Question 1

The Canadian gumnut industry consists of 10 companies whose annual sales are as shown:
  
-What is the total sale of the four biggest firms for this industry?

Accepted Answer

A) $91 million. 
B) $118 million 
C) $129 million. 
D) $172 million. 
A) $91 million. 
B) $118 million 
C) $129 million. 
D) $172 million.

Question 2

Below is a profit pay-off matrix for two oligopoly firms: North and South.North's profits are shown in the upper portion of each box and South's are in the lower portion.
  
-Refer to the information above to answer this question.If North and South have agreed through illegal collusion to both follow a low output policy,the temptation to cheat is demonstrated by which of the following?

Accepted Answer

A) The fact that North can gain if South raises output and it doesn't. 
B) The fact that South can gain if North raises output and it doesn't. 
C) The fact that North can gain if it raises output and South does not. 
D) The fact that South can gain if it raises output and North does not. 
E) Both c and d. 
A) The fact that North can gain if South raises output and it doesn't. 
B) The fact that South can gain if North raises output and it doesn't. 
C) The fact that North can gain if it raises output and South does not. 
D) The fact that South can gain if it raises output and North does not. 
E) Both c and d.

Question 3

-Refer to the graph above to answer this question.What type of market is portrayed in this graph?

Accepted Answer

A) Monopoly. 
B) Collusive oligopoly. 
C) Imperfect competition. 
D) Perfect competition. 
E) Non-collusive oligopoly. 
A) Monopoly. 
B) Collusive oligopoly. 
C) Imperfect competition. 
D) Perfect competition. 
E) Non-collusive oligopoly.

Question 4

Which of the following statements is correct concerning a typical firm operating under conditions of monopolistic competition in the long run?

Accepted Answer

A) Excess capacity is lowered as demand becomes less elastic. 
B) It operates on the rising portion of its average cost curve because of excess capacity. 
C) The greater the product differentiation the lower will be the amount of excess capacity. 
D) None of the choices are correct. 
A) Excess capacity is lowered as demand becomes less elastic. 
B) It operates on the rising portion of its average cost curve because of excess capacity. 
C) The greater the product differentiation the lower will be the amount of excess capacity. 
D) None of the choices are correct.

Question 5

How are a typical monopolistically competitive firm and a typical perfectly competitive firm alike?

Accepted Answer

A) Both face perfectly elastic demand. 
B) Both experience zero economic profits in the long run. 
C) Both achieve allocative efficiency only. 
D) Both achieve productive efficiency only. 
E) Both achieve allocative and productive efficiency. 
A) Both face perfectly elastic demand. 
B) Both experience zero economic profits in the long run. 
C) Both achieve allocative efficiency only. 
D) Both achieve productive efficiency only. 
E) Both achieve allocative and productive efficiency.

Question 6

All of the following,except one,are possible goals that a firm might have besides that of profit maximization.

Accepted Answer

A) Obtaining anatomy of decision making. 
B) Developing state of the art technology. 
C) Achieving a high rate of growth. 
D) Lobbying the government for lower taxes. 
A) Obtaining anatomy of decision making. 
B) Developing state of the art technology. 
C) Achieving a high rate of growth. 
D) Lobbying the government for lower taxes.

Question 7

The following graph shows the costs and revenues of a typical firm operating in a monopolistically competitive industry.
  
-What is true about the long-run equilibrium price of a monopolistically competitive firm?

Accepted Answer

A) It will equal average cost and exceed marginal cost. 
B) It will equal both average cost and marginal cost. 
C) It will equal marginal cost and exceed average cost. 
D) It will exceed both average cost and marginal cost. 
E) It will equal both marginal cost and marginal revenue. 
A) It will equal average cost and exceed marginal cost. 
B) It will equal both average cost and marginal cost. 
C) It will equal marginal cost and exceed average cost. 
D) It will exceed both average cost and marginal cost. 
E) It will equal both marginal cost and marginal revenue.

Question 8

Why is it impossible for a monopolistically competitive firm to achieve productive efficiency?

Accepted Answer

A) All monopolistically competitive firms are too small. 
B) All monopolistically competitive firms make economic profits. 
C) The market demand curve is perfectly elastic. 
D) The firm's demand curve is not perfectly elastic. 
E) The firm's marginal cost curve is upward-sloping. 
A) All monopolistically competitive firms are too small. 
B) All monopolistically competitive firms make economic profits. 
C) The market demand curve is perfectly elastic. 
D) The firm's demand curve is not perfectly elastic. 
E) The firm's marginal cost curve is upward-sloping.

Question 9

Below is a graphical illustration of a typical firm operating in a monopolistically competitive industry:
  
-Refer to the graph above to answer this question.What area graphically represents a profit-maximizing firm's total cost?

Accepted Answer

A) 0P5FQ1. 
B) 0P4JQ1. 
C) 0P3GQ1. 
D) 0P2IQ2. 
E) 0P1HQ1. 
A) 0P5FQ1. 
B) 0P4JQ1. 
C) 0P3GQ1. 
D) 0P2IQ2. 
E) 0P1HQ1.

Question 10

Graphically,what will be the effect of entry by new firms into a monopolistically-competitive industry?

Accepted Answer

A) It will shift each firm's demand curve to the right. 
B) It will shift each existing firm's demand curve to the left. 
C) It will shift the market's supply curve to the left. 
D) It will shift the market's demand curve to the right. 
A) It will shift each firm's demand curve to the right. 
B) It will shift each existing firm's demand curve to the left. 
C) It will shift the market's supply curve to the left. 
D) It will shift the market's demand curve to the right.

Question 11

Which term best describes the attempt by firms to distinguish their products from those of their competitors?

Accepted Answer

A) Product differentiation. 
B) Competition. 
C) Mutual interdependence. 
D) Franchising. 
E) Entry. 
A) Product differentiation. 
B) Competition. 
C) Mutual interdependence. 
D) Franchising. 
E) Entry.

Question 12

Which of the following statements is correct concerning the kinked-demand curve variant of oligopoly theory?

Accepted Answer

A) It assumes that the portion of the demand curve above the kink is elastic and the portion below the kink is inelastic. 
B) It assumes that the portion of the demand curve above the kink is inelastic and the portion below the kink is elastic. 
C) It assumes that the marginal costs of all firms are the same. 
D) It assumes that while the some firms will charge the same price they may produce different outputs. 
E) It assumes that while the some firms will produce the same output they will charge different prices. 
A) It assumes that the portion of the demand curve above the kink is elastic and the portion below the kink is inelastic. 
B) It assumes that the portion of the demand curve above the kink is inelastic and the portion below the kink is elastic. 
C) It assumes that the marginal costs of all firms are the same. 
D) It assumes that while the some firms will charge the same price they may produce different outputs. 
E) It assumes that while the some firms will produce the same output they will charge different prices.

Question 13

Suppose that it requires a special license in order to operate a firm in a certain type of industry.In addition,suppose that firms that hold such licenses are able to sell them for a high price.Which of the following statements is true?

Accepted Answer

A) The firms in this industry must all be franchised. 
B) This is a typical monopolistically competitive market in which there are no economic profits in the long run. 
C) The government that issued the original licenses will be willing to issue more. 
D) There is free entry by new firms into this industry. 
E) Most firms currently in the industry are earning economic profits. 
A) The firms in this industry must all be franchised. 
B) This is a typical monopolistically competitive market in which there are no economic profits in the long run. 
C) The government that issued the original licenses will be willing to issue more. 
D) There is free entry by new firms into this industry. 
E) Most firms currently in the industry are earning economic profits.

Question 14

-Refer to the graph above to answer this question All of the following statements,except one,are true regarding this firm.Which is the exception?

Accepted Answer

A) The firm is realizing an economic profit. 
B) The firm will be reluctant to increase the price. 
C) The firm will pass on any increase in costs by increasing the price. 
D) The firm will be reluctant to decrease the price. 
E) The present price exceeds the average cost. 
A) The firm is realizing an economic profit. 
B) The firm will be reluctant to increase the price. 
C) The firm will pass on any increase in costs by increasing the price. 
D) The firm will be reluctant to decrease the price. 
E) The present price exceeds the average cost.

Question 15

Explain why monopolistically competitive firms franchise?

Accepted Answer

In the long-run,monopolistically competi

Question 16

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 Calvin and Hobbs reach a secret agreement between themselves concerning advertising budgets and this agreement holds because neither cheats?

Accepted Answer

A) Both will have a low advertising budget and both will earn profits of $600. 
B) Both will have a low advertising budget and both will earn profits of $400. 
C) Both will have a high advertising budget and both will earn profits of $800. 
D) Both will have a high advertising budget and Calvin will earn a profit of $300 and Hobbs will earn a profit of $800. 
A) Both will have a low advertising budget and both will earn profits of $600. 
B) Both will have a low advertising budget and both will earn profits of $400. 
C) Both will have a high advertising budget and both will earn profits of $800. 
D) Both will have a high advertising budget and Calvin will earn a profit of $300 and Hobbs will earn a profit of $800.

Question 17

In the kinked-demand curve variant of oligopoly theory,what output will the firm produce?

Accepted Answer

A) Where marginal cost equals marginal revenue. 
B) Where demand is elastic. 
C) Where demand is inelastic. 
D) Where marginal cost equals average cost. 
A) Where marginal cost equals marginal revenue. 
B) Where demand is elastic. 
C) Where demand is inelastic. 
D) Where marginal cost equals average cost.

Question 18

Determine whether each of the following is a form of product differentiation.
a)Developing an advertising strategy.
b)Developing new packaging
c)Charging a lower price than its competitor.
d)Designing a new logo.
e)Renaming the product

Accepted Answer

a)Yes.
b)Y

Question 19

Why do firms collude?

Accepted Answer

Firms collude because this wil

Question 20

Below is a profit pay-off matrix for two oligopoly firms: North and South.North's profits are shown in the upper portion of each box and South's are in the lower portion.
  
-Refer to the information above to answer this question.If both North and South are independently following a low output policy and North assumes that South will stay with its policy,what is North's best course of action?

Accepted Answer

A) Remain with a low output policy. 
B) To try to convince South to adopt a high output policy. 
C) Adopt a high output policy independent of South. 
D) It is better for North to ignore South's actions when making its decisions. 
A) Remain with a low output policy. 
B) To try to convince South to adopt a high output policy. 
C) Adopt a high output policy independent of South. 
D) It is better for North to ignore South's actions when making its decisions.

The Canadian gumnut industry consists of 10 companies whose annual sales are as shown: -What is the total sale of the four biggest firms for this industry?

-Refer to the graph above to answer this question.What type of market is portrayed in this graph?

Which of the following statements is correct concerning a typical firm operating under conditions of monopolistic competition in the long run?

How are a typical monopolistically competitive firm and a typical perfectly competitive firm alike?

All of the following,except one,are possible goals that a firm might have besides that of profit maximization.

The following graph shows the costs and revenues of a typical firm operating in a monopolistically competitive industry. -What is true about the long-run equilibrium price of a monopolistically competitive firm?

Why is it impossible for a monopolistically competitive firm to achieve productive efficiency?

Below is a graphical illustration of a typical firm operating in a monopolistically competitive industry: -Refer to the graph above to answer this question.What area graphically represents a profit-maximizing firm's total cost?

Graphically,what will be the effect of entry by new firms into a monopolistically-competitive industry?

Which term best describes the attempt by firms to distinguish their products from those of their competitors?

Which of the following statements is correct concerning the kinked-demand curve variant of oligopoly theory?

Suppose that it requires a special license in order to operate a firm in a certain type of industry.In addition,suppose that firms that hold such licenses are able to sell them for a high price.Which of the following statements is true?

-Refer to the graph above to answer this question All of the following statements,except one,are true regarding this firm.Which is the exception?

Explain why monopolistically competitive firms franchise?

In the kinked-demand curve variant of oligopoly theory,what output will the firm produce?

Determine whether each of the following is a form of product differentiation. a)Developing an advertising strategy. b)Developing new packaging c)Charging a lower price than its competitor. d)Designing a new logo. e)Renaming the product

Why do firms collude?

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

The Canadian gumnut industry consists of 10 companies whose annual sales are as shown: -What is the total sale of the four biggest firms for this industry?

-Refer to the graph above to answer this question.What type of market is portrayed in this graph?

Which of the following statements is correct concerning a typical firm operating under conditions of monopolistic competition in the long run?

How are a typical monopolistically competitive firm and a typical perfectly competitive firm alike?

All of the following,except one,are possible goals that a firm might have besides that of profit maximization.

The following graph shows the costs and revenues of a typical firm operating in a monopolistically competitive industry. -What is true about the long-run equilibrium price of a monopolistically competitive firm?

Why is it impossible for a monopolistically competitive firm to achieve productive efficiency?

Below is a graphical illustration of a typical firm operating in a monopolistically competitive industry: -Refer to the graph above to answer this question.What area graphically represents a profit-maximizing firm's total cost?

Graphically,what will be the effect of entry by new firms into a monopolistically-competitive industry?

Which term best describes the attempt by firms to distinguish their products from those of their competitors?

Which of the following statements is correct concerning the kinked-demand curve variant of oligopoly theory?

Suppose that it requires a special license in order to operate a firm in a certain type of industry.In addition,suppose that firms that hold such licenses are able to sell them for a high price.Which of the following statements is true?

-Refer to the graph above to answer this question All of the following statements,except one,are true regarding this firm.Which is the exception?

Explain why monopolistically competitive firms franchise?

In the kinked-demand curve variant of oligopoly theory,what output will the firm produce?

Determine whether each of the following is a form of product differentiation. a)Developing an advertising strategy. b)Developing new packaging c)Charging a lower price than its competitor. d)Designing a new logo. e)Renaming the product

Why do firms collude?

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