Question 1

How do the characteristics of perfect competition and monopolistic competition differ?

Accepted Answer

In monopolistic competition,the products

Question 2

Boeing and Airbus have entered into a cartel agreement that will enable them to boost their profits.What occurs if Boeing decides to cheat on the agreement?
I.Boeing lowers the price of its airplanes.
Ii.The total industry output increases.
Iii.The total profits in the airplane industry will decrease.

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) i and ii 
E) i,ii,and iii 
A) i only 
B) ii only 
C) iii only 
D) i and ii 
E) i,ii,and iii

Question 3

What is the Herfindahl-Hirschman Index if the four firms in an industry account have market shares of 62 percent,15 percent,15 percent,and 8 percent?

Accepted Answer

A) 100 
B) 4,358 
C) 111,600 
D) 2,822 
E) 6,200 
A) 100 
B) 4,358 
C) 111,600 
D) 2,822 
E) 6,200

Question 4

-Suppose there are ten firms that occupy the Odell,Oregon cherry pie market.The market share of each firm is listed in the above table.
a.What is the Herfindahl-Hirschman Index for this market?
b.If Firm H and Firm A merge,what is the new Herfindahl-Hirschman Index for this market?
c.A severe winter causes every firm except A,B,and E to close.With only these three firms operating,Firm A's market share is 71 percent,Firm B's market share is 23 percent,and Firm C's market share is 6 percent.What is the Herfindahl-Hirschman Index for this market now?

Accepted Answer

a.The Herfindahl-Hirschman Ind

Question 5

Which of the following characterize a firm in monopolistic competition in the long run?
I.operating at the minimum efficient scale
Ii.markups of price over marginal cost
Iii.zero economic profit

Accepted Answer

A) i and ii 
B) i and iii 
C) ii and iii 
D) i,ii,and iii 
E) only ii 
A) i and ii 
B) i and iii 
C) ii and iii 
D) i,ii,and iii 
E) only ii

Question 6

Why are selling costs high in monopolistic competition?

Accepted Answer

In monopolistic competition,there are a

Question 7

-The table above has the market demand schedule in an industry that has two firms in it.The marginal cost of this product is zero because these two firms have exclusive ownership of the resource and it does not cost any additional amount to produce additional units.
a.If the firms cooperate with each other so that they operate as a monopoly,what price will they charge and what (total)output will they produce?
b.If the firms cannot cooperate but instead behave as perfect competitors,what will be the price and the (total)output they produce?

Accepted Answer

a.As a monopoly,the price will be $15 an

Question 8

When firms in monopolistic competition incur an economic loss,some firms will

Accepted Answer

A) enter the industry and produce more products. 
B) exit the industry,and demand will increase for the firms that remain. 
C) exit the industry,and demand will decrease for the firms that remain. 
D) enter the industry,and demand will become more elastic for the original firms. 
E) exit the industry and other firms will enter. 
A) enter the industry and produce more products. 
B) exit the industry,and demand will increase for the firms that remain. 
C) exit the industry,and demand will decrease for the firms that remain. 
D) enter the industry,and demand will become more elastic for the original firms. 
E) exit the industry and other firms will enter.

Question 9

A firm in monopolistic competition maximizes profit by producing the quantity at which

Accepted Answer

A) marginal revenue equals marginal cost. 
B) price equals marginal revenue. 
C) price equals marginal cost. 
D) demand equals marginal cost. 
E) price equals average total cost. 
A) marginal revenue equals marginal cost. 
B) price equals marginal revenue. 
C) price equals marginal cost. 
D) demand equals marginal cost. 
E) price equals average total cost.

Question 10

For a duopoly,the maximum total profit is reached when the duopoly produces

Accepted Answer

A) the same amount of output as the competitive outcome. 
B) the same amount of output as the monopoly outcome. 
C) an amount of output that lies between the competitive outcome and the monopoly outcome. 
D) more output than the competitive outcome. 
E) less output than the monopoly outcome. 
A) the same amount of output as the competitive outcome. 
B) the same amount of output as the monopoly outcome. 
C) an amount of output that lies between the competitive outcome and the monopoly outcome. 
D) more output than the competitive outcome. 
E) less output than the monopoly outcome.

Question 11

The freedom of entry and exit in monopolistic competition means that firms

Accepted Answer

A) enter the market when economic losses are being suffered. 
B) exit the market when economic profits are being earned. 
C) enter the market when normal profits are being earned. 
D) can enter a market to compete for economic profits and leave when economic losses are being incurred. 
E) find it easy to permanently earn an economic profit. 
A) enter the market when economic losses are being suffered. 
B) exit the market when economic profits are being earned. 
C) enter the market when normal profits are being earned. 
D) can enter a market to compete for economic profits and leave when economic losses are being incurred. 
E) find it easy to permanently earn an economic profit.

Question 12

In the long-run,a firm in monopolistic competition produces at an output level where

Accepted Answer

A) P > ATC and MR = MC. 
B) P > ATC and MR > MC. 
C) P = ATC and MR = MC. 
D) P = ATC and MR > MC. 
E) P = ATC and MC = ATC. 
A) P > ATC and MR = MC. 
B) P > ATC and MR > MC. 
C) P = ATC and MR = MC. 
D) P = ATC and MR > MC. 
E) P = ATC and MC = ATC.

Question 13

A firm in monopolistic competition is

Accepted Answer

A) efficient because in the long run it earns zero economic profit. 
B) efficient because it produces at the minimum average total cost. 
C) inefficient because price exceeds marginal cost. 
D) efficient because of the ease of entry. 
E) efficient because it produces where MR = MC. 
A) efficient because in the long run it earns zero economic profit. 
B) efficient because it produces at the minimum average total cost. 
C) inefficient because price exceeds marginal cost. 
D) efficient because of the ease of entry. 
E) efficient because it produces where MR = MC.

Question 14

-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.AMD is playing a tit-for-tat strategy and Intel did not conduct R&D last period.Then,of the following answers,Intel's total profit for the next two periods is the highest if Intel ________ R&D this period and ________ R&D next period.

Accepted Answer

A) conducts;conducts 
B) does not conduct;conducts 
C) conducts;does not conduct 
D) does not conduct;does not conduct 
E) conducts;either conducts or does not conduct because the profit is the same in either case 
A) conducts;conducts 
B) does not conduct;conducts 
C) conducts;does not conduct 
D) does not conduct;does not conduct 
E) conducts;either conducts or does not conduct because the profit is the same in either case

Question 15

Economists use game theory to analyze strategic behavior,which takes into account

Accepted Answer

A) monopoly situations. 
B) the expected behavior of others and the recognition of mutual interdependence. 
C) the price-taking behavior of oligopolists. 
D) non-price competition. 
E) that increased demand decreases the market power of the firms in the market. 
A) monopoly situations. 
B) the expected behavior of others and the recognition of mutual interdependence. 
C) the price-taking behavior of oligopolists. 
D) non-price competition. 
E) that increased demand decreases the market power of the firms in the market.

Question 16

Explain the role of advertising in monopolistic competition.Describe how advertising by all firms in a monopolistically competitive industry impacts a firm's ATC curve,its MC curve,its demand curve,and its MR curve.

Accepted Answer

In order to maintain (or regain)economic

Question 17

In an oligopoly in which the firms have entered into a cartel agreement,the Nash equilibrium exhibits which of the following?

Accepted Answer

A) firms jointly maximizing profits 
B) the firms cheating on the cartel agreement,which benefits society 
C) production at a price and output level close to monopolistic competition in the long run 
D) the firms cheating on the cartel agreement,which harms society 
E) one firm cheating on the cartel agreement and the other firms complying with the cartel agreement. 
A) firms jointly maximizing profits 
B) the firms cheating on the cartel agreement,which benefits society 
C) production at a price and output level close to monopolistic competition in the long run 
D) the firms cheating on the cartel agreement,which harms society 
E) one firm cheating on the cartel agreement and the other firms complying with the cartel agreement.

Question 18

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.Kevin will train how many clients per day?

Accepted Answer

A) 4 
B) 6 
C) 10 
D) between 2 and 4 
E) None of the above answers is correct. 
A) 4 
B) 6 
C) 10 
D) between 2 and 4 
E) None of the above answers is correct.

Question 19

If the HHI for the widget industry is 1,200,then the market structure is

Accepted Answer

A) a monopoly. 
B) monopolistic competition. 
C) an oligopoly. 
D) perfect competition. 
E) impossible to determine 
A) a monopoly. 
B) monopolistic competition. 
C) an oligopoly. 
D) perfect competition. 
E) impossible to determine

Question 20

Firms in oligopoly can achieve an economic profit

Accepted Answer

A) always in the long run. 
B) if they cooperate. 
C) only if the demand for their products is inelastic. 
D) only if the demand for their products is elastic. 
E) if they reach the non-cooperative equilibrium. 
A) always in the long run. 
B) if they cooperate. 
C) only if the demand for their products is inelastic. 
D) only if the demand for their products is elastic. 
E) if they reach the non-cooperative equilibrium.

How do the characteristics of perfect competition and monopolistic competition differ?

What is the Herfindahl-Hirschman Index if the four firms in an industry account have market shares of 62 percent,15 percent,15 percent,and 8 percent?

Which of the following characterize a firm in monopolistic competition in the long run? I.operating at the minimum efficient scale Ii.markups of price over marginal cost Iii.zero economic profit

Why are selling costs high in monopolistic competition?

When firms in monopolistic competition incur an economic loss,some firms will

A firm in monopolistic competition maximizes profit by producing the quantity at which

For a duopoly,the maximum total profit is reached when the duopoly produces

The freedom of entry and exit in monopolistic competition means that firms

In the long-run,a firm in monopolistic competition produces at an output level where

A firm in monopolistic competition is

Economists use game theory to analyze strategic behavior,which takes into account

Explain the role of advertising in monopolistic competition.Describe how advertising by all firms in a monopolistically competitive industry impacts a firm's ATC curve,its MC curve,its demand curve,and its MR curve.

In an oligopoly in which the firms have entered into a cartel agreement,the Nash equilibrium exhibits which of the following?

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.Kevin will train how many clients per day?

If the HHI for the widget industry is 1,200,then the market structure is

Firms in oligopoly can achieve an economic profit

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

How do the characteristics of perfect competition and monopolistic competition differ?

What is the Herfindahl-Hirschman Index if the four firms in an industry account have market shares of 62 percent,15 percent,15 percent,and 8 percent?

Which of the following characterize a firm in monopolistic competition in the long run? I.operating at the minimum efficient scale Ii.markups of price over marginal cost Iii.zero economic profit

Why are selling costs high in monopolistic competition?

When firms in monopolistic competition incur an economic loss,some firms will

A firm in monopolistic competition maximizes profit by producing the quantity at which

For a duopoly,the maximum total profit is reached when the duopoly produces

The freedom of entry and exit in monopolistic competition means that firms

In the long-run,a firm in monopolistic competition produces at an output level where

A firm in monopolistic competition is

Economists use game theory to analyze strategic behavior,which takes into account

Explain the role of advertising in monopolistic competition.Describe how advertising by all firms in a monopolistically competitive industry impacts a firm's ATC curve,its MC curve,its demand curve,and its MR curve.

In an oligopoly in which the firms have entered into a cartel agreement,the Nash equilibrium exhibits which of the following?

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.Kevin will train how many clients per day?

If the HHI for the widget industry is 1,200,then the market structure is

Firms in oligopoly can achieve an economic profit

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