Question 1

A set of actions that a firm takes to achieve a goal,such as maximising profits,is called

Accepted Answer

A)  a business strategy. 
B)  a payoff matrix. 
C)  the Porter's Competitive Forces plan. 
D)  game theory. 
A)  a business strategy. 
B)  a payoff matrix. 
C)  the Porter's Competitive Forces plan. 
D)  game theory.

Question 2

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.What is the area that represents the total variable cost of production?

Accepted Answer

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

Question 3

The demand curve of a monopolistically competitive firm

Accepted Answer

A)  is horizontal because the firm must cut its price to sell more. 
B)  is perfectly elastic. 
C)  is downward sloping because it sells an identical product. 
D)  is downward sloping because it must cut its price to sell more. 
A)  is horizontal because the firm must cut its price to sell more. 
B)  is perfectly elastic. 
C)  is downward sloping because it sells an identical product. 
D)  is downward sloping because it must cut its price to sell more.

Question 4

Which of the following is the best example of an oligopolistic industry?

Accepted Answer

A)  The beef market 
B)  The pharmaceutical industry 
C)  Public education 
D)  The beauty products industry 
A)  The beef market 
B)  The pharmaceutical industry 
C)  Public education 
D)  The beauty products industry

Question 5

Monopolistically competitive firms face a perfectly elastic demand curve.

Accepted Answer

A) True 
 B)False

Question 6

Table 9-3
   Table 9-3 shows the demand and cost schedules for a monopolistically competitive firm.
-Refer to Table 9-3.What is its average variable cost of production at its optimal output level?

Accepted Answer

A)  $0 (because its optimal output = 0) 
B)  $15 
C)  $14.75 
D)  $29 
A)  $0 (because its optimal output = 0) 
B)  $15 
C)  $14.75 
D)  $29

Question 7

Suppose we want to use game theory to analyse how an oligopolist selects its optimal price.The cells of the payoff matrix show

Accepted Answer

A)  the profit that each producer can expect to earn by pursuing a single strategy. 
B)  the profit that each producer can expect to earn from every combination of strategies by the firms in the market. 
C)  the strategy that a firm must pursue to earn various levels of profit. 
D)  the expected profits of rival firms. 
A)  the profit that each producer can expect to earn by pursuing a single strategy. 
B)  the profit that each producer can expect to earn from every combination of strategies by the firms in the market. 
C)  the strategy that a firm must pursue to earn various levels of profit. 
D)  the expected profits of rival firms.

Question 8

In an oligopoly,firms can increase their market power by

Accepted Answer

A)  selling to buyers who have market power. 
B)  pursuing dominant strategies. 
C)  colluding to set prices. 
D)  undertaking heavy advertising expenditure. 
A)  selling to buyers who have market power. 
B)  pursuing dominant strategies. 
C)  colluding to set prices. 
D)  undertaking heavy advertising expenditure.

Question 9

Table 9-3
   Table 9-3 shows the demand and cost schedules for a monopolistically competitive firm.
-Refer to Table 9-3.What is the amount of the firm's loss at its optimal output level?

Accepted Answer

A)  $0 
B)  $41 
C)  $45 
D)  $50 
A)  $0 
B)  $41 
C)  $45 
D)  $50

Question 10

Which of the following is not a characteristic of a monopolistically competitive firm in long-run equilibrium?

Accepted Answer

A)  Marginal revenue is equal to marginal cost. 
B)  Price is equal to average revenue. 
C)  The firm has excess capacity. 
D)  Price is equal to marginal cost. 
A)  Marginal revenue is equal to marginal cost. 
B)  Price is equal to average revenue. 
C)  The firm has excess capacity. 
D)  Price is equal to marginal cost.

Question 11

Table 9-4
   Table 9-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to university and private research laboratories.
-Refer to Table 9-4.At Victoria's profit-maximising output,

Accepted Answer

A)  profit equals $2. 
B)  total revenue equals $24 and total cost equals $20. 
C)  total revenue equals $25 and total cost equals $22. 
D)  total revenue equals $21 and total cost equals $17. 
A)  profit equals $2. 
B)  total revenue equals $24 and total cost equals $20. 
C)  total revenue equals $25 and total cost equals $22. 
D)  total revenue equals $21 and total cost equals $17.

Question 12

Oligopoly differs from perfect competition and monopolistic competition in that

Accepted Answer

A)  barriers to entry are lower in oligopoly industries than they are in perfectly competitive and monopolistically competitive industries. 
B)  demand and marginal revenue curves are more useful for analysing oligopoly than they are for analysing perfect competition and monopolistic competition. 
C)  because oligopoly firms often react when other firms in their industry change their prices, it is difficult to know what the oligopolist's demand curve looks like. 
D)  the concentration ratios of oligopoly industries are lower than they are for perfectly competitive and monopolistically competitive firms. 
A)  barriers to entry are lower in oligopoly industries than they are in perfectly competitive and monopolistically competitive industries. 
B)  demand and marginal revenue curves are more useful for analysing oligopoly than they are for analysing perfect competition and monopolistic competition. 
C)  because oligopoly firms often react when other firms in their industry change their prices, it is difficult to know what the oligopolist's demand curve looks like. 
D)  the concentration ratios of oligopoly industries are lower than they are for perfectly competitive and monopolistically competitive firms.

Question 13

Collusion occurs when

Accepted Answer

A)  a firm chooses a level of output to maximise its own profit. 
B)  two firms' price and output decisions come into conflict. 
C)  there is an agreement among firms to charge the same price or otherwise not to compete. 
D)  firms refuse to follow their price leaders. 
A)  a firm chooses a level of output to maximise its own profit. 
B)  two firms' price and output decisions come into conflict. 
C)  there is an agreement among firms to charge the same price or otherwise not to compete. 
D)  firms refuse to follow their price leaders.

Question 14

If a monopolistically competitive firm breaks even,the firm

Accepted Answer

A)  is earning an accounting profit and will have to pay taxes on that profit. 
B)  is earning zero accounting and zero economic profit. 
C)  should advertise its product to stimulate demand. 
D)  should expand production. 
A)  is earning an accounting profit and will have to pay taxes on that profit. 
B)  is earning zero accounting and zero economic profit. 
C)  should advertise its product to stimulate demand. 
D)  should expand production.

Question 15

Price leadership is a form of explicit collusion where one firm in an oligopoly announces a price change and expects all other firms to follow suit.

Accepted Answer

A) True 
 B)False

Question 16

Figure 9-12  
-Refer to Figure 9-12.What is the productively efficient output for the firm represented in the diagram?

Accepted Answer

A)  Q1 units 
B)  Q2 units 
C)  Q3 units 
D)  Q4 units 
A)  Q1 units 
B)  Q2 units 
C)  Q3 units 
D)  Q4 units

Question 17

Is a monopolistically competitive firm allocatively efficient?

Accepted Answer

A)  No, because it does not produce at minimum average total cost. 
B)  Yes, because it produces where marginal cost equals marginal revenue. 
C)  No, because price is greater than marginal cost. 
D)  Yes, because price equals average total cost. 
A)  No, because it does not produce at minimum average total cost. 
B)  Yes, because it produces where marginal cost equals marginal revenue. 
C)  No, because price is greater than marginal cost. 
D)  Yes, because price equals average total cost.

Question 18

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.

Accepted Answer

A)  few barriers to entry 
B)  significant barriers to entry 
C)  blocked entry 
D)  no barriers to entry 
A)  few barriers to entry 
B)  significant barriers to entry 
C)  blocked entry 
D)  no barriers to entry

Question 19

Suppose a monopolistically competitive firm's output where marginal revenue equals marginal cost is 66 units and the price corresponding to this quantity is $18.If the average total cost at this output is $16.55,then its total profit is

Accepted Answer

A)  $1188. 
B)  $1092.30. 
C)  $95.70. 
D)  $1.45. 
A)  $1188. 
B)  $1092.30. 
C)  $95.70. 
D)  $1.45.

Question 20

Table 9-4
   Table 9-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to university and private research laboratories.
-Refer to Table 9-4.Victoria's profit-maximising output is where

Accepted Answer

A)  total profit equals $3. 
B)  marginal revenue and marginal cost both equal $4. 
C)  marginal revenue and marginal cost both equal $3. 
D)  marginal cost is at its minimum value. 
A)  total profit equals $3. 
B)  marginal revenue and marginal cost both equal $4. 
C)  marginal revenue and marginal cost both equal $3. 
D)  marginal cost is at its minimum value.

A set of actions that a firm takes to achieve a goal,such as maximising profits,is called

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.What is the area that represents the total variable cost of production?

The demand curve of a monopolistically competitive firm

Which of the following is the best example of an oligopolistic industry?

Monopolistically competitive firms face a perfectly elastic demand curve.

Table 9-3 Table 9-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 9-3.What is its average variable cost of production at its optimal output level?

Suppose we want to use game theory to analyse how an oligopolist selects its optimal price.The cells of the payoff matrix show

In an oligopoly,firms can increase their market power by

Table 9-3 Table 9-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 9-3.What is the amount of the firm's loss at its optimal output level?

Which of the following is not a characteristic of a monopolistically competitive firm in long-run equilibrium?

Table 9-4 Table 9-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to university and private research laboratories. -Refer to Table 9-4.At Victoria's profit-maximising output,

Oligopoly differs from perfect competition and monopolistic competition in that

Collusion occurs when

If a monopolistically competitive firm breaks even,the firm

Price leadership is a form of explicit collusion where one firm in an oligopoly announces a price change and expects all other firms to follow suit.

Figure 9-12 -Refer to Figure 9-12.What is the productively efficient output for the firm represented in the diagram?

Is a monopolistically competitive firm allocatively efficient?

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.

Suppose a monopolistically competitive firm's output where marginal revenue equals marginal cost is 66 units and the price corresponding to this quantity is $18.If the average total cost at this output is $16.55,then its total profit is

Table 9-4 Table 9-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to university and private research laboratories. -Refer to Table 9-4.Victoria's profit-maximising output is where

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 9: Firms in Perfectly Competitive Markets

A set of actions that a firm takes to achieve a goal,such as maximising profits,is called

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.What is the area that represents the total variable cost of production?

The demand curve of a monopolistically competitive firm

Which of the following is the best example of an oligopolistic industry?

Monopolistically competitive firms face a perfectly elastic demand curve.

Table 9-3 Table 9-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 9-3.What is its average variable cost of production at its optimal output level?

Suppose we want to use game theory to analyse how an oligopolist selects its optimal price.The cells of the payoff matrix show

In an oligopoly,firms can increase their market power by

Table 9-3 Table 9-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 9-3.What is the amount of the firm's loss at its optimal output level?

Which of the following is not a characteristic of a monopolistically competitive firm in long-run equilibrium?

Table 9-4 Table 9-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to university and private research laboratories. -Refer to Table 9-4.At Victoria's profit-maximising output,

Oligopoly differs from perfect competition and monopolistic competition in that

Collusion occurs when

If a monopolistically competitive firm breaks even,the firm

Price leadership is a form of explicit collusion where one firm in an oligopoly announces a price change and expects all other firms to follow suit.

Figure 9-12 -Refer to Figure 9-12.What is the productively efficient output for the firm represented in the diagram?

Is a monopolistically competitive firm allocatively efficient?

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.

Suppose a monopolistically competitive firm's output where marginal revenue equals marginal cost is 66 units and the price corresponding to this quantity is $18.If the average total cost at this output is $16.55,then its total profit is

Table 9-4 Table 9-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to university and private research laboratories. -Refer to Table 9-4.Victoria's profit-maximising output is where

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters