Question 1

In a prisoners' dilemma game,in the Nash equilibrium

Accepted Answer

A) neither player gets his or her best outcome. 
B) both players get their best outcome. 
C) one player gets his or her best outcome and the other player does not. 
D) collusion would not alter the outcome. 
E) Either answer A or C might be correct depending on whether the players communicate with each other or do not communicate with each other. 
A) neither player gets his or her best outcome. 
B) both players get their best outcome. 
C) one player gets his or her best outcome and the other player does not. 
D) collusion would not alter the outcome. 
E) Either answer A or C might be correct depending on whether the players communicate with each other or do not communicate with each other. A

Question 2

What is the best outcome for society: When firms in an oligopoly operate as a monopoly or when they act as perfect competitors? Briefly explain your answer.

Accepted Answer

The best outcome for society is when the firms act as perfect competitors.Perfect competition produces the efficient quantity of output.A monopoly restricts the quantity of output it produces and creates a deadweight loss,which harms society So society is better off if the firms compete rather than collude and operate as a monopoly.

Question 3

Which of the following is correct?

Accepted Answer

A) Monopoly has a four-firm concentration ratio of 100. 
B) Perfect competition has a four-firm concentration ratio near zero. 
C) Monopolistic competition has a four-firm concentration ratio of more than 40. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct. 
A) Monopoly has a four-firm concentration ratio of 100. 
B) Perfect competition has a four-firm concentration ratio near zero. 
C) Monopolistic competition has a four-firm concentration ratio of more than 40. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct. D

Question 4

If the four-firm concentration ratio for the market for diapers is 73 percent,then this industry is best characterized as

Accepted Answer

A) a monopoly. 
B) monopolistic competition. 
C) an oligopoly. 
D) perfect competition. 
E) either a monopoly or monopolistic competition. 
A) a monopoly. 
B) monopolistic competition. 
C) an oligopoly. 
D) perfect competition. 
E) either a monopoly or monopolistic competition.

Question 5

-The only two firms in a market are trying to decide what price to charge.The payoff matrix for this duopoly game is shown above.The payoffs are thousands of dollars of economic profit.Which of the following statements is correct?

Accepted Answer

A) If the firms play this game repeatedly,one would end up charging $20 and the other $10. 
B) If the firms cooperate,they could both earn $55,000 in economic profit. 
C) The Nash equilibrium in this game is for both firms to set P = $20 because that maximizes their combined profit. 
D) Firm B's strategy is to always set P= $20 because that gives Firm B the highest possible profit. 
E) If Firm B sets P = $20,then Firm A will maximize its profit by setting its P = $20. 
A) If the firms play this game repeatedly,one would end up charging $20 and the other $10. 
B) If the firms cooperate,they could both earn $55,000 in economic profit. 
C) The Nash equilibrium in this game is for both firms to set P = $20 because that maximizes their combined profit. 
D) Firm B's strategy is to always set P= $20 because that gives Firm B the highest possible profit. 
E) If Firm B sets P = $20,then Firm A will maximize its profit by setting its P = $20.

Question 6

If the four-firm concentration ratio for the market for pizza is 28 percent,then this industry is best characterized as

Accepted Answer

A) a monopoly. 
B) monopolistic competition. 
C) an oligopoly. 
D) perfect competition. 
E) oligopolistic competition. 
A) a monopoly. 
B) monopolistic competition. 
C) an oligopoly. 
D) perfect competition. 
E) oligopolistic competition.

Question 7

If a firm in the long run produces less than its efficient scale,it

Accepted Answer

A) should raise its markup to increase its profit. 
B) should lower its markup to increase its profit. 
C) cannot be a perfectly competitive firm. 
D) should not advertise to increase its profit. 
E) must have its markup equal to zero. 
A) should raise its markup to increase its profit. 
B) should lower its markup to increase its profit. 
C) cannot be a perfectly competitive firm. 
D) should not advertise to increase its profit. 
E) must have its markup equal to zero.

Question 8

-Which of the following is true? In the above figure,if the market is

Accepted Answer

A) a monopoly,output will be Q1 and price will be P3. 
B) a monopoly,output will be Q3 and price will be P3. 
C) perfect competition,output will be Q2 and price will be P2. 
D) perfect competition,output will be Q1 and price will be P1. 
E) perfect competition,output will be Q3 and price will be P3. 
A) a monopoly,output will be Q1 and price will be P3. 
B) a monopoly,output will be Q3 and price will be P3. 
C) perfect competition,output will be Q2 and price will be P2. 
D) perfect competition,output will be Q1 and price will be P1. 
E) perfect competition,output will be Q3 and price will be P3.

Question 9

-An industry's total revenue is $100 million.The above table shows the total revenue of the four largest firms in an industry.
a.Calculate this industry's four-firm concentration ratio.
b.Is this industry competitive?
c.What market type does it most likely represent?

Accepted Answer

a.The four-firm concentration

Question 10

-There are 9 firms in an industry with market shares in the table above.Calculate the HHI for the industry.What kind of market does this operate in and why?

Accepted Answer

The HHI equals 202 + 202 + 152

Question 11

A firm in monopolistic competition ________ influence its price and ________ influence the market average price.

Accepted Answer

A) can;can 
B) can;cannot 
C) cannot;can 
D) cannot;cannot 
E) can;only in the short run can 
A) can;can 
B) can;cannot 
C) cannot;can 
D) cannot;cannot 
E) can;only in the short run can

Question 12

If a monopolistically competitive seller's marginal cost is $3.56,the firm will increase its output if

Accepted Answer

A) its marginal revenue is less than $3.56. 
B) its marginal revenue is equal to $3.56. 
C) its marginal revenue is more than $3.56. 
D) average total cost is less than $3.56. 
E) Both answers A and D are correct. 
A) its marginal revenue is less than $3.56. 
B) its marginal revenue is equal to $3.56. 
C) its marginal revenue is more than $3.56. 
D) average total cost is less than $3.56. 
E) Both answers A and D are correct.

Question 13

Monopolistic competition is a market structure in which

Accepted Answer

A) firms face barriers to entry. 
B) a large number of firms compete. 
C) firms produce and sell an identical product. 
D) firms face perfectly elastic demand for their product. 
E) the firms have no ability to influence the price of their product. 
A) firms face barriers to entry. 
B) a large number of firms compete. 
C) firms produce and sell an identical product. 
D) firms face perfectly elastic demand for their product. 
E) the firms have no ability to influence the price of their product.

Question 14

The possible alternatives for an oligopoly range from the monopoly case with ________ to the perfectly competitive case with ________.

Accepted Answer

A) high output;low output 
B) low prices;high prices 
C) low profits;high profits 
D) low output;high output 
E) no cooperation among the firms;much cooperation among the firms 
A) high output;low output 
B) low prices;high prices 
C) low profits;high profits 
D) low output;high output 
E) no cooperation among the firms;much cooperation among the firms

Question 15

The clothing industry has many firms with differentiated products and no barriers to entry.The cereal industry has a few firms with either identical or differentiated products and moderate barriers to entry.The food industry is characterized as ________ and the cereal industry is characterized as ________.

Accepted Answer

A) perfect competition;monopolistic competition 
B) monopolistic competition;oligopoly 
C) oligopoly;monopolistic competition 
D) perfect competition;perfect competition 
E) monopolistic competition;monopoly 
A) perfect competition;monopolistic competition 
B) monopolistic competition;oligopoly 
C) oligopoly;monopolistic competition 
D) perfect competition;perfect competition 
E) monopolistic competition;monopoly

Question 16

A firm in monopolistic competition makes its decisions on quantity and price by

Accepted Answer

A) taking price as given from the market and producing where MR = MC. 
B) taking both price and quantity as given from the market. 
C) producing where MR = MC and setting the price for this quantity from the demand curve. 
D) taking quantity as given from the market and setting the price for this quantity from the demand curve. 
E) producing where MR = MC and setting the price so that P = MR = MC. 
A) taking price as given from the market and producing where MR = MC. 
B) taking both price and quantity as given from the market. 
C) producing where MR = MC and setting the price for this quantity from the demand curve. 
D) taking quantity as given from the market and setting the price for this quantity from the demand curve. 
E) producing where MR = MC and setting the price so that P = MR = MC.

Question 17

A firm in monopolistic competition is similar to a firm in perfect competition because they both

Accepted Answer

A) can earn only zero economic profit in the long run. 
B) can earn only zero economic profit in the short run. 
C) maximize their profits by producing where P = MR = MC. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct. 
A) can earn only zero economic profit in the long run. 
B) can earn only zero economic profit in the short run. 
C) maximize their profits by producing where P = MR = MC. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct.

Question 18

The figure above shows the market for airplanes.
-Suppose the airplane market is an oligopoly.According to the figure above,the price can range as high as ________ and as low as ________.

Accepted Answer

A) $13 million per plane;$1 million per plane 
B) $30 million per plane;$13 million per plane 
C) $13 million per plane;$13 million per plane 
D) $1 million per plane;$1 million per plane 
E) None of the above answers is correct. 
A) $13 million per plane;$1 million per plane 
B) $30 million per plane;$13 million per plane 
C) $13 million per plane;$13 million per plane 
D) $1 million per plane;$1 million per plane 
E) None of the above answers is correct.

Question 19

-The firm in the above figure has a markup of ________ per meal.

Accepted Answer

A) $0 
B) $4 
C) $8 
D) $10 
E) more than $10 
A) $0 
B) $4 
C) $8 
D) $10 
E) more than $10

Question 20

-Intel and AMD are a duopoly that produces CPU chips.Intel and AMD can conduct R&D or they cannot conduct R&D.The table above shows the payoff matrix for the two firms.The numbers are millions of dollars of profit.The Nash equilibrium is for Intel to ________ and for AMD to ________.

Accepted Answer

A) conduct R&D;conduct R&D 
B) conduct R&D;not conduct R&D 
C) not conduct R&D;conduct R&D 
D) not conduct R&D;not conduct R&D 
E) conduct R&D;either conduct R&D or not conduct R&D,the equilibrium could be either choice for AMD 
A) conduct R&D;conduct R&D 
B) conduct R&D;not conduct R&D 
C) not conduct R&D;conduct R&D 
D) not conduct R&D;not conduct R&D 
E) conduct R&D;either conduct R&D or not conduct R&D,the equilibrium could be either choice for AMD

In a prisoners' dilemma game,in the Nash equilibrium

What is the best outcome for society: When firms in an oligopoly operate as a monopoly or when they act as perfect competitors? Briefly explain your answer.

Which of the following is correct?

If the four-firm concentration ratio for the market for diapers is 73 percent,then this industry is best characterized as

-The only two firms in a market are trying to decide what price to charge.The payoff matrix for this duopoly game is shown above.The payoffs are thousands of dollars of economic profit.Which of the following statements is correct?

If the four-firm concentration ratio for the market for pizza is 28 percent,then this industry is best characterized as

If a firm in the long run produces less than its efficient scale,it

-Which of the following is true? In the above figure,if the market is

-An industry's total revenue is $100 million.The above table shows the total revenue of the four largest firms in an industry. a.Calculate this industry's four-firm concentration ratio. b.Is this industry competitive? c.What market type does it most likely represent?

-There are 9 firms in an industry with market shares in the table above.Calculate the HHI for the industry.What kind of market does this operate in and why?

A firm in monopolistic competition influence its price and influence the market average price.

If a monopolistically competitive seller's marginal cost is $3.56,the firm will increase its output if

Monopolistic competition is a market structure in which

The possible alternatives for an oligopoly range from the monopoly case with to the perfectly competitive case with .

The clothing industry has many firms with differentiated products and no barriers to entry.The cereal industry has a few firms with either identical or differentiated products and moderate barriers to entry.The food industry is characterized as and the cereal industry is characterized as .

A firm in monopolistic competition makes its decisions on quantity and price by

A firm in monopolistic competition is similar to a firm in perfect competition because they both

The figure above shows the market for airplanes. -Suppose the airplane market is an oligopoly.According to the figure above,the price can range as high as and as low as .

-The firm in the above figure has a markup of ________ per meal.

-Intel and AMD are a duopoly that produces CPU chips.Intel and AMD can conduct R&D or they cannot conduct R&D.The table above shows the payoff matrix for the two firms.The numbers are millions of dollars of profit.The Nash equilibrium is for Intel to and for AMD to .

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 13: Monopolistic Competition and Oligopoly

In a prisoners' dilemma game,in the Nash equilibrium

What is the best outcome for society: When firms in an oligopoly operate as a monopoly or when they act as perfect competitors? Briefly explain your answer.

Which of the following is correct?

If the four-firm concentration ratio for the market for diapers is 73 percent,then this industry is best characterized as

-The only two firms in a market are trying to decide what price to charge.The payoff matrix for this duopoly game is shown above.The payoffs are thousands of dollars of economic profit.Which of the following statements is correct?

If the four-firm concentration ratio for the market for pizza is 28 percent,then this industry is best characterized as

If a firm in the long run produces less than its efficient scale,it

-Which of the following is true? In the above figure,if the market is

-An industry's total revenue is $100 million.The above table shows the total revenue of the four largest firms in an industry. a.Calculate this industry's four-firm concentration ratio. b.Is this industry competitive? c.What market type does it most likely represent?

-There are 9 firms in an industry with market shares in the table above.Calculate the HHI for the industry.What kind of market does this operate in and why?

A firm in monopolistic competition ________ influence its price and ________ influence the market average price.

If a monopolistically competitive seller's marginal cost is $3.56,the firm will increase its output if

Monopolistic competition is a market structure in which

The possible alternatives for an oligopoly range from the monopoly case with ________ to the perfectly competitive case with ________.

A firm in monopolistic competition makes its decisions on quantity and price by

A firm in monopolistic competition is similar to a firm in perfect competition because they both

The figure above shows the market for airplanes. -Suppose the airplane market is an oligopoly.According to the figure above,the price can range as high as ________ and as low as ________.

-The firm in the above figure has a markup of ________ per meal.

-Intel and AMD are a duopoly that produces CPU chips.Intel and AMD can conduct R&D or they cannot conduct R&D.The table above shows the payoff matrix for the two firms.The numbers are millions of dollars of profit.The Nash equilibrium is for Intel to ________ and for AMD to ________.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

A firm in monopolistic competition influence its price and influence the market average price.

The possible alternatives for an oligopoly range from the monopoly case with to the perfectly competitive case with .

The figure above shows the market for airplanes. -Suppose the airplane market is an oligopoly.According to the figure above,the price can range as high as and as low as .

-Intel and AMD are a duopoly that produces CPU chips.Intel and AMD can conduct R&D or they cannot conduct R&D.The table above shows the payoff matrix for the two firms.The numbers are millions of dollars of profit.The Nash equilibrium is for Intel to and for AMD to .