Question 1

For a monopolistically competitive firm,marginal revenue _______.

Accepted Answer

A)  equals the price 
B)  is greater than the price 
C)  is less than the price 
D)  and price are unrelated 
A)  equals the price 
B)  is greater than the price 
C)  is less than the price 
D)  and price are unrelated

Question 2

Assume that price exceeds average variable cost over the relevant range of demand.If a monopolistically competitive firm is producing at an output where marginal revenue is $111.11 and marginal cost is $118,then to maximise profits the firm should increase its output.

Accepted Answer

A) True 
 B)False

Question 3

The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called _______.

Accepted Answer

A)  Nash equilibrium 
B)  the prisoner's dilemma 
C)  game theory 
D)  dominant strategy equilibrium 
A)  Nash equilibrium 
B)  the prisoner's dilemma 
C)  game theory 
D)  dominant strategy equilibrium

Question 4

A Nash equilibrium is ______.

Accepted Answer

A)  reached when an oligopoly's market demand and supply intersect 
B)  reached when each player chooses the best strategy for himself and for the group 
C)  reached when each player chooses the best strategy for himself, given the other strategies chosen by the other players in the group 
D)  an equilibrium comprising non-dominant strategies only 
A)  reached when an oligopoly's market demand and supply intersect 
B)  reached when each player chooses the best strategy for himself and for the group 
C)  reached when each player chooses the best strategy for himself, given the other strategies chosen by the other players in the group 
D)  an equilibrium comprising non-dominant strategies only

Question 5

Figure 9.4   Figure 9.4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 9.4.The area that represents the total variable cost of production is

Accepted Answer

A)  0P0aQa 
B)  0P1bQa 
C)  P0abP1 
D)  P1bdP3 
A)  0P0aQa 
B)  0P1bQa 
C)  P0abP1 
D)  P1bdP3

Question 6

Table 9.5
 $$\begin{array} { | c | c | c | } 
\hline \text { Quantity } & \begin{array} { c } 
\text { Price } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Total Cost } \
\text { (dollars) }
\end{array} \
\hline 1 & 18 & 14 \
\hline 2 & 16 & 20 \
\hline 3 & 14 & 26 \
\hline 4 & 12 & 32 \
\hline 5 & 10 & 38 \
\hline 6 & 8 & 44 \
\hline
\end{array}$$ Table 9.5 shows the demand and cost data facing a monopolistically competitive producer of canvas bags.
-Refer to Table 9.5.The firm's profit-maximising or loss-minimising price and quantity are ________.

Accepted Answer

A)  price = $10; quantity = 5 
B)  price = $12; quantity = 4 
C)  The firm should shut down temporarily 
D)  This cannot be determined from the information given. 
A)  price = $10; quantity = 5 
B)  price = $12; quantity = 4 
C)  The firm should shut down temporarily 
D)  This cannot be determined from the information given.

Question 7

In which type of industry is interdependence most common?

Accepted Answer

A)  Monopolistically competitive industries 
B)  Monopolistic industries 
C)  Monopolistically competitive and oligopolistic industries 
D)  Oligopolistic industries 
A)  Monopolistically competitive industries 
B)  Monopolistic industries 
C)  Monopolistically competitive and oligopolistic industries 
D)  Oligopolistic industries

Question 8

In the long run,if the demand curve of a monopolistically competitive firm is tangent to its average total cost curve,then _______.

Accepted Answer

A)  the firm would break even 
B)  the firm would shut down temporarily 
C)  the firm would earn enough revenue to cover its variable costs, but not its fixed costs 
D)  the firm would earn an economic profit 
A)  the firm would break even 
B)  the firm would shut down temporarily 
C)  the firm would earn enough revenue to cover its variable costs, but not its fixed costs 
D)  the firm would earn an economic profit

Question 9

Long-run equilibrium in a monopolistically competitive market is similar to long-run equilibrium in a perfectly competitive market in that in both markets,firms ____________.

Accepted Answer

A)  produce at the minimum point of their average total cost curves 
B)  produce where price equals marginal cost 
C)  break even 
D)  produce where price equals marginal revenue 
A)  produce at the minimum point of their average total cost curves 
B)  produce where price equals marginal cost 
C)  break even 
D)  produce where price equals marginal revenue

Question 10

In what way does long-run equilibrium under monopolistic competition differ from long-run equilibrium under perfect competition?

Accepted Answer

A)  Firms in perfect competition achieve productive and allocative efficiency while firms in monopolistic competition achieve neither allocative nor productive efficiency. 
B)  The only difference is that in a monopolistically competitive market there are many brands to choose from while in a perfectly competitive market there is one standard product. 
C)  Firms in perfect competition achieve productive efficiency while firms in monopolistic competition achieve allocative efficiency. 
D)  Firms in perfect competition achieve allocative efficiency while firms in monopolistic competition achieve brand efficiency. 
A)  Firms in perfect competition achieve productive and allocative efficiency while firms in monopolistic competition achieve neither allocative nor productive efficiency. 
B)  The only difference is that in a monopolistically competitive market there are many brands to choose from while in a perfectly competitive market there is one standard product. 
C)  Firms in perfect competition achieve productive efficiency while firms in monopolistic competition achieve allocative efficiency. 
D)  Firms in perfect competition achieve allocative efficiency while firms in monopolistic competition achieve brand efficiency.

Question 11

Consumers in monopolistically competitive markets face a trade-off between paying prices greater than marginal costs and purchasing products that are more closely suited to their tastes.

Accepted Answer

A) True 
 B)False

Question 12

In monopolistic competition,if a firm produces a highly desirable product relative to its competitors,the firm will be able to raise its price without losing any customers.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is true of a typical firm in a monopolistically competitive industry?

Accepted Answer

A)  Product differentiation allows a successful firm to emerge as a market leader in the industry. 
B)  All firms have identical cost structures. 
C)  The more successful firms have an incentive to merge in order to exert greater market power. 
D)  Each firm acts independently. 
A)  Product differentiation allows a successful firm to emerge as a market leader in the industry. 
B)  All firms have identical cost structures. 
C)  The more successful firms have an incentive to merge in order to exert greater market power. 
D)  Each firm acts independently.

Question 14

An equilibrium in a game in which players pursue their own self-interest is called ________.

Accepted Answer

A)  a Nash equilibrium 
B)  a cooperative equilibrium 
C)  a non-cooperative equilibrium 
D)  a prisoner's dilemma 
A)  a Nash equilibrium 
B)  a cooperative equilibrium 
C)  a non-cooperative equilibrium 
D)  a prisoner's dilemma

Question 15

Which of the following would not occur as a result of a monopolistically competitive firm suffering a short-run economic loss?

Accepted Answer

A)  The firm could exit the industry in the long run. 
B)  If the firm does not exit the industry in the long run, its demand curve will shift to the left. 
C)  If the firm does not exit the industry in the long run, its demand curve will shift to the right. 
D)  If the firm remains in the industry in the long run, it will break even. 
A)  The firm could exit the industry in the long run. 
B)  If the firm does not exit the industry in the long run, its demand curve will shift to the left. 
C)  If the firm does not exit the industry in the long run, its demand curve will shift to the right. 
D)  If the firm remains in the industry in the long run, it will break even.

Question 16

What is a dominant strategy?

Accepted Answer

A)  An equilibrium where each firm chooses the best strategy, given the strategies of other firms 
B)  A strategy chosen by two firms that decide to charge the same price or otherwise not to compete 
C)  A strategy that is obviously the best for each firm that is a party to a business decision 
D)  A strategy that is the best for a firm no matter what strategies other firms use 
A)  An equilibrium where each firm chooses the best strategy, given the strategies of other firms 
B)  A strategy chosen by two firms that decide to charge the same price or otherwise not to compete 
C)  A strategy that is obviously the best for each firm that is a party to a business decision 
D)  A strategy that is the best for a firm no matter what strategies other firms use

Question 17

Which of the following statements is true about monopolistically competitive firms?

Accepted Answer

A)  Unlike perfectly competitive firms, monopolistically competitive firms are able to raise their prices without losing all of their customers. 
B)  Like perfectly competitive firms, monopolistically competitive firms are not able to raise prices without losing all of their customers because they face competition from firms selling similar products. 
C)  Like perfectly competitive firms, monopolistically competitive firms maximise their profits by settling price equal to marginal cost. 
D)  Unlike perfectly competitive firms, monopolistically competitive firms face perfectly inelastic demand curves. 
A)  Unlike perfectly competitive firms, monopolistically competitive firms are able to raise their prices without losing all of their customers. 
B)  Like perfectly competitive firms, monopolistically competitive firms are not able to raise prices without losing all of their customers because they face competition from firms selling similar products. 
C)  Like perfectly competitive firms, monopolistically competitive firms maximise their profits by settling price equal to marginal cost. 
D)  Unlike perfectly competitive firms, monopolistically competitive firms face perfectly inelastic demand curves.

Question 18

Figure 9.8   Figure 9.8 shows cost and demand curves for a monopolistically competitive producer of iced tea.
-Refer to Figure 9.8.The firm's profit-maximising price is ______.

Accepted Answer

A)  $12 
B)  $13 
C)  $14 
D)  $16 
A)  $12 
B)  $13 
C)  $14 
D)  $16

Question 19

Which of the following is not a barrier to entry?

Accepted Answer

A)  An inelastic demand curve 
B)  Economies of scale 
C)  Ownership of a key input 
D)  A patent 
A)  An inelastic demand curve 
B)  Economies of scale 
C)  Ownership of a key input 
D)  A patent

Question 20

Which of the following is important in determining the extent of competition in an industry?

Accepted Answer

A)  The minimum level of short-run average total costs of production 
B)  The minimum efficient scale of production relative to market demand 
C)  Whether or not the industry product is differentiated or standardised 
D)  The level of market demand for the industry's product 
A)  The minimum level of short-run average total costs of production 
B)  The minimum efficient scale of production relative to market demand 
C)  Whether or not the industry product is differentiated or standardised 
D)  The level of market demand for the industry's product

For a monopolistically competitive firm,marginal revenue _______.

Assume that price exceeds average variable cost over the relevant range of demand.If a monopolistically competitive firm is producing at an output where marginal revenue is $111.11 and marginal cost is $118,then to maximise profits the firm should increase its output.

The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called _______.

A Nash equilibrium is ______.

Figure 9.4 Figure 9.4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 9.4.The area that represents the total variable cost of production is

In which type of industry is interdependence most common?

In the long run,if the demand curve of a monopolistically competitive firm is tangent to its average total cost curve,then _______.

Long-run equilibrium in a monopolistically competitive market is similar to long-run equilibrium in a perfectly competitive market in that in both markets,firms ____________.

In what way does long-run equilibrium under monopolistic competition differ from long-run equilibrium under perfect competition?

Consumers in monopolistically competitive markets face a trade-off between paying prices greater than marginal costs and purchasing products that are more closely suited to their tastes.

In monopolistic competition,if a firm produces a highly desirable product relative to its competitors,the firm will be able to raise its price without losing any customers.

Which of the following is true of a typical firm in a monopolistically competitive industry?

An equilibrium in a game in which players pursue their own self-interest is called ________.

Which of the following would not occur as a result of a monopolistically competitive firm suffering a short-run economic loss?

What is a dominant strategy?

Which of the following statements is true about monopolistically competitive firms?

Figure 9.8 Figure 9.8 shows cost and demand curves for a monopolistically competitive producer of iced tea. -Refer to Figure 9.8.The firm's profit-maximising price is ______.

Which of the following is not a barrier to entry?

Which of the following is important in determining the extent of competition in an industry?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

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Exam 9: Monopolistic Competition and Oligopoly

For a monopolistically competitive firm,marginal revenue _______.

Assume that price exceeds average variable cost over the relevant range of demand.If a monopolistically competitive firm is producing at an output where marginal revenue is $111.11 and marginal cost is $118,then to maximise profits the firm should increase its output.

The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called _______.

A Nash equilibrium is ______.

Figure 9.4 Figure 9.4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 9.4.The area that represents the total variable cost of production is

In which type of industry is interdependence most common?

In the long run,if the demand curve of a monopolistically competitive firm is tangent to its average total cost curve,then _______.

Long-run equilibrium in a monopolistically competitive market is similar to long-run equilibrium in a perfectly competitive market in that in both markets,firms ____________.

In what way does long-run equilibrium under monopolistic competition differ from long-run equilibrium under perfect competition?

Consumers in monopolistically competitive markets face a trade-off between paying prices greater than marginal costs and purchasing products that are more closely suited to their tastes.

In monopolistic competition,if a firm produces a highly desirable product relative to its competitors,the firm will be able to raise its price without losing any customers.

Which of the following is true of a typical firm in a monopolistically competitive industry?

An equilibrium in a game in which players pursue their own self-interest is called ________.

Which of the following would not occur as a result of a monopolistically competitive firm suffering a short-run economic loss?

What is a dominant strategy?

Which of the following statements is true about monopolistically competitive firms?

Figure 9.8 Figure 9.8 shows cost and demand curves for a monopolistically competitive producer of iced tea. -Refer to Figure 9.8.The firm's profit-maximising price is ______.

Which of the following is not a barrier to entry?

Which of the following is important in determining the extent of competition in an industry?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters