Exam 9: Monopolistic Competition and Oligopoly

Figure 9.3 -Refer to Figure 9.3.The marginal revenue from one additional unit sold is the sum of the gain in revenue from selling the additional unit and the loss in revenue from having to charge a lower price to sell the additional unit.Based on the diagram in the figure,________.

Which of the following is an example of a barrier to entry?

What is the trade-off that consumers face when buying the product of a monopolistically competitive firm?

An example of a government-imposed barrier to entry gives a firm the exclusive right to a new product for a period of 20 years from the date the product is invented.This entry barrier is known as ______.

Long-run equilibrium under monopolistic competition is similar to that under perfect competition in that _______.

Figure 9.12 -Refer to Figure 9.12.The firm represented in the diagram _________.

Table 9.2 Suppose OPEC has only two producers, Saudi Arabia and Nigeria. Saudi Arabia has far more oil reserves and is the lower cost producer compared to Nigeria. The payoff matrix in Table 9.2 shows the profits earned per day by each country. 'Low output' corresponds to producing the OPEC assigned quota and 'high output' corresponds to producing the maximum capacity beyond the assigned quota. -Refer to Table 9.2.Is there a dominant strategy for Nigeria and,if so,what is it?

Table 9.3 Firm A(Alistair's) and Firm B (Baine's) are the only firms selling luggage in the upscale town of Adelaide. Each firm must decide on whether to increase its advertising spending to compete for customers. If one firm increases its advertising budget but the other does not, then the firm with the higher advertising budget will increase its profit. Table 9.3 shows the payoff matrix for this advertising game. -Refer to Table 9.3.Does Baine have a dominant strategy and,if so,what is it?

If a monopolistically competitive firm is producing 50 units of output where marginal cost equals marginal revenue,total cost is $1674 and total revenue is $2000,its average profit is ______.

Which of the following best explains why airlines often cut their ticket prices at the last minute in order to fill the remaining empty seats on their flights?

Figure 9.14 -Refer to Figure 9.14.The area that represents the firm's profit is ______.

What effect does the entry of new firms in a monopolistically competitive market have on the economic profits of existing firms in the market? How might existing firms attempt to counteract this effect? __________________________________________________________________________________________________________________________________________________________________________________________

What is a characteristic found only in oligopolies?

A game in which each player adopts its dominant strategy _________.

What is meant by the term 'government-imposed barrier to entry'? Why would a government be willing to impose barriers to entering an industry? __________________________________________________________________________________________________________________________________________________________________________________________

Suppose a monopolistically competitive firm sells 25 units at a price of $10.What is its marginal revenue per unit of output if it sells 5 more units of output when it reduced its price to $9?

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 revenue made by the firm is ________.

In the long run,what happens to the demand curve facing a monopolistically competitive firm that is earning short-run profits?

There is much evidence to suggest that airlines are more likely to match price cuts than price increases.Which of the following best explains this evidence?

Despite being in a market with ________,from the mid-1990s to the mid-2000s Starbucks was able to significantly differentiate its products from the products of its competitors.