly industries.Which is the exception?

Accepted Answer

A) The manufacture of automobiles. 
B) The manufacture of cigarettes. 
C) The provision of accounting services. 
D) The provision of long-distance telephone services. 
A) The manufacture of automobiles. 
B) The manufacture of cigarettes. 
C) The provision of accounting services. 
D) The provision of long-distance telephone services.

Question 9

All of the following,except one,could be an explanation of a price war between firms.Which is the exception?

Accepted Answer

A) A breakdown in the collusive agreement between firms. 
B) The intense competition that one finds in a perfectly competitive industry. 
C) An aggressive young firm challenging the established price leadership of a rival firm. 
D) The action taken by established firms to ward off the possible entry of a new firm. 
A) A breakdown in the collusive agreement between firms. 
B) The intense competition that one finds in a perfectly competitive industry. 
C) An aggressive young firm challenging the established price leadership of a rival firm. 
D) The action taken by established firms to ward off the possible entry of a new firm.

Question 10

Explain why the demand curve for an oligopoly firm might be kinked.

Accepted Answer

The demand curve for an oligopoly firm m

Question 11

All,except one,of the following statements about the kinked demand curve theory of oligopoly are correct.Which is the exception?

Accepted Answer

A) It explains why the prices charged by rival firms are often similar. 
B) It explains why rival firms that charge similar prices may not be in collusion. 
C) It explains why the prices charged by rival firms sometimes go for months,or even years,without changing. 
D) It explains,particularly well,how the prevailing price in the industry first got established. 
A) It explains why the prices charged by rival firms are often similar. 
B) It explains why rival firms that charge similar prices may not be in collusion. 
C) It explains why the prices charged by rival firms sometimes go for months,or even years,without changing. 
D) It explains,particularly well,how the prevailing price in the industry first got established.

Question 12

-Refer to the graph above to answer this question.What is the firm's profit or loss at its optimum price and output?

Accepted Answer

A) A loss of $1,015. 
B) A loss of $1,350. 
C) $0. 
D) A profit of $1,350. 
E) A profit of $1,584. 
A) A loss of $1,015. 
B) A loss of $1,350. 
C) $0. 
D) A profit of $1,350. 
E) A profit of $1,584.

Question 13

What will be the long-run result of new firms entering a monopolistically-competitive industry?

Accepted Answer

A) The price charged by the representative firm will be equal to marginal cost. 
B) The representative firm will certainly incur losses. 
C) While the representative firm will not make economic profits,it will be able to make normal profits. 
D) The representative firm will be able to maintain economic profits. 
A) The price charged by the representative firm will be equal to marginal cost. 
B) The representative firm will certainly incur losses. 
C) While the representative firm will not make economic profits,it will be able to make normal profits. 
D) The representative firm will be able to maintain economic profits.

Question 14

Below is a profit pay-off matrix for two oligopoly firms: Calvin Inc.and Hobbs Ltd.Calvin's profits are shown in the upper portion of each box and Hobb's are in the lower portion.
  
-Refer to the information above to answer this question.Which of the following statements is correct if no agreement between Calvin and Hobbs is in place and each is considering what to do in terms of its advertising budget?

Accepted Answer

A) If Calvin adopts a high advertising budget,then Hobbs should adopt a low budget. 
B) If Calvin adopts a high advertising budget,then Hobbs should also. 
C) If Calvin adopts a low advertising budget,then Hobbs should also. 
D) If Hobbs adopts a low advertising budget,then Calvin should also. 
A) If Calvin adopts a high advertising budget,then Hobbs should adopt a low budget. 
B) If Calvin adopts a high advertising budget,then Hobbs should also. 
C) If Calvin adopts a low advertising budget,then Hobbs should also. 
D) If Hobbs adopts a low advertising budget,then Calvin should also.

Question 15

What is collusion?

Accepted Answer

An agreement among s

Question 16

Differentiate between free entry into industry and monopolistic competition.

Accepted Answer

In perfect competition,there are a large

Question 17

Each spring,Firm A brings out the new model of its product and announces the price.Rival firms B,C and D soon follow with their new models and announce prices similar to A's.What is this an example of?

Accepted Answer

A) Mark-up pricing. 
B) A cartel. 
C) Collusion. 
D) Price leadership. 
E) A kinked-demand curve. 
A) Mark-up pricing. 
B) A cartel. 
C) Collusion. 
D) Price leadership. 
E) A kinked-demand curve.

Question 18

All of the following statements,except one,are correct about game theory analysis.Which is the exception?

Accepted Answer

A) It has led some economists to conclude that the likelihood of cheating is a more effective barrier to collusion than government legislation. 
B) It emphasizes the importance of mutual interdependence. 
C) It is an attempt to explain firm behaviour. 
D) It shows that it is rational for each firm to trust the other. 
E) It is able to predict a likely outcome of two firms engaged in considering a specific action. 
A) It has led some economists to conclude that the likelihood of cheating is a more effective barrier to collusion than government legislation. 
B) It emphasizes the importance of mutual interdependence. 
C) It is an attempt to explain firm behaviour. 
D) It shows that it is rational for each firm to trust the other. 
E) It is able to predict a likely outcome of two firms engaged in considering a specific action.

Question 19

-Refer to Figure 11.10 to answer this question.What output level will the firm produce?

Accepted Answer

A) Q1. 
B) Q2. 
C) Q3. 
D) Q4. 
E) More information is needed to answer this question. 
A) Q1. 
B) Q2. 
C) Q3. 
D) Q4. 
E) More information is needed to answer this question.

Question 20

-Refer to the graph above to answer this question.What will be the profit maximizing price?

Accepted Answer

A) P1. 
B) P2. 
C) P3. 
D) P4. 
E) P5. 
A) P1. 
B) P2. 
C) P3. 
D) P4. 
E) P5.

Which of the following statements concerning a monopolistically competitive industry is correct?

Use the kinked demand curve diagram to illustrate and describe why prices are often sticky in an oligopoly market.

Table 11.2 -Refer to Table 11.2 to answer this question.What output will this firm produce?

The following graph shows the costs and revenues of a typical firm operating in a monopolistically competitive industry. -What is the profit maximization criterion for a monopolistically competitive firm?

Explain four methods of product differentiation.

Which of the following would measure excess capacity?

All of the following,except one,are oligopoly industries.Which is the exception?

All of the following,except one,could be an explanation of a price war between firms.Which is the exception?

Explain why the demand curve for an oligopoly firm might be kinked.

All,except one,of the following statements about the kinked demand curve theory of oligopoly are correct.Which is the exception?

-Refer to the graph above to answer this question.What is the firm's profit or loss at its optimum price and output?

What will be the long-run result of new firms entering a monopolistically-competitive industry?

What is collusion?

Differentiate between free entry into industry and monopolistic competition.

Each spring,Firm A brings out the new model of its product and announces the price.Rival firms B,C and D soon follow with their new models and announce prices similar to A's.What is this an example of?

All of the following statements,except one,are correct about game theory analysis.Which is the exception?

-Refer to Figure 11.10 to answer this question.What output level will the firm produce?

-Refer to the graph above to answer this question.What will be the profit maximizing price?

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

Which of the following statements concerning a monopolistically competitive industry is correct?

Use the kinked demand curve diagram to illustrate and describe why prices are often sticky in an oligopoly market.

Table 11.2 -Refer to Table 11.2 to answer this question.What output will this firm produce?

The following graph shows the costs and revenues of a typical firm operating in a monopolistically competitive industry. -What is the profit maximization criterion for a monopolistically competitive firm?

Explain four methods of product differentiation.

Which of the following would measure excess capacity?

All of the following,except one,are oligopoly industries.Which is the exception?

All of the following,except one,could be an explanation of a price war between firms.Which is the exception?

Explain why the demand curve for an oligopoly firm might be kinked.

All,except one,of the following statements about the kinked demand curve theory of oligopoly are correct.Which is the exception?

-Refer to the graph above to answer this question.What is the firm's profit or loss at its optimum price and output?

What will be the long-run result of new firms entering a monopolistically-competitive industry?

What is collusion?

Differentiate between free entry into industry and monopolistic competition.

Each spring,Firm A brings out the new model of its product and announces the price.Rival firms B,C and D soon follow with their new models and announce prices similar to A's.What is this an example of?

All of the following statements,except one,are correct about game theory analysis.Which is the exception?

-Refer to Figure 11.10 to answer this question.What output level will the firm produce?

-Refer to the graph above to answer this question.What will be the profit maximizing price?

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