Question 1

Game theory explains:

Accepted Answer

A)  gambling problems. 
B)  how the decisions are made in a game of soccer. 
C)  strategic responses of firms. 
D)  the effect of games on the economy. 
A)  gambling problems. 
B)  how the decisions are made in a game of soccer. 
C)  strategic responses of firms. 
D)  the effect of games on the economy.

Question 2

In the long run, a monopolistically competitive firm will operate:

Accepted Answer

A)  at the level of output that allows the firm to earn zero economic profit. 
B)  at the level of output that allows the firm to earn economic profit. 
C)  at the level of output that allows the firm to earn negative economic profit. 
D)  at any level of output. 
A)  at the level of output that allows the firm to earn zero economic profit. 
B)  at the level of output that allows the firm to earn economic profit. 
C)  at the level of output that allows the firm to earn negative economic profit. 
D)  at any level of output.

Question 3

In general, oligopolies are considered to misallocate resources because:

Accepted Answer

A)  competition is often fierce in oligopolies. 
B)  an oligopolist often earns economic profits. 
C)  P < MC in oligopoly. 
D)  P = MC in oligopoly. 
A)  competition is often fierce in oligopolies. 
B)  an oligopolist often earns economic profits. 
C)  P < MC in oligopoly. 
D)  P = MC in oligopoly.

Question 4

A pay-off matrix used in game theory shows:

Accepted Answer

A)  the concentration ratio in an industry. 
B)  the profit firms can earn in a cartel. 
C)  how much firms can earn or lose under different strategies in an imperfect competitive market. 
D)  the proportion of firms that sell a differentiated product to their customers. 
A)  the concentration ratio in an industry. 
B)  the profit firms can earn in a cartel. 
C)  how much firms can earn or lose under different strategies in an imperfect competitive market. 
D)  the proportion of firms that sell a differentiated product to their customers.

Question 5

Which of the following is true about advertising by a firm?

Accepted Answer

A)  It is always successful in increasing demand for a firm's product. 
B)  It attempts to increase demand and to make demand more elastic. 
C)  It can attract severe penalties if firms are engaged in false or misleading advertising. 
D)  It allows large firms to become monopolists. 
A)  It is always successful in increasing demand for a firm's product. 
B)  It attempts to increase demand and to make demand more elastic. 
C)  It can attract severe penalties if firms are engaged in false or misleading advertising. 
D)  It allows large firms to become monopolists.

Question 6

Which of the following is true in monopolistic competition?

Accepted Answer

A)  In the long run, the monopolistically competitive firm earns positive economic profit. 
B)  In the long run, monopolistic competition produces the output that would minimise average total cost. 
C)  In the long run, monopolistic competition produces less than the output that would minimise average total cost. 
D)  In the long run, the monopolistically competitive firm charges the same price as
A monopoly. 
A)  In the long run, the monopolistically competitive firm earns positive economic profit. 
B)  In the long run, monopolistic competition produces the output that would minimise average total cost. 
C)  In the long run, monopolistic competition produces less than the output that would minimise average total cost. 
D)  In the long run, the monopolistically competitive firm charges the same price as
A monopoly.

Question 7

The monopolistic competition market structure helps explain:

Accepted Answer

A)  why a monopoly market structure is superior to other market structures. 
B)  why firms do not advertise. 
C)  why firms try to win customers through advertising. 
D)  why firms cannot raise prices without losing all of their customers. 
A)  why a monopoly market structure is superior to other market structures. 
B)  why firms do not advertise. 
C)  why firms try to win customers through advertising. 
D)  why firms cannot raise prices without losing all of their customers.

Question 8

The cartel is a group of firms:

Accepted Answer

A)  producing legally agreed output at the prevailing price. 
B)  known as a black market. 
C)  legally supported by government to maximise the price and output. 
D)  formally agreeing to control their price and output levels. 
A)  producing legally agreed output at the prevailing price. 
B)  known as a black market. 
C)  legally supported by government to maximise the price and output. 
D)  formally agreeing to control their price and output levels.

Question 9

The entry of new firms into a monopolistically competitive industry will shift the:

Accepted Answer

A)  market demand curve to the right. 
B)  market demand curve to the left. 
C)  existing firm's demand curve to the right. 
D)  existing firm's demand curve to the left. 
A)  market demand curve to the right. 
B)  market demand curve to the left. 
C)  existing firm's demand curve to the right. 
D)  existing firm's demand curve to the left.

Question 10

The strategic analysis firms undertake is often seen in perfect competition.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements best describes firms under monopolistic competition?

Accepted Answer

A)  Profits will be positive in the long run. 
B)  Price always equals average variable cost. 
C)  In the long run, excessive level of economic profit will be eliminated. 
D)  Marginal revenue equals minimum average total cost in the short run. 
A)  Profits will be positive in the long run. 
B)  Price always equals average variable cost. 
C)  In the long run, excessive level of economic profit will be eliminated. 
D)  Marginal revenue equals minimum average total cost in the short run.

Question 12

A monopolistically competitive firm, although inefficient, still operates where price equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 13

In the short run the monopolistic firm's profit maximising decision:

Accepted Answer

A)  is hard to determine. 
B)  is like that of the perfectly competitive firm. 
C)  is based on the horizontal market price. 
D)  is like that of the monopoly. 
A)  is hard to determine. 
B)  is like that of the perfectly competitive firm. 
C)  is based on the horizontal market price. 
D)  is like that of the monopoly.

Question 14

Cartel members have an incentive to cheat on the cartel because:

Accepted Answer

A)  the cartel does not maximise profits. 
B)  the cartel price is the competitive price. 
C)  each member's output quota is too high. 
D)  each members MR is not equal to the cartel's MC. 
A)  the cartel does not maximise profits. 
B)  the cartel price is the competitive price. 
C)  each member's output quota is too high. 
D)  each members MR is not equal to the cartel's MC.

Question 15

According to the kinked demand theory, when one firm raises its price, other firms will:

Accepted Answer

A)  also raise their prices. 
B)  refuse to follow. 
C)  increase their advertising expenditures. 
D)  exit the industry. 
A)  also raise their prices. 
B)  refuse to follow. 
C)  increase their advertising expenditures. 
D)  exit the industry.

Question 16

The fact that a monopolistically competitive firm is not as efficient as a perfectly competitive firm may be outweighed by which of the following?

Accepted Answer

A)  The price charged is still equal to marginal revenue. 
B)  Goods in a monopolistically competitive market are usually cheaper. 
C)  There are still many perfect substitutes. 
D)  Consumers are given more choice. 
A)  The price charged is still equal to marginal revenue. 
B)  Goods in a monopolistically competitive market are usually cheaper. 
C)  There are still many perfect substitutes. 
D)  Consumers are given more choice.

Question 17

In order to make oil profits as large as possible, OPEC meets to set oil production quotas for its members. OPEC is best classified as a:

Accepted Answer

A)  monopoly. 
B)  cartel. 
C)  kinked demand industry. 
D)  price leadership industry. 
A)  monopoly. 
B)  cartel. 
C)  kinked demand industry. 
D)  price leadership industry.

Question 18

Critics of advertising argue that:

Accepted Answer

A)  its main purpose is to explain the best characteristics of rival products. 
B)  its main purpose is to provide consumers with much needed information. 
C)  its main purpose is to persuade consumers into buying something they do not need. 
D)  it saves consumers time and money. 
A)  its main purpose is to explain the best characteristics of rival products. 
B)  its main purpose is to provide consumers with much needed information. 
C)  its main purpose is to persuade consumers into buying something they do not need. 
D)  it saves consumers time and money.

Question 19

A firm in a monopolistically competitive industry can:

Accepted Answer

A)  raise price and lose all customers. 
B)  raise price and sell more units of a product. 
C)  lower price and sell the same quantity of a product. 
D)  lower price and sell more units of a product. 
A)  raise price and lose all customers. 
B)  raise price and sell more units of a product. 
C)  lower price and sell the same quantity of a product. 
D)  lower price and sell more units of a product.

Question 20

Supporters of advertising claim that it:

Accepted Answer

A)  promotes the public interest. 
B)  is a barrier to entry. 
C)  allows small firms to compete. 
D)  misleads consumers. 
A)  promotes the public interest. 
B)  is a barrier to entry. 
C)  allows small firms to compete. 
D)  misleads consumers.

Game theory explains:

In the long run, a monopolistically competitive firm will operate:

In general, oligopolies are considered to misallocate resources because:

A pay-off matrix used in game theory shows:

Which of the following is true about advertising by a firm?

Which of the following is true in monopolistic competition?

The monopolistic competition market structure helps explain:

The cartel is a group of firms:

The entry of new firms into a monopolistically competitive industry will shift the:

The strategic analysis firms undertake is often seen in perfect competition.

Which of the following statements best describes firms under monopolistic competition?

A monopolistically competitive firm, although inefficient, still operates where price equals marginal cost.

In the short run the monopolistic firm's profit maximising decision:

Cartel members have an incentive to cheat on the cartel because:

According to the kinked demand theory, when one firm raises its price, other firms will:

The fact that a monopolistically competitive firm is not as efficient as a perfectly competitive firm may be outweighed by which of the following?

In order to make oil profits as large as possible, OPEC meets to set oil production quotas for its members. OPEC is best classified as a:

Critics of advertising argue that:

A firm in a monopolistically competitive industry can:

Supporters of advertising claim that it:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters

Exam 10: Monopolistic Competition and Oligopoly

Game theory explains:

In the long run, a monopolistically competitive firm will operate:

In general, oligopolies are considered to misallocate resources because:

A pay-off matrix used in game theory shows:

Which of the following is true about advertising by a firm?

Which of the following is true in monopolistic competition?

The monopolistic competition market structure helps explain:

The cartel is a group of firms:

The entry of new firms into a monopolistically competitive industry will shift the:

The strategic analysis firms undertake is often seen in perfect competition.

Which of the following statements best describes firms under monopolistic competition?

A monopolistically competitive firm, although inefficient, still operates where price equals marginal cost.

In the short run the monopolistic firm's profit maximising decision:

Cartel members have an incentive to cheat on the cartel because:

According to the kinked demand theory, when one firm raises its price, other firms will:

The fact that a monopolistically competitive firm is not as efficient as a perfectly competitive firm may be outweighed by which of the following?

In order to make oil profits as large as possible, OPEC meets to set oil production quotas for its members. OPEC is best classified as a:

Critics of advertising argue that:

A firm in a monopolistically competitive industry can:

Supporters of advertising claim that it:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters