Question 1

Game theory is used to analyze the interactions among firms in ________.

Accepted Answer

A) oligopoly 
B) perfect competition 
C) monopoly 
D) monopolistic competition 
E) Both answers A and D are correct. 
A) oligopoly 
B) perfect competition 
C) monopoly 
D) monopolistic competition 
E) Both answers A and D are correct.

Question 2

If firms in an oligopolistic industry consistently cut their price to sell more output,what price and output will result?

Accepted Answer

A) the monopoly price and output 
B) the competitive price and output 
C) the monopolistically competitive price and output 
D) a price lower than the competitive price and less output than the competitive amount 
E) a price lower than the competitive price and more output than the competitive amount 
A) the monopoly price and output 
B) the competitive price and output 
C) the monopolistically competitive price and output 
D) a price lower than the competitive price and less output than the competitive amount 
E) a price lower than the competitive price and more output than the competitive amount

Question 3

-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.If Kevin trains 5 clients per day,he will ________ his profit and will ________.

Accepted Answer

A) maximize;earn normal profit 
B) not maximize;earn a normal profit anyway 
C) maximize;earn an economic profit 
D) not maximize;earn an economic profit anyway 
E) not maximize;incur an economic loss 
A) maximize;earn normal profit 
B) not maximize;earn a normal profit anyway 
C) maximize;earn an economic profit 
D) not maximize;earn an economic profit anyway 
E) not maximize;incur an economic loss

Question 4

If a few oil-producing countries in the Middle East decide to jointly limit the production of oil,

Accepted Answer

A) they are forming a cartel. 
B) they would like the price of oil to be the same as if the market were perfectly competitive. 
C) game theory does not apply to their actions because they are nations,not firms. 
D) they will try to operate as a large,monopolistically competitive firm. 
E) they will agree to lower the price of oil in order to increase their profits. 
A) they are forming a cartel. 
B) they would like the price of oil to be the same as if the market were perfectly competitive. 
C) game theory does not apply to their actions because they are nations,not firms. 
D) they will try to operate as a large,monopolistically competitive firm. 
E) they will agree to lower the price of oil in order to increase their profits.

Question 5

Each of the four firms in an industry has a market share of 25 percent.The Herfindahl-Hirschman Index equals

Accepted Answer

A) 3,600. 
B) 100. 
C) 625. 
D) 25. 
E) 2,500. 
A) 3,600. 
B) 100. 
C) 625. 
D) 25. 
E) 2,500.

Question 6

-The above figure represents Tony's Pizza Parlor,a firm in monopolistic competition.
a.What quantity will be produced?
b.What price will be charged?
c.What is Tony's total cost?
d.What is Tony's total revenue?
e.What is Tony's economic profit or loss?
f.Is this a long-run equilibrium? Why or why not?

Accepted Answer

a.40 pizzas per day
b.$12.00 per pizza
c

Question 7

If the four-firm concentration ratio equals 0.1 percent for the Mexican tomato industry,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 8

-The above figure shows a restaurant engaged in monopolistic competition with other restaurants.The equilibrium price at this restaurant is ________ per meal.

Accepted Answer

A) $20 
B) $30 
C) $50 
D) less than $20 
E) more than $50 
A) $20 
B) $30 
C) $50 
D) less than $20 
E) more than $50

Question 9

-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.If AMD is playing a tit-for-tat strategy,then if Intel conducted R&D last period,AMD

Accepted Answer

A) definitely conducts R&D this period. 
B) definitely does not conduct R&D this period. 
C) might conduct R&D or might not conduct R&D,depending on Intel's profit. 
D) might conduct R&D or might not conduct R&D,depending on its profit. 
E) might conduct R&D or might not conduct R&D,but more information is needed to determine its action. 
A) definitely conducts R&D this period. 
B) definitely does not conduct R&D this period. 
C) might conduct R&D or might not conduct R&D,depending on Intel's profit. 
D) might conduct R&D or might not conduct R&D,depending on its profit. 
E) might conduct R&D or might not conduct R&D,but more information is needed to determine its action.

Question 10

-Two firms are introducing an improved version of their toothpastes.They must decide whether or not to advertise their products.The table above gives the payoff matrix in terms of the economic profits they expect in each case.The payoffs are in terms of millions of dollars.
a.What is the Nash equilibrium for the game?
b.If they could cooperate,what strategy would they prefer? What would be the payoff?

Accepted Answer

a.The Nash equilibrium has each firm adv

Question 11

A cartel is

Accepted Answer

A) a market structure with a small number of large firms. 
B) a market structure with a large number of small firms. 
C) a group of firms acting together to raise price,decrease output,and increase economic profit. 
D) a market with only two firms. 
E) another name for an oligopoly. 
A) a market structure with a small number of large firms. 
B) a market structure with a large number of small firms. 
C) a group of firms acting together to raise price,decrease output,and increase economic profit. 
D) a market with only two firms. 
E) another name for an oligopoly.

Question 12

The decision to innovate

Accepted Answer

A) depends on the marketing department's needs. 
B) depends on whether the firm wants to benefit its customers. 
C) is based on the marginal cost and the marginal revenue of innovation. 
D) is unnecessary in a monopolistically competitive market. 
E) None of the above answers is correct. 
A) depends on the marketing department's needs. 
B) depends on whether the firm wants to benefit its customers. 
C) is based on the marginal cost and the marginal revenue of innovation. 
D) is unnecessary in a monopolistically competitive market. 
E) None of the above answers is correct.

Question 13

Which of the following is an advantage to society of monopolistic competition?

Accepted Answer

A) production at the lowest possible average cost 
B) product variety 
C) only essential costs are incurred 
D) long-run profitability 
E) The firms have excess capacity so they are are always willing to increase their production. 
A) production at the lowest possible average cost 
B) product variety 
C) only essential costs are incurred 
D) long-run profitability 
E) The firms have excess capacity so they are are always willing to increase their production.

Question 14

In the prisoners' dilemma,each player is ________ regardless of the other players' actions.

Accepted Answer

A) forced to confess 
B) forced to deny 
C) better off confessing 
D) better off denying 
E) going to go free 
A) forced to confess 
B) forced to deny 
C) better off confessing 
D) better off denying 
E) going to go free

Question 15

When the firm in the figure above maximizes its profit,it earns an economic profit of

Accepted Answer

A) $3,125. 
B) $6,250. 
C) $9,375. 
D) $5,625. 
E) None of the above answers are correct because the firm incurs an economic loss. 
A) $3,125. 
B) $6,250. 
C) $9,375. 
D) $5,625. 
E) None of the above answers are correct because the firm incurs an economic loss.

Question 16

What is the Herfindahl-Hirschman Index and what does it measure?

Accepted Answer

The Herfindahl-Hirschman Index,or HHI,is

Question 17

In an oligopoly,output is

Accepted Answer

A) less than the output in monopoly. 
B) greater than the output in perfect competition. 
C) in all circumstances the same as the output in perfect competition. 
D) somewhere between the output in monopoly and that in perfect competition outcomes. 
E) in all circumstances the same as the output in monopoly. 
A) less than the output in monopoly. 
B) greater than the output in perfect competition. 
C) in all circumstances the same as the output in perfect competition. 
D) somewhere between the output in monopoly and that in perfect competition outcomes. 
E) in all circumstances the same as the output in monopoly.

Question 18

When a firm maximizes its profit,which of the following is correct for firms in monopolistic competition and perfect competition?

Accepted Answer

A) P = MC for both types of firms. 
B) P = MR = MC for firms in perfect competition and P > MR = MC for firms in monopolistic competition. 
C) MR = MC for firms in perfect competition and MR > MC for firms in monopolistic competition. 
D) P > MR = MC for firms in both perfect competition and monopolistic competition. 
E) P = ATC always for firms in both perfect competition and monopolistic competition. 
A) P = MC for both types of firms. 
B) P = MR = MC for firms in perfect competition and P > MR = MC for firms in monopolistic competition. 
C) MR = MC for firms in perfect competition and MR > MC for firms in monopolistic competition. 
D) P > MR = MC for firms in both perfect competition and monopolistic competition. 
E) P = ATC always for firms in both perfect competition and monopolistic competition.

Question 19

As a firm in monopolistic competition sets the price for its product,the firm faces a tradeoff between

Accepted Answer

A) supply and demand. 
B) efficiency and equity. 
C) internal and external economies of scale. 
D) price and the quantity it can sell. 
E) its marginal revenue and its price. 
A) supply and demand. 
B) efficiency and equity. 
C) internal and external economies of scale. 
D) price and the quantity it can sell. 
E) its marginal revenue and its price.

Question 20

For a monopolistically competitive firm,the demand curve

Accepted Answer

A) is a horizontal line. 
B) has a positive slope. 
C) is vertical. 
D) has a negative slope. 
E) is the same as the marginal revenue curve. 
A) is a horizontal line. 
B) has a positive slope. 
C) is vertical. 
D) has a negative slope. 
E) is the same as the marginal revenue curve.

Game theory is used to analyze the interactions among firms in ________.

If firms in an oligopolistic industry consistently cut their price to sell more output,what price and output will result?

-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.If Kevin trains 5 clients per day,he will his profit and will .

If a few oil-producing countries in the Middle East decide to jointly limit the production of oil,

Each of the four firms in an industry has a market share of 25 percent.The Herfindahl-Hirschman Index equals

If the four-firm concentration ratio equals 0.1 percent for the Mexican tomato industry,then this industry is best characterized as

-The above figure shows a restaurant engaged in monopolistic competition with other restaurants.The equilibrium price at this restaurant is ________ 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.If AMD is playing a tit-for-tat strategy,then if Intel conducted R&D last period,AMD

A cartel is

The decision to innovate

Which of the following is an advantage to society of monopolistic competition?

In the prisoners' dilemma,each player is ________ regardless of the other players' actions.

When the firm in the figure above maximizes its profit,it earns an economic profit of

What is the Herfindahl-Hirschman Index and what does it measure?

In an oligopoly,output is

When a firm maximizes its profit,which of the following is correct for firms in monopolistic competition and perfect competition?

As a firm in monopolistic competition sets the price for its product,the firm faces a tradeoff between

For a monopolistically competitive firm,the demand curve

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

Game theory is used to analyze the interactions among firms in ________.

If firms in an oligopolistic industry consistently cut their price to sell more output,what price and output will result?

-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.If Kevin trains 5 clients per day,he will ________ his profit and will ________.

If a few oil-producing countries in the Middle East decide to jointly limit the production of oil,

Each of the four firms in an industry has a market share of 25 percent.The Herfindahl-Hirschman Index equals

If the four-firm concentration ratio equals 0.1 percent for the Mexican tomato industry,then this industry is best characterized as

-The above figure shows a restaurant engaged in monopolistic competition with other restaurants.The equilibrium price at this restaurant is ________ 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.If AMD is playing a tit-for-tat strategy,then if Intel conducted R&D last period,AMD

A cartel is

The decision to innovate

Which of the following is an advantage to society of monopolistic competition?

In the prisoners' dilemma,each player is ________ regardless of the other players' actions.

When the firm in the figure above maximizes its profit,it earns an economic profit of

What is the Herfindahl-Hirschman Index and what does it measure?

In an oligopoly,output is

When a firm maximizes its profit,which of the following is correct for firms in monopolistic competition and perfect competition?

As a firm in monopolistic competition sets the price for its product,the firm faces a tradeoff between

For a monopolistically competitive firm,the demand curve

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

-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.If Kevin trains 5 clients per day,he will his profit and will .