Question 1

A profit-maximising monopolistically competitive firm produces and sells an allocatively efficient quantity of output.

Accepted Answer

A) True 
 B)False

Question 2

For the monopolistically competitive firm

Accepted Answer

A)  price (P) = marginal revenue (MR) = average revenue (AR). 
B)  P = MR > AR. 
C)  P = AR > MR. 
D)  P > MR = AR. 
A)  price (P) = marginal revenue (MR) = average revenue (AR). 
B)  P = MR > AR. 
C)  P = AR > MR. 
D)  P > MR = AR.

Question 3

A cooperative equilibrium results when firms

Accepted Answer

A)  choose the best strategy regardless of what other players do. 
B)  choose the strategy that maximises the total game payoff. 
C)  choose the strategy that minimises the payoff to other players. 
D)  choose a strategy by random chance. 
A)  choose the best strategy regardless of what other players do. 
B)  choose the strategy that maximises the total game payoff. 
C)  choose the strategy that minimises the payoff to other players. 
D)  choose a strategy by random chance.

Question 4

How does the demand curve for an oligopoly firm differ from the demand curves for firms in competitive market structures?

Accepted Answer

The demand curve facing a perfectly comp

Question 5

For a profit-maximising monopolistically competitive firm,for the last unit sold,the marginal cost of production is less than the marginal benefit received by a customer from the purchase of that unit.

Accepted Answer

A) True 
 B)False

Question 6

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 fixed cost of production?

Accepted Answer

A)  0P1aQa 
B)  P0adP3 
C)  P1bdP3 
D)  That information cannot be determined from the graph. 
A)  0P1aQa 
B)  P0adP3 
C)  P1bdP3 
D)  That information cannot be determined from the graph.

Question 7

A fundamental assumption in game theory is that players do not interact with each other.

Accepted Answer

A) True 
 B)False

Question 8

If firms in a monopolistically competitive industry are making profits in the short run,

Accepted Answer

A)  barriers to entry will be erected to keep out rivals. 
B)  some firms will ultimately exit the industry. 
C)  they will resort to advertising wars to help sustain these profits. 
D)  new firms will enter the market. 
A)  barriers to entry will be erected to keep out rivals. 
B)  some firms will ultimately exit the industry. 
C)  they will resort to advertising wars to help sustain these profits. 
D)  new firms will enter the market.

Question 9

Monopolistic competition is a market structure in which

Accepted Answer

A)  firms produce and sell products for which there are no close substitutes. 
B)  the demand curve for a typical firm is horizontal. 
C)  firms cannot influence the market price. 
D)  barriers to entry are low. 
A)  firms produce and sell products for which there are no close substitutes. 
B)  the demand curve for a typical firm is horizontal. 
C)  firms cannot influence the market price. 
D)  barriers to entry are low.

Question 10

Figure 9-5  
-Refer to Figure 9-5.The chocolate store represented in the diagram is currently selling Qa units of chocolate at a price of Pa.Is this chocolate store maximising its profit and,if it is not,what would you recommend to the firm?

Accepted Answer

A)  Yes, it is maximising its profit by charging the highest price possible. 
B)  No, it is not; since its marginal cost is constant, it should produce and sell as much chocolate as it can. It should sell Qd units at a price of Pd. 
C)  No, it is not; it should lower its price to Pc and sell Qc units. 
D)  No, it is not; it should lower its price to Pb and sell Qb units. 
A)  Yes, it is maximising its profit by charging the highest price possible. 
B)  No, it is not; since its marginal cost is constant, it should produce and sell as much chocolate as it can. It should sell Qd units at a price of Pd. 
C)  No, it is not; it should lower its price to Pc and sell Qc units. 
D)  No, it is not; it should lower its price to Pb and sell Qb units.

Question 11

An entry barrier exists when firms in an industry charge the lowest price possible for their products.

Accepted Answer

A) True 
 B)False

Question 12

The approach economists use to analyse competition among oligopolists is called

Accepted Answer

A)  marginal analysis. 
B)  game theory. 
C)  oligopoly theory. 
D)  competition among the few. 
A)  marginal analysis. 
B)  game theory. 
C)  oligopoly theory. 
D)  competition among the few.

Question 13

A monopolistically competitive industry that earns economic profits in the short run will face a more elastic demand curve in the long run.

Accepted Answer

A) True 
 B)False

Question 14

In monopolistic competition there is/are

Accepted Answer

A)  many sellers who each face a downward-sloping demand curve. 
B)  a few sellers who each face a downward-sloping demand curve. 
C)  only one seller who faces a downward-sloping demand curve. 
D)  many sellers who each face a perfectly elastic demand curve. 
A)  many sellers who each face a downward-sloping demand curve. 
B)  a few sellers who each face a downward-sloping demand curve. 
C)  only one seller who faces a downward-sloping demand curve. 
D)  many sellers who each face a perfectly elastic demand curve.

Question 15

A set of actions that a firm takes to achieve a goal is the definition of a

Accepted Answer

A)  business plan. 
B)  business strategy. 
C)  business prospectus. 
D)  business goal. 
A)  business plan. 
B)  business strategy. 
C)  business prospectus. 
D)  business goal.

Question 16

Both the perfectly competitive firm and the monopolistically competitive firm produce at the output where marginal revenue equals marginal cost (MR = MC)but only the perfectly competitive firm achieves allocative efficiency.Explain why this is the case.

Accepted Answer

Unlike the perfectly competitive firm,th

Question 17

Which of the following is not a reason why government officials are willing to impose entry barriers?

Accepted Answer

A)  To raise revenue 
B)  To encourage innovation which may improve the standard of living in the long run 
C)  To increase economic efficiency 
D)  To promote an equitable distribution of income 
A)  To raise revenue 
B)  To encourage innovation which may improve the standard of living in the long run 
C)  To increase economic efficiency 
D)  To promote an equitable distribution of income

Question 18

For a monopolistically competitive firm,price equals average revenue.

Accepted Answer

A) True 
 B)False

Question 19

In long-run equilibrium,compared to a perfectly competitive market,a monopolistically competitive industry produces a ________ level of output and charges a ________ price.

Accepted Answer

A)  higher; lower 
B)  lower; lower 
C)  lower; higher 
D)  higher; higher 
A)  higher; lower 
B)  lower; lower 
C)  lower; higher 
D)  higher; higher

Question 20

The barrier to entry that allowed Alcoa to make persistent economic profits was ownership of an essential input.

Accepted Answer

A) True 
 B)False

A profit-maximising monopolistically competitive firm produces and sells an allocatively efficient quantity of output.

For the monopolistically competitive firm

A cooperative equilibrium results when firms

How does the demand curve for an oligopoly firm differ from the demand curves for firms in competitive market structures?

For a profit-maximising monopolistically competitive firm,for the last unit sold,the marginal cost of production is less than the marginal benefit received by a customer from the purchase of that unit.

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 fixed cost of production?

A fundamental assumption in game theory is that players do not interact with each other.

If firms in a monopolistically competitive industry are making profits in the short run,

Monopolistic competition is a market structure in which

Figure 9-5 -Refer to Figure 9-5.The chocolate store represented in the diagram is currently selling Qa units of chocolate at a price of Pa.Is this chocolate store maximising its profit and,if it is not,what would you recommend to the firm?

An entry barrier exists when firms in an industry charge the lowest price possible for their products.

The approach economists use to analyse competition among oligopolists is called

A monopolistically competitive industry that earns economic profits in the short run will face a more elastic demand curve in the long run.

In monopolistic competition there is/are

A set of actions that a firm takes to achieve a goal is the definition of a

Both the perfectly competitive firm and the monopolistically competitive firm produce at the output where marginal revenue equals marginal cost (MR = MC)but only the perfectly competitive firm achieves allocative efficiency.Explain why this is the case.

Which of the following is not a reason why government officials are willing to impose entry barriers?

For a monopolistically competitive firm,price equals average revenue.

In long-run equilibrium,compared to a perfectly competitive market,a monopolistically competitive industry produces a level of output and charges a price.

The barrier to entry that allowed Alcoa to make persistent economic profits was ownership of an essential input.

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 profit-maximising monopolistically competitive firm produces and sells an allocatively efficient quantity of output.

For the monopolistically competitive firm

A cooperative equilibrium results when firms

How does the demand curve for an oligopoly firm differ from the demand curves for firms in competitive market structures?

For a profit-maximising monopolistically competitive firm,for the last unit sold,the marginal cost of production is less than the marginal benefit received by a customer from the purchase of that unit.

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 fixed cost of production?

A fundamental assumption in game theory is that players do not interact with each other.

If firms in a monopolistically competitive industry are making profits in the short run,

Monopolistic competition is a market structure in which

Figure 9-5 -Refer to Figure 9-5.The chocolate store represented in the diagram is currently selling Qa units of chocolate at a price of Pa.Is this chocolate store maximising its profit and,if it is not,what would you recommend to the firm?

An entry barrier exists when firms in an industry charge the lowest price possible for their products.

The approach economists use to analyse competition among oligopolists is called

A monopolistically competitive industry that earns economic profits in the short run will face a more elastic demand curve in the long run.

In monopolistic competition there is/are

A set of actions that a firm takes to achieve a goal is the definition of a

Both the perfectly competitive firm and the monopolistically competitive firm produce at the output where marginal revenue equals marginal cost (MR = MC)but only the perfectly competitive firm achieves allocative efficiency.Explain why this is the case.

Which of the following is not a reason why government officials are willing to impose entry barriers?

For a monopolistically competitive firm,price equals average revenue.

In long-run equilibrium,compared to a perfectly competitive market,a monopolistically competitive industry produces a ________ level of output and charges a ________ price.

The barrier to entry that allowed Alcoa to make persistent economic profits was ownership of an essential input.

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

In long-run equilibrium,compared to a perfectly competitive market,a monopolistically competitive industry produces a level of output and charges a price.