Question 1

In the long run,firms in monopolistic competition earn zero economic profit because

Accepted Answer

A) firms are free to enter and exit. 
B) their products are similar but slightly different. 
C) of over-reliance on product marketing. 
D) of collusion among the various sellers. 
E) their demand curves are horizontal. 
A) firms are free to enter and exit. 
B) their products are similar but slightly different. 
C) of over-reliance on product marketing. 
D) of collusion among the various sellers. 
E) their demand curves are horizontal.

Question 2

In monopolistic competition,profit is maximized by producing so that marginal revenue

Accepted Answer

A) equals price. 
B) is negative. 
C) equals marginal cost and which are less than price. 
D) equals average total cost but not marginal cost. 
E) equals marginal cost and equals price. 
A) equals price. 
B) is negative. 
C) equals marginal cost and which are less than price. 
D) equals average total cost but not marginal cost. 
E) equals marginal cost and equals price.

Question 3

Product differentiation means

Accepted Answer

A) firms sell products that are very dissimilar. 
B) products sold by different firms are slightly different. 
C) charging a higher price to consumers with high willingness to pay. 
D) charging a lower price to consumers with low willingness to pay. 
E) that a single firm sells many different types of products. 
A) firms sell products that are very dissimilar. 
B) products sold by different firms are slightly different. 
C) charging a higher price to consumers with high willingness to pay. 
D) charging a lower price to consumers with low willingness to pay. 
E) that a single firm sells many different types of products.

Question 4

How does a firm in monopolistic competition determine its price and quantity? What type of profit can it earn in the short run and the long run?

Accepted Answer

The firm produces where its marginal cos

Question 5

Sammy's Inc.competes with a few other firms because there are natural barriers to entry.Sammy's operates in

Accepted Answer

A) a perfectly competitive market. 
B) an oligopoly. 
C) a monopolistically competitive market. 
D) a monopoly. 
E) a natural monopolistically competitive market. 
A) a perfectly competitive market. 
B) an oligopoly. 
C) a monopolistically competitive market. 
D) a monopoly. 
E) a natural monopolistically competitive market.

Question 6

A market is considered competitive if the Herfindahl-Hirschman Index (HHI)is ________ and its four-firm concentration ratio is ________.

Accepted Answer

A) high;high 
B) high;low 
C) low;high 
D) low;low 
E) between 30 percent and 70 percent;greater than 5,000 
A) high;high 
B) high;low 
C) low;high 
D) low;low 
E) between 30 percent and 70 percent;greater than 5,000

Question 7

Imagine a duopoly in which two firms,A and B,produce the monopoly profit-maximizing output and equally share the economic profit.If firm A increases its output,the market price ________ and total economic profit of the two firms combined ________.

Accepted Answer

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

Question 8

The major dilemma facing Boeing and Airbus is the

Accepted Answer

A) fact that neither will respond to the behavior of the other. 
B) certainty surrounding the reaction of each firm to the behavior of the other firm. 
C) fact that if each firm separately tries to maximize its profit,it might wind up with less profit that otherwise. 
D) competition from other firms that drives their economic profit to zero. 
E) fact that when they collude to maximize their profit,the other firm's profit might be larger than its profit. 
A) fact that neither will respond to the behavior of the other. 
B) certainty surrounding the reaction of each firm to the behavior of the other firm. 
C) fact that if each firm separately tries to maximize its profit,it might wind up with less profit that otherwise. 
D) competition from other firms that drives their economic profit to zero. 
E) fact that when they collude to maximize their profit,the other firm's profit might be larger than its profit.

Question 9

Which of the following four-firm concentration ratios would be the best indicator of an oligopoly?

Accepted Answer

A) 0.25 percent 
B) 31 percent 
C) 78 percent 
D) 100 percent 
E) 11 percent 
A) 0.25 percent 
B) 31 percent 
C) 78 percent 
D) 100 percent 
E) 11 percent

Question 10

Herb's Inc.has a large share of its market and is tempted to collude with the few firms that are in its market.Herb's operates in

Accepted Answer

A) an oligopoly. 
B) a monopolistically competitive market. 
C) a monopoly market. 
D) a perfectly competitive market. 
E) a collusively protected market. 
A) an oligopoly. 
B) a monopolistically competitive market. 
C) a monopoly market. 
D) a perfectly competitive market. 
E) a collusively protected market.

Question 11

-Two firms are competing in a duopoly and are trying to decide which price to set.The two prices under consideration are a high monopoly price and a low competitive level.If both seller A and seller B chose the monopoly price,each will earn $20 million of economic profit.However,if one picks the monopoly price while the other picks the competitive price,the high-price firm will lose $1 million while the low-price firm will earn $32 million.If both sell at the competitive level,they both earn a normal profit.Complete the payoff matrix below and determine the Nash equilibrium.

Accepted Answer

@#IMG-DLM& The completed payoff matrix i

Question 12

If firms in monopolistic competition are earning economic profits,eventually

Accepted Answer

A) they shut down. 
B) they exit the industry. 
C) the market turns into a monopoly. 
D) new firms enter the industry. 
E) the firms in the market increase their production so that their economic profit disappears. 
A) they shut down. 
B) they exit the industry. 
C) the market turns into a monopoly. 
D) new firms enter the industry. 
E) the firms in the market increase their production so that their economic profit disappears.

Question 13

If firms in monopolistic competition are earning economic profits,then

Accepted Answer

A) they can expect to earn the profits indefinitely. 
B) new rivals enter the industry,and the demand for any seller's good decreases. 
C) the market demand becomes more inelastic. 
D) the industry is in long-run equilibrium. 
E) new rivals enter the industry,and the demand for any seller's good increases. 
A) they can expect to earn the profits indefinitely. 
B) new rivals enter the industry,and the demand for any seller's good decreases. 
C) the market demand becomes more inelastic. 
D) the industry is in long-run equilibrium. 
E) new rivals enter the industry,and the demand for any seller's good increases.

Question 14

All games have which features?

Accepted Answer

A) prices,rules,and payoffs 
B) rules,markets,and prices 
C) rules,strategies,and payoffs 
D) rules,strategies,and costs 
E) equilibrium,prices,and quantities 
A) prices,rules,and payoffs 
B) rules,markets,and prices 
C) rules,strategies,and payoffs 
D) rules,strategies,and costs 
E) equilibrium,prices,and quantities

Question 15

-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.In the above game,in the Nash equilibrium,

Accepted Answer

A) Firm A and Firm B are both making $40,000 in economic profit. 
B) Firm A and Firm B are both making $55,000 in economic profit. 
C) Firm A is making $60,000 and Firm B is making $55,000 in economic profit. 
D) Firm A and Firm B are both making $60,000 in economic profit. 
E) Firm A and Firm B are both making $35,000 in economic profit. 
A) Firm A and Firm B are both making $40,000 in economic profit. 
B) Firm A and Firm B are both making $55,000 in economic profit. 
C) Firm A is making $60,000 and Firm B is making $55,000 in economic profit. 
D) Firm A and Firm B are both making $60,000 in economic profit. 
E) Firm A and Firm B are both making $35,000 in economic profit.

Question 16

Advertising costs and other selling costs are

Accepted Answer

A) efficient. 
B) fixed costs. 
C) variable costs. 
D) marginal costs. 
E) considered as part of demand because they affect the demand for the good. 
A) efficient. 
B) fixed costs. 
C) variable costs. 
D) marginal costs. 
E) considered as part of demand because they affect the demand for the good.

Question 17

The women's dress industry is monopolistically competitive because each firm has

Accepted Answer

A) a large market share. 
B) a very small market share. 
C) no market share. 
D) no competition for their market share. 
E) struck a deal with the many other firms about what price will be charged. 
A) a large market share. 
B) a very small market share. 
C) no market share. 
D) no competition for their market share. 
E) struck a deal with the many other firms about what price will be charged.

Question 18

A cartel is most likely to occur in

Accepted Answer

A) perfect competition as firms compete by reducing cost. 
B) oligopoly as firms act together to raise prices and increase profits. 
C) monopolistic competition where firms collude to increase profits. 
D) oligopoly as firms compete to lower price and increase their own profits. 
E) monopoly because it faces no competition. 
A) perfect competition as firms compete by reducing cost. 
B) oligopoly as firms act together to raise prices and increase profits. 
C) monopolistic competition where firms collude to increase profits. 
D) oligopoly as firms compete to lower price and increase their own profits. 
E) monopoly because it faces no competition.

Question 19

To maximize profit,a firm in monopolistic competition will produce the quantity where marginal revenue

Accepted Answer

A) is greater than marginal cost. 
B) equals zero. 
C) is less than marginal cost. 
D) equals marginal cost. 
E) equals average total cost. 
A) is greater than marginal cost. 
B) equals zero. 
C) is less than marginal cost. 
D) equals marginal cost. 
E) equals average total cost.

Question 20

The firm illustrated above is

Accepted Answer

A) earning an economic profit of $400,000 per month. 
B) earning an economic profit of $2,000,000 per month. 
C) earning an economic profit of $1,600,000 per month. 
D) incurring an economic loss of $400,000 per month. 
E) incurring an economic loss of $1,600,000 per month. 
A) earning an economic profit of $400,000 per month. 
B) earning an economic profit of $2,000,000 per month. 
C) earning an economic profit of $1,600,000 per month. 
D) incurring an economic loss of $400,000 per month. 
E) incurring an economic loss of $1,600,000 per month.

In the long run,firms in monopolistic competition earn zero economic profit because

In monopolistic competition,profit is maximized by producing so that marginal revenue

Product differentiation means

How does a firm in monopolistic competition determine its price and quantity? What type of profit can it earn in the short run and the long run?

Sammy's Inc.competes with a few other firms because there are natural barriers to entry.Sammy's operates in

A market is considered competitive if the Herfindahl-Hirschman Index (HHI)is and its four-firm concentration ratio is .

Imagine a duopoly in which two firms,A and B,produce the monopoly profit-maximizing output and equally share the economic profit.If firm A increases its output,the market price and total economic profit of the two firms combined .

The major dilemma facing Boeing and Airbus is the

Which of the following four-firm concentration ratios would be the best indicator of an oligopoly?

Herb's Inc.has a large share of its market and is tempted to collude with the few firms that are in its market.Herb's operates in

If firms in monopolistic competition are earning economic profits,eventually

If firms in monopolistic competition are earning economic profits,then

All games have which features?

-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.In the above game,in the Nash equilibrium,

Advertising costs and other selling costs are

The women's dress industry is monopolistically competitive because each firm has

A cartel is most likely to occur in

To maximize profit,a firm in monopolistic competition will produce the quantity where marginal revenue

The firm illustrated above is

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 the long run,firms in monopolistic competition earn zero economic profit because

In monopolistic competition,profit is maximized by producing so that marginal revenue

Product differentiation means

How does a firm in monopolistic competition determine its price and quantity? What type of profit can it earn in the short run and the long run?

Sammy's Inc.competes with a few other firms because there are natural barriers to entry.Sammy's operates in

A market is considered competitive if the Herfindahl-Hirschman Index (HHI)is ________ and its four-firm concentration ratio is ________.

Imagine a duopoly in which two firms,A and B,produce the monopoly profit-maximizing output and equally share the economic profit.If firm A increases its output,the market price ________ and total economic profit of the two firms combined ________.

The major dilemma facing Boeing and Airbus is the

Which of the following four-firm concentration ratios would be the best indicator of an oligopoly?

Herb's Inc.has a large share of its market and is tempted to collude with the few firms that are in its market.Herb's operates in

If firms in monopolistic competition are earning economic profits,eventually

If firms in monopolistic competition are earning economic profits,then

All games have which features?

-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.In the above game,in the Nash equilibrium,

Advertising costs and other selling costs are

The women's dress industry is monopolistically competitive because each firm has

A cartel is most likely to occur in

To maximize profit,a firm in monopolistic competition will produce the quantity where marginal revenue

The firm illustrated above is

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 market is considered competitive if the Herfindahl-Hirschman Index (HHI)is and its four-firm concentration ratio is .

Imagine a duopoly in which two firms,A and B,produce the monopoly profit-maximizing output and equally share the economic profit.If firm A increases its output,the market price and total economic profit of the two firms combined .