Question 1

The inefficiency of monopolistic competition is a result of:

Accepted Answer

A) product differentiation. 
B) free entry. 
C) many sellers of similar products. 
D) advertising. 
A) product differentiation. 
B) free entry. 
C) many sellers of similar products. 
D) advertising.

Question 2

Characteristics shared by monopolistically and perfectly competitive markets alike include:

Accepted Answer

A) differentiated products. 
B) advertising. 
C) many sellers. 
D) brand identity. 
A) differentiated products. 
B) advertising. 
C) many sellers. 
D) brand identity.

Question 3

Which of the following is characteristic of an oligopolistic industry?

Accepted Answer

A) homogeneous or differentiated products 
B) few firms 
C) interdependence 
D) large barriers to entry 
E) all of the above 
A) homogeneous or differentiated products 
B) few firms 
C) interdependence 
D) large barriers to entry 
E) all of the above

Question 4

Monopolistic competition is characterized by:

Accepted Answer

A) a small number of firms selling differentiated products. 
B) a large number of firms selling identical products. 
C) high barriers to entry. 
D) a large number of firms selling differentiated products. 
E) firms that are all price takers. 
A) a small number of firms selling differentiated products. 
B) a large number of firms selling identical products. 
C) high barriers to entry. 
D) a large number of firms selling differentiated products. 
E) firms that are all price takers.

Question 5

Firms in monopolistically competitive markets can differentiate their products on the basis of:

Accepted Answer

A) geographical location. 
B) service. 
C) credit terms. 
D) packaging. 
E) all of the above. 
A) geographical location. 
B) service. 
C) credit terms. 
D) packaging. 
E) all of the above.

Question 6

Figure 9-C
The graph depicts a monopolistically competitive firm's demand, marginal revenue, and cost curves.  
-Refer to Figure 9-C.Based on the diagram, it follows that:

Accepted Answer

A) new firms will enter the industry. 
B) existing firms will exit the industry. 
C) the firm is operating in long-run equilibrium. 
D) the firm could minimize average cost by producing 85 sweaters each week. 
A) new firms will enter the industry. 
B) existing firms will exit the industry. 
C) the firm is operating in long-run equilibrium. 
D) the firm could minimize average cost by producing 85 sweaters each week.

Question 7

Which of the following is characteristic of oligopoly firms, but not of monopolistically competitive firms?

Accepted Answer

A) firms seek to maximize profits 
B) firms face downward-sloping demand curves 
C) the pricing behavior of one firm has a significant effect on the sales of other firms 
D) firms have at least some ability to influence price 
A) firms seek to maximize profits 
B) firms face downward-sloping demand curves 
C) the pricing behavior of one firm has a significant effect on the sales of other firms 
D) firms have at least some ability to influence price

Question 8

Based on the graph below, what would total cost be at the profit maximizing level of output?

Accepted Answer

A) $560 
B) $665 
C) $875 
D) $900 
A) $560 
B) $665 
C) $875 
D) $900

Question 9

Under monopolistic competition:

Accepted Answer

A) there are significant barriers to entry. 
B) there are few barriers to entry. 
C) firms sell identical products. 
D) firms face perfectly elastic demand curves. 
A) there are significant barriers to entry. 
B) there are few barriers to entry. 
C) firms sell identical products. 
D) firms face perfectly elastic demand curves.

Question 10

An example of an oligopoly is:

Accepted Answer

A) the restaurant industry. 
B) the wheat market. 
C) the tobacco industry. 
D) the beef industry. 
A) the restaurant industry. 
B) the wheat market. 
C) the tobacco industry. 
D) the beef industry.

Question 11

Which of the following is not a source of product differentiation?

Accepted Answer

A) physical differences in products 
B) differences in service provided by firms 
C) differences in the location of sales outlets 
D) differences in a product's image created through advertising 
E) All of the above are sources of product differentiation. 
A) physical differences in products 
B) differences in service provided by firms 
C) differences in the location of sales outlets 
D) differences in a product's image created through advertising 
E) All of the above are sources of product differentiation.

Question 12

Figure 9-C
The graph depicts a monopolistically competitive firm's demand, marginal revenue, and cost curves.  
-Refer to Figure 9-C.If the firm produces the profit-maximizing (or loss-minimizing) level of output, it will produce:

Accepted Answer

A) 100 sweaters each week. 
B) 85 sweaters each week. 
C) 70 sweaters each week. 
D) 60 sweaters each week. 
E) zero sweaters each week. 
A) 100 sweaters each week. 
B) 85 sweaters each week. 
C) 70 sweaters each week. 
D) 60 sweaters each week. 
E) zero sweaters each week.

Question 13

Which of the following is uncharacteristic of monopolistic competition in the long run?

Accepted Answer

A) firms selling heterogeneous products 
B) zero economic profits 
C) price in excess of marginal revenue 
D) equilibrium on the increasing portion of the average total cost curve 
E) excess capacity 
A) firms selling heterogeneous products 
B) zero economic profits 
C) price in excess of marginal revenue 
D) equilibrium on the increasing portion of the average total cost curve 
E) excess capacity

Question 14

Billy is running a fast-food burger stand in his small community.If he is like other monopolistic competitors in short-run equilibrium which of the following would be true?

Accepted Answer

A) His demand curve would be downward sloping. 
B) His marginal revenue curve would lie below his demand curve. 
C) He would be maximizing profits where his MC = MR. 
D) All of the above would be characteristics of Billy's burger stand. 
A) His demand curve would be downward sloping. 
B) His marginal revenue curve would lie below his demand curve. 
C) He would be maximizing profits where his MC = MR. 
D) All of the above would be characteristics of Billy's burger stand.

Question 15

Due to the entry and exit of firms in a monopolistically competitive market:

Accepted Answer

A) economic profits and economic losses are dissipated in the long run. 
B) economic profits persist in the long run, but not economic losses. 
C) economic losses will exist in the long run, but not economic profits. 
D) both economic profits and economic losses exist in the long run. 
A) economic profits and economic losses are dissipated in the long run. 
B) economic profits persist in the long run, but not economic losses. 
C) economic losses will exist in the long run, but not economic profits. 
D) both economic profits and economic losses exist in the long run.

Question 16

Characteristics shared by monopolistically competitive and monopoly markets alike include:

Accepted Answer

A) strategic interactions among sellers. 
B) many sellers. 
C) firms facing a downward-sloping demand curve. 
D) insignificant barriers to entry. 
A) strategic interactions among sellers. 
B) many sellers. 
C) firms facing a downward-sloping demand curve. 
D) insignificant barriers to entry.

Question 17

Cartel members have a collective interest in ____ industry output and a private interest in ____ their own output.

Accepted Answer

A) increasing; increasing 
B) increasing; decreasing 
C) decreasing; increasing 
D) decreasing; decreasing 
A) increasing; increasing 
B) increasing; decreasing 
C) decreasing; increasing 
D) decreasing; decreasing

Question 18

Monopolistic competition is similar to monopoly in that:

Accepted Answer

A) firms face perfectly elastic demand curves. 
B) firms sell products for which there are no close substitutes. 
C) there is relatively free entry and exit. 
D) firms have some influence over the product price. 
A) firms face perfectly elastic demand curves. 
B) firms sell products for which there are no close substitutes. 
C) there is relatively free entry and exit. 
D) firms have some influence over the product price.

Question 19

Figure 9-A
The following diagram depicts firms in monopolistically competitive markets.  
-Refer to Figure 9-A.If the firm maximizes profit, it will:

Accepted Answer

A) earn $64,000 in profit this month. 
B) earn $112,000 in profit this month. 
C) earn $30,000 in profit this month. 
D) lose $30,000 in profit this month. 
E) earn zero economic profits this month. 
A) earn $64,000 in profit this month. 
B) earn $112,000 in profit this month. 
C) earn $30,000 in profit this month. 
D) lose $30,000 in profit this month. 
E) earn zero economic profits this month.

Question 20

A dominant strategy is:

Accepted Answer

A) one that maximizes the social welfare. 
B) one that maximizes profit. 
C) one that maximizes a player's welfare, regardless of the behavior of a competitor. 
D) one that maximizes a player's welfare, given the actions of a competitor. 
A) one that maximizes the social welfare. 
B) one that maximizes profit. 
C) one that maximizes a player's welfare, regardless of the behavior of a competitor. 
D) one that maximizes a player's welfare, given the actions of a competitor.

The inefficiency of monopolistic competition is a result of:

Characteristics shared by monopolistically and perfectly competitive markets alike include:

Which of the following is characteristic of an oligopolistic industry?

Monopolistic competition is characterized by:

Firms in monopolistically competitive markets can differentiate their products on the basis of:

Figure 9-C The graph depicts a monopolistically competitive firm's demand, marginal revenue, and cost curves. -Refer to Figure 9-C.Based on the diagram, it follows that:

Which of the following is characteristic of oligopoly firms, but not of monopolistically competitive firms?

Based on the graph below, what would total cost be at the profit maximizing level of output?

Under monopolistic competition:

An example of an oligopoly is:

Which of the following is not a source of product differentiation?

Figure 9-C The graph depicts a monopolistically competitive firm's demand, marginal revenue, and cost curves. -Refer to Figure 9-C.If the firm produces the profit-maximizing (or loss-minimizing) level of output, it will produce:

Which of the following is uncharacteristic of monopolistic competition in the long run?

Billy is running a fast-food burger stand in his small community.If he is like other monopolistic competitors in short-run equilibrium which of the following would be true?

Due to the entry and exit of firms in a monopolistically competitive market:

Characteristics shared by monopolistically competitive and monopoly markets alike include:

Cartel members have a collective interest in industry output and a private interest in their own output.

Monopolistic competition is similar to monopoly in that:

Figure 9-A The following diagram depicts firms in monopolistically competitive markets. -Refer to Figure 9-A.If the firm maximizes profit, it will:

A dominant strategy is:

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

Exam 9: Monopolistic Competition and Oligopoly

The inefficiency of monopolistic competition is a result of:

Characteristics shared by monopolistically and perfectly competitive markets alike include:

Which of the following is characteristic of an oligopolistic industry?

Monopolistic competition is characterized by:

Firms in monopolistically competitive markets can differentiate their products on the basis of:

Figure 9-C The graph depicts a monopolistically competitive firm's demand, marginal revenue, and cost curves. -Refer to Figure 9-C.Based on the diagram, it follows that:

Which of the following is characteristic of oligopoly firms, but not of monopolistically competitive firms?

Based on the graph below, what would total cost be at the profit maximizing level of output?

Under monopolistic competition:

An example of an oligopoly is:

Which of the following is not a source of product differentiation?

Figure 9-C The graph depicts a monopolistically competitive firm's demand, marginal revenue, and cost curves. -Refer to Figure 9-C.If the firm produces the profit-maximizing (or loss-minimizing) level of output, it will produce:

Which of the following is uncharacteristic of monopolistic competition in the long run?

Billy is running a fast-food burger stand in his small community.If he is like other monopolistic competitors in short-run equilibrium which of the following would be true?

Due to the entry and exit of firms in a monopolistically competitive market:

Characteristics shared by monopolistically competitive and monopoly markets alike include:

Cartel members have a collective interest in ____ industry output and a private interest in ____ their own output.

Monopolistic competition is similar to monopoly in that:

Figure 9-A The following diagram depicts firms in monopolistically competitive markets. -Refer to Figure 9-A.If the firm maximizes profit, it will:

A dominant strategy is:

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

Cartel members have a collective interest in industry output and a private interest in their own output.