Exam 11: Monopolistic Competition and Oligopoly

Table 11-2 Eco Energy is a monopolistically competitive producer of a sports beverage called Power On.Table 11-2 shows the firm's demand and cost schedules. -Refer to Table 11-2.What is Eco Energy's profit?

Table 11-4 Godrickporter and Star Connections are the only two airport shuttle and limousine rental service companies in the mid-sized town of Godrick Hollow.Each firm must decide on whether to increase its advertising spending to compete for customers.Table 11-4 shows the payoff matrix for this advertising game. -Refer to Table 11-4.Let's suppose the game starts with each firm adhering to its original budget so that Godrickporter earns a profit of $6,000 and Star Connections earns a profit of $12,000.Is there an incentive for any one firm to increase its advertising budget?

A member of a cartel earns more profits by producing more than its quota and selling at a price higher than the cartel's price.

An oligopolistic industry is characterized by a few large firms acting independently.

What is an oligopoly? Give two examples of oligopolistic industries in the United States.

How does the long run equilibrium of a monopolistically competitive industry differ from that of a perfectly competitive industry?

If the painting firms in a city sign a contract outlining a pricing plan,they are involved in

Is a monopolistically competitive firm productively efficient?

Figure 11-3 Figure 11-3 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 11-3.What is the area that represents the total fixed cost of production?

An oligopolistic industry is characterized by all of the following except

If an industry is made up of five identical firms,the four-firm concentration ratio is

Figure 11-3 Figure 11-3 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 11-3.Should the firm represented in the diagram continue to stay in business despite its losses?

A monopolistically competitive firm faces a downward-sloping demand curve because

On November 7,1996,the Distilled Spirits Council of the United States decided to end its voluntary ban on television and radio liquor advertisement.The ban on hard liquor advertising had been in effect since 1936 for radio and 1948 for television.Did the lifting of this ban likely increase or decrease the profits of hard liquor companies? Briefly explain.

The key characteristics of a monopolistically competitive market structure include

Table 11-6 Suppose OPEC has only two producers,Saudi Arabia and Nigeria.Saudi Arabia has far more oil reserves and is the lower cost producer compared to Nigeria.The payoff matrix in Table 11-6 shows the profits earned per day by each country."Low output" corresponds to producing the OPEC assigned quota and "high output" corresponds to producing the maximum capacity beyond the assigned quota. -Refer to Table 11-6.Is there a dominant strategy for Saudi Arabia and,if so,what is it?

Which of the following is not a reason why government officials are willing to impose entry barriers?

Figure 11-8 -Refer to Figure 11-8.Assume Starbucks is successful with its new health and wellness stores,and as a result it is able to earn economic profits.Which of the graphs in the figure above reflects this?

Figure 11-12 -Refer to Figure 11-12.The diagram demonstrates that

Producing a homogeneous product occurs in which of the following industries?