Question 1

Product differentiation allows a firm to compete with another firm on the basis of

Accepted Answer

A) efficiency. 
B) elasticity. 
C) quality,price,and marketing. 
D) the level of output and the price. 
E) demand. 
A) efficiency. 
B) elasticity. 
C) quality,price,and marketing. 
D) the level of output and the price. 
E) demand.

Question 2

If a monopolistically competitive seller's marginal cost is $3.56,the firm will decrease 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) its average total cost is equal to $4.00. 
E) Both answers B 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) its average total cost is equal to $4.00. 
E) Both answers B and D are correct.

Question 3

For a firm in monopolistic competition,selling costs

Accepted Answer

A) increase costs and reduce profits. 
B) always increase demand. 
C) can change the quantity produced and lower the average total cost. 
D) can lower total cost. 
E) have no effect on the quantity sold. 
A) increase costs and reduce profits. 
B) always increase demand. 
C) can change the quantity produced and lower the average total cost. 
D) can lower total cost. 
E) have no effect on the quantity sold.

Question 4

If a duopoly has reached the monopoly outcome and only one firm increases its production,that firm's profit ________ and the other firm's profit ________.

Accepted Answer

A) increases;increases 
B) increases;decreases 
C) decreases;increases 
D) decreases;decreases 
E) increases;does not change 
A) increases;increases 
B) increases;decreases 
C) decreases;increases 
D) decreases;decreases 
E) increases;does not change

Question 5

In monopolistic competition in the long run,firms

Accepted Answer

A) make zero economic profit and require more capacity. 
B) incur an economic loss and require more capacity. 
C) make an economic profit and have excess capacity. 
D) make zero economic profit and have excess capacity. 
E) make an economic profit and require more capacity. 
A) make zero economic profit and require more capacity. 
B) incur an economic loss and require more capacity. 
C) make an economic profit and have excess capacity. 
D) make zero economic profit and have excess capacity. 
E) make an economic profit and require more capacity.

Question 6

If there are four firms in an industry with market shares of 50 percent,40 percent,5 percent,and 5 percent,the Herfindahl-Hirschman Index is

Accepted Answer

A) 100. 
B) 4150. 
C) 25. 
D) 3450. 
E) undefined because there are not 50 firms in the industry. 
A) 100. 
B) 4150. 
C) 25. 
D) 3450. 
E) undefined because there are not 50 firms in the industry.

Question 7

A group of firms that has entered into an agreement to restrict output and increase prices and profits is called

Accepted Answer

A) a compliance. 
B) a cartel. 
C) an oligopoly. 
D) a duopoly. 
E) a multi-firm monopoly. 
A) a compliance. 
B) a cartel. 
C) an oligopoly. 
D) a duopoly. 
E) a multi-firm monopoly.

Question 8

In the long run,firms in monopolistic competition earn zero economic profit.When firms earn zero economic profit,in the long run they exit the industry.

Accepted Answer

A) The first sentence is correct and the second sentence is incorrect. 
B) The first sentence is incorrect and the second sentence is correct. 
C) Both sentences are correct. 
D) Both sentences are incorrect. 
E) More information about the presence or absence of barriers to entry and exit is needed to determine if the statements are true or false. 
A) The first sentence is correct and the second sentence is incorrect. 
B) The first sentence is incorrect and the second sentence is correct. 
C) Both sentences are correct. 
D) Both sentences are incorrect. 
E) More information about the presence or absence of barriers to entry and exit is needed to determine if the statements are true or false.

Question 9

The prisoners' dilemma is similar to the problem faced by firms in an oligopoly in the United States because

Accepted Answer

A) mutual interdependence exists,and collusion is illegal in the United States,so the firms cannot legally communicate. 
B) collusion is legal in the United States,and firms can communicate their pricing decisions to each other. 
C) failure to cooperate leads to better outcomes than cooperation. 
D) private prisons are run by oligopolies. 
E) the firms can communicate,but mutual interdependence exists. 
A) mutual interdependence exists,and collusion is illegal in the United States,so the firms cannot legally communicate. 
B) collusion is legal in the United States,and firms can communicate their pricing decisions to each other. 
C) failure to cooperate leads to better outcomes than cooperation. 
D) private prisons are run by oligopolies. 
E) the firms can communicate,but mutual interdependence exists.

Question 10

If all firms in the industry have similar demand,marginal revenue,and cost curves as the firm in the figure above,in the long run

Accepted Answer

A) nothing changes. 
B) some firms exit the industry and the economic losses of the remaining firms decrease. 
C) some firms exit the industry and the economic profits of the remaining firms increase. 
D) new firms enter the industry and the economic losses of the original firms decrease. 
E) new firms enter the industry and the economic profits of the original firms increase. 
A) nothing changes. 
B) some firms exit the industry and the economic losses of the remaining firms decrease. 
C) some firms exit the industry and the economic profits of the remaining firms increase. 
D) new firms enter the industry and the economic losses of the original firms decrease. 
E) new firms enter the industry and the economic profits of the original firms increase.

Question 11

In monopolistic competition,the presence of a large number of firms making a differentiated product means that

Accepted Answer

A) each firm can set the price of its particular product. 
B) each firm must charge the same price. 
C) the price is established by collusive behavior. 
D) each firm must produce the same quantity. 
E) firms cannot compete with each other on the basis of price. 
A) each firm can set the price of its particular product. 
B) each firm must charge the same price. 
C) the price is established by collusive behavior. 
D) each firm must produce the same quantity. 
E) firms cannot compete with each other on the basis of price.

Question 12

In the above figure,the output of an oligopoly will range between

Accepted Answer

A) 0 and Q1. 
B) Q1 and Q2. 
C) Q1 and Q3. 
D) Q2 and Q3. 
E) 0 and Q2. 
A) 0 and Q1. 
B) Q1 and Q2. 
C) Q1 and Q3. 
D) Q2 and Q3. 
E) 0 and Q2.

Question 13

The figure above shows the market for airplanes.
-Suppose the airplane market is an oligopoly.If the firms act as a monopolist,the price will be ________ and if the firms act as competitors the price will be ________.

Accepted Answer

A) $13 million per plane;$1 million per plane 
B) $1 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) $1 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 14

A Nash equilibrium occurs

Accepted Answer

A) when each player acts without considering the actions of the other player. 
B) when each player takes the best possible action given the action of the other player. 
C) only when players use the tit-for-tat strategy. 
D) only when the game is played in Nashville,Tennessee. 
E) when each player takes the action that makes the combined payoff for all players as large as possible. 
A) when each player acts without considering the actions of the other player. 
B) when each player takes the best possible action given the action of the other player. 
C) only when players use the tit-for-tat strategy. 
D) only when the game is played in Nashville,Tennessee. 
E) when each player takes the action that makes the combined payoff for all players as large as possible.

Question 15

-The above figure shows the market demand curve for long-distance telephone calls.Suppose the marginal cost of a long-distance telephone call is 2¢ a minute for a call no matter how many minutes of calls are made and there are 3 firms in the industry.If the firms in the industry operate as perfect competitors,there are ________ minutes of calls made per hour.

Accepted Answer

A) between 0 and 3 million 
B) more than 3 million and less than or equal to 5 million 
C) more than 5 million and less than or equal to 7 million 
D) more than 7 million and less than or equal to 9 million 
E) more than 9 million 
A) between 0 and 3 million 
B) more than 3 million and less than or equal to 5 million 
C) more than 5 million and less than or equal to 7 million 
D) more than 7 million and less than or equal to 9 million 
E) more than 9 million

Question 16

If a firm is maximizing its profit and producing less than the output at which its average total cost is minimized,then that firm

Accepted Answer

A) must be suffering an economic loss. 
B) must be earning an economic profit. 
C) has excess capacity. 
D) is producing at its capacity output. 
E) must be earning a normal profit. 
A) must be suffering an economic loss. 
B) must be earning an economic profit. 
C) has excess capacity. 
D) is producing at its capacity output. 
E) must be earning a normal profit.

Question 17

The figure above shows the market for airplanes.
-Suppose the airplane market is an oligopoly.According to the figure above,if the firms act as a monopolist,the quantity produced will be ________ planes per week and if the firms act as competitors the quantity produced will be ________ planes per week.

Accepted Answer

A) 6;12 
B) 12;6 
C) 0;6 
D) 12;0 
E) None of the above answers is correct. 
A) 6;12 
B) 12;6 
C) 0;6 
D) 12;0 
E) None of the above answers is correct.

Question 18

"A Nash equilibrium occurs when both parties to a game end up worse off as a result of the decisions that are made." Is the previous definition of a Nash equilibrium correct or incorrect?

Accepted Answer

The definition is incorrect.A

Question 19

What is the legal status of a cartel among firms in the United States?

Accepted Answer

Cartels are illegal

Question 20

Firms in monopolistic competition have demand curves that are

Accepted Answer

A) horizontal. 
B) vertical. 
C) downward sloping. 
D) upward sloping. 
E) U-shaped. 
A) horizontal. 
B) vertical. 
C) downward sloping. 
D) upward sloping. 
E) U-shaped.

Product differentiation allows a firm to compete with another firm on the basis of

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

For a firm in monopolistic competition,selling costs

If a duopoly has reached the monopoly outcome and only one firm increases its production,that firm's profit and the other firm's profit .

In monopolistic competition in the long run,firms

If there are four firms in an industry with market shares of 50 percent,40 percent,5 percent,and 5 percent,the Herfindahl-Hirschman Index is

A group of firms that has entered into an agreement to restrict output and increase prices and profits is called

In the long run,firms in monopolistic competition earn zero economic profit.When firms earn zero economic profit,in the long run they exit the industry.

The prisoners' dilemma is similar to the problem faced by firms in an oligopoly in the United States because

If all firms in the industry have similar demand,marginal revenue,and cost curves as the firm in the figure above,in the long run

In monopolistic competition,the presence of a large number of firms making a differentiated product means that

In the above figure,the output of an oligopoly will range between

The figure above shows the market for airplanes. -Suppose the airplane market is an oligopoly.If the firms act as a monopolist,the price will be and if the firms act as competitors the price will be .

A Nash equilibrium occurs

If a firm is maximizing its profit and producing less than the output at which its average total cost is minimized,then that firm

The figure above shows the market for airplanes. -Suppose the airplane market is an oligopoly.According to the figure above,if the firms act as a monopolist,the quantity produced will be planes per week and if the firms act as competitors the quantity produced will be planes per week.

"A Nash equilibrium occurs when both parties to a game end up worse off as a result of the decisions that are made." Is the previous definition of a Nash equilibrium correct or incorrect?

What is the legal status of a cartel among firms in the United States?

Firms in monopolistic competition have demand curves that are

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

Product differentiation allows a firm to compete with another firm on the basis of

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

For a firm in monopolistic competition,selling costs

If a duopoly has reached the monopoly outcome and only one firm increases its production,that firm's profit ________ and the other firm's profit ________.

In monopolistic competition in the long run,firms

If there are four firms in an industry with market shares of 50 percent,40 percent,5 percent,and 5 percent,the Herfindahl-Hirschman Index is

A group of firms that has entered into an agreement to restrict output and increase prices and profits is called

In the long run,firms in monopolistic competition earn zero economic profit.When firms earn zero economic profit,in the long run they exit the industry.

The prisoners' dilemma is similar to the problem faced by firms in an oligopoly in the United States because

If all firms in the industry have similar demand,marginal revenue,and cost curves as the firm in the figure above,in the long run

In monopolistic competition,the presence of a large number of firms making a differentiated product means that

In the above figure,the output of an oligopoly will range between

The figure above shows the market for airplanes. -Suppose the airplane market is an oligopoly.If the firms act as a monopolist,the price will be ________ and if the firms act as competitors the price will be ________.

A Nash equilibrium occurs

If a firm is maximizing its profit and producing less than the output at which its average total cost is minimized,then that firm

"A Nash equilibrium occurs when both parties to a game end up worse off as a result of the decisions that are made." Is the previous definition of a Nash equilibrium correct or incorrect?

What is the legal status of a cartel among firms in the United States?

Firms in monopolistic competition have demand curves that are

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

If a duopoly has reached the monopoly outcome and only one firm increases its production,that firm's profit and the other firm's profit .

The figure above shows the market for airplanes. -Suppose the airplane market is an oligopoly.If the firms act as a monopolist,the price will be and if the firms act as competitors the price will be .