Question 1

What are the most important differences between perfectly competitive markets and monopolistically competitive markets?

Accepted Answer

In both perfectly competitive and monopolistically competitive industries there are many firms and low barriers to entry.However,while products are identical in perfectly competitive markets,products are similar - but not identical - in monopolistically competitive markets.

Question 2

Collusion

Accepted Answer

A) is rampant in perfect competition as all firms charge the same price. 
B) reduces market concentration in an industry. 
C) among firms is difficult to maintain because it eliminates long run economic profit. 
D) is more difficult when there are many firms producing differentiated products in an industry. 
A) is rampant in perfect competition as all firms charge the same price. 
B) reduces market concentration in an industry. 
C) among firms is difficult to maintain because it eliminates long run economic profit. 
D) is more difficult when there are many firms producing differentiated products in an industry. D

Question 3

The "Discount Department Stores" industry is highly concentrated.What does this mean?

Accepted Answer

A) There are many large stores such as Wal-Mart,Target,Kohl's,in this industry. 
B) A few large stores account for a significant portion of industry sales. 
C) There is cut-throat competition in this industry because there are no entry barriers. 
D) The sales volume in this industry is consistently high. 
A) There are many large stores such as Wal-Mart,Target,Kohl's,in this industry. 
B) A few large stores account for a significant portion of industry sales. 
C) There is cut-throat competition in this industry because there are no entry barriers. 
D) The sales volume in this industry is consistently high. B

Question 4

For a profit-maximizing monopolistically competitive firm,for the last unit sold,the marginal cost of production is less than the marginal benefit received by a customer from the purchase of that unit.

Accepted Answer

A) True 
 B)False

Question 5

The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because

Accepted Answer

A) barriers to entry are very low. 
B) there are many firms in the market. 
C) products are differentiated. 
D) entry into the market is blocked. 
A) barriers to entry are very low. 
B) there are many firms in the market. 
C) products are differentiated. 
D) entry into the market is blocked.

Question 6

Which of the following characteristics is not common to monopolistic competition and perfect competition?

Accepted Answer

A) Firms act to maximize profit. 
B) Entry barriers into the industry are low. 
C) The market demand curve is downward -sloping. 
D) Firms take market prices as given. 
A) Firms act to maximize profit. 
B) Entry barriers into the industry are low. 
C) The market demand curve is downward -sloping. 
D) Firms take market prices as given.

Question 7

Interdependence of firms is most common in

Accepted Answer

A) monopolistically competitive industries. 
B) monopolistic industries. 
C) monopolistically competitive and oligopolistic industries. 
D) oligopolistic industries. 
A) monopolistically competitive industries. 
B) monopolistic industries. 
C) monopolistically competitive and oligopolistic industries. 
D) oligopolistic industries.

Question 8

Figure 11-11  
-Refer to Figure 11-11.Suppose the firm is currently producing Qf units.What happens if it increases its output to Qg units?

Accepted Answer

A) Its average cost of production will fall and its profit will rise. 
B) It will be taking advantage of economies of scale and will be able to lower the price of its product. 
C) It will move from a zero profit situation to a profit situation 
D) It will move from a zero profit situation to a loss situation 
A) Its average cost of production will fall and its profit will rise. 
B) It will be taking advantage of economies of scale and will be able to lower the price of its product. 
C) It will move from a zero profit situation to a profit situation 
D) It will move from a zero profit situation to a loss situation

Question 9

What is a prisoner's dilemma?

Accepted Answer

A) a game that involves no dominant strategies 
B) a game in which prisoners are stumped because they cannot communicate with each other 
C) a game in which players act in rational,self-interested ways that leave everyone worse off 
D) a game in which players collude to outfox authorities 
A) a game that involves no dominant strategies 
B) a game in which prisoners are stumped because they cannot communicate with each other 
C) a game in which players act in rational,self-interested ways that leave everyone worse off 
D) a game in which players collude to outfox authorities

Question 10

Which of the following is true for a firm with a downward-sloping demand curve for its product?

Accepted Answer

A) Price,average revenue,and marginal revenue are all equal. 
B) Price,average revenue,and marginal revenue are all different. 
C) Price equals average revenue but is greater than marginal revenue. 
D) Price equals average revenue but is less than marginal revenue. 
A) Price,average revenue,and marginal revenue are all equal. 
B) Price,average revenue,and marginal revenue are all different. 
C) Price equals average revenue but is greater than marginal revenue. 
D) Price equals average revenue but is less than marginal revenue.

Question 11

Occupational licensing is an example of an entry barrier that improves a country's standard of living.

Accepted Answer

A) True 
 B)False

Question 12

If a firm has excess capacity,it means

Accepted Answer

A) that the firm expends too much of its resources on advertising its product without seeing an appreciable increase in sales. 
B) that the firm is not producing its minimum efficient scale of output. 
C) that the firm's long-run average cost of producing a given quantity exceeds its short-run cost of producing that same quantity. 
D) that the firm's quantity supplied exceeds its quantity demanded. 
A) that the firm expends too much of its resources on advertising its product without seeing an appreciable increase in sales. 
B) that the firm is not producing its minimum efficient scale of output. 
C) that the firm's long-run average cost of producing a given quantity exceeds its short-run cost of producing that same quantity. 
D) that the firm's quantity supplied exceeds its quantity demanded.

Question 13

If a firm faces a downward-sloping demand curve,

Accepted Answer

A) the demand for its product must be inelastic. 
B) it can control both price and quantity sold. 
C) it must reduce its price to sell more units. 
D) it will always make a profit. 
A) the demand for its product must be inelastic. 
B) it can control both price and quantity sold. 
C) it must reduce its price to sell more units. 
D) it will always make a profit.

Question 14

Figure 11-11  
-Refer to Figure 11-11.In the long run,why will the firm produce Qf units and not Qg units,which has a lower its average cost of production?

Accepted Answer

A) Although its average cost of production is lower when the firm produces Qg units,to be able to sell its output the firm will have to charge a price below average cost,resulting in a loss. 
B) At Qg,average cost exceeds marginal cost so the firm will actually make a loss. 
C) At Qg,marginal revenue is less than average revenue which will result in a loss for the firm. 
D) The firm's goal is to charge a high price and make a small profit rather than a low price and no profit. 
A) Although its average cost of production is lower when the firm produces Qg units,to be able to sell its output the firm will have to charge a price below average cost,resulting in a loss. 
B) At Qg,average cost exceeds marginal cost so the firm will actually make a loss. 
C) At Qg,marginal revenue is less than average revenue which will result in a loss for the firm. 
D) The firm's goal is to charge a high price and make a small profit rather than a low price and no profit.

Question 15

A characteristic found only in oligopolies is

Accepted Answer

A) break even level of profits. 
B) interdependence of firms. 
C) independence of firms. 
D) products that are slightly different. 
A) break even level of profits. 
B) interdependence of firms. 
C) independence of firms. 
D) products that are slightly different.

Question 16

The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called

Accepted Answer

A) Nash equilibrium. 
B) the prisoner's dilemma. 
C) game theory. 
D) dominant strategy equilibrium. 
A) Nash equilibrium. 
B) the prisoner's dilemma. 
C) game theory. 
D) dominant strategy equilibrium.

Question 17

Patents,tariffs and quotas are all examples of

Accepted Answer

A) government-imposed barriers. 
B) economic regulations that increase efficiency. 
C) entry barriers that improve a country's standard of living. 
D) entry barriers that protect consumers. 
A) government-imposed barriers. 
B) economic regulations that increase efficiency. 
C) entry barriers that improve a country's standard of living. 
D) entry barriers that protect consumers.

Question 18

In the short run,a profit-maximizing firm's decision to produce should be guided by whether

Accepted Answer

A) it makes a profit. 
B) its marginal profit is maximized. 
C) its total revenue exceeds its fixed cost. 
D) its total revenue covers its variable cost. 
A) it makes a profit. 
B) its marginal profit is maximized. 
C) its total revenue exceeds its fixed cost. 
D) its total revenue covers its variable cost.

Question 19

One reason why,in the last four decades,the number of new auto makers in the world has been very small compared to the past is that

Accepted Answer

A) the automobile cannot be improved upon in any way by new producers. 
B) new auto makers cannot obtain necessary inputs to produce new cars. 
C) governments restrict who can produce automobiles. 
D) new producers cannot match the economies of scale of existing auto makers. 
A) the automobile cannot be improved upon in any way by new producers. 
B) new auto makers cannot obtain necessary inputs to produce new cars. 
C) governments restrict who can produce automobiles. 
D) new producers cannot match the economies of scale of existing auto makers.

Question 20

In the long run,if price is less than average cost,

Accepted Answer

A) there is an incentive for firms to exit the market. 
B) there is profit incentive for firms to enter the market. 
C) the market must be in long-run equilibrium. 
D) there is no incentive for the number of firms in the market to change. 
A) there is an incentive for firms to exit the market. 
B) there is profit incentive for firms to enter the market. 
C) the market must be in long-run equilibrium. 
D) there is no incentive for the number of firms in the market to change.

What are the most important differences between perfectly competitive markets and monopolistically competitive markets?

Collusion

The "Discount Department Stores" industry is highly concentrated.What does this mean?

For a profit-maximizing monopolistically competitive firm,for the last unit sold,the marginal cost of production is less than the marginal benefit received by a customer from the purchase of that unit.

The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because

Which of the following characteristics is not common to monopolistic competition and perfect competition?

Interdependence of firms is most common in

Figure 11-11 -Refer to Figure 11-11.Suppose the firm is currently producing Qf units.What happens if it increases its output to Qg units?

What is a prisoner's dilemma?

Which of the following is true for a firm with a downward-sloping demand curve for its product?

Occupational licensing is an example of an entry barrier that improves a country's standard of living.

If a firm has excess capacity,it means

If a firm faces a downward-sloping demand curve,

Figure 11-11 -Refer to Figure 11-11.In the long run,why will the firm produce Qf units and not Qg units,which has a lower its average cost of production?

A characteristic found only in oligopolies is

The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called

Patents,tariffs and quotas are all examples of

In the short run,a profit-maximizing firm's decision to produce should be guided by whether

One reason why,in the last four decades,the number of new auto makers in the world has been very small compared to the past is that

In the long run,if price is less than average cost,

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

Exam 11: Monopolistic Competition and Oligopoly

What are the most important differences between perfectly competitive markets and monopolistically competitive markets?

Collusion

The "Discount Department Stores" industry is highly concentrated.What does this mean?

For a profit-maximizing monopolistically competitive firm,for the last unit sold,the marginal cost of production is less than the marginal benefit received by a customer from the purchase of that unit.

The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because

Which of the following characteristics is not common to monopolistic competition and perfect competition?

Interdependence of firms is most common in

Figure 11-11 -Refer to Figure 11-11.Suppose the firm is currently producing Qf units.What happens if it increases its output to Qg units?

What is a prisoner's dilemma?

Which of the following is true for a firm with a downward-sloping demand curve for its product?

Occupational licensing is an example of an entry barrier that improves a country's standard of living.

If a firm has excess capacity,it means

If a firm faces a downward-sloping demand curve,

Figure 11-11 -Refer to Figure 11-11.In the long run,why will the firm produce Qf units and not Qg units,which has a lower its average cost of production?

A characteristic found only in oligopolies is

The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called

Patents,tariffs and quotas are all examples of

In the short run,a profit-maximizing firm's decision to produce should be guided by whether

One reason why,in the last four decades,the number of new auto makers in the world has been very small compared to the past is that

In the long run,if price is less than average cost,

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters