Question 1

One way government could try to increase the efficiency of monopolistically competitive markets is to:

Accepted Answer

A)  regulate one price for all firms.
B)  set each firm's price according to their ATC.
C)  set each firm's price according to their MC.
D)  place a price floor on the market,and let competition prevail.E) A) and D)
F) All of the above

Question 2

One of the defining characteristics of an oligopoly is that:

Accepted Answer

A)  one firm's behavior can affect the others' profits.
B)  all firms act in unison to create a perfectly competitive outcome.
C)  all firms act in unison to create a monopoly outcome.
D)  None of these statements is true.E) None of the above
F) C) and D)

Question 3

If producers strongly object to banning advertising:

Accepted Answer

A)  they probably believe it will remove the ability to inform customers.
B)  they probably believe it will remove the ability to persuade customers.
C)  the government is less likely to pursue such legislation.
D)  the government is more likely to pursue such legislation.E) All of the above
F) A) and D)

Question 4

Like the monopolist,the monopolistically competitive firm:

Accepted Answer

A)  faces a downward sloping demand curve.
B)  is a price taker.
C)  sets the price where marginal cost equals marginal revenue;the demand curve doesn't matter.
D)  All of these statements are true.E) A) and B)
F) C) and D)

Question 5

A market with many firms that sell goods and services that are close substitutes for one another is called:

Accepted Answer

A)  perfect competition.
B)  monopolistic competition.
C)  oligopoly.
D)  monopoly.E) B) and C)
F) A) and D)

Question 6

These are the cost and revenue curves associated with a monopolistically competitive firm. 
According to the graph shown,area B represents:

Accepted Answer

A)  profits earned in the short run.
B)  consumer surplus.
C)  producer surplus.
D)  deadweight loss.E) All of the above
F) A) and B)

Question 7

If a monopolistically competitive firm is earning profits in the short run:

Accepted Answer

A)  other firms have an incentive to enter the market.
B)  barriers to entry will allow the firm to enjoy them in the long run as well.
C)  it is acting like a perfectly competitive firm.
D)  it should leave the industry before it gets competed away.E) All of the above
F) B) and C)

Question 8

These are the cost and revenue curves associated with a firm. 
Assuming the firm in the graph is producing Q1 and charging P3,it is likely showing the cost and revenue curves of a firm in:

Accepted Answer

A)  the short run,and firms will enter this market.
B)  the long run,and firms will enter this market.
C)  the short run,and firms will leave this market.
D)  the long run,and no firms will enter or exit.E) B) and C)
F) A) and D)

Question 9

This prisoner's dilemma game shows the payoffs associated with two firms,A and B,in an oligopoly and their choices to either collude with one another or not. 
According to the matrix shown,the firms:

Accepted Answer

A)  both have a dominant strategy.
B)  both have an incentive to renege on collusion.
C)  both have an incentive to compete.
D)  All of these statements are true.E) A) and B)
F) A) and C)

Question 10

The outcome of a competitive oligopoly:

Accepted Answer

A)  is more efficient than that of a monopolist.
B)  is less efficient than that of colluding oligopolists.
C)  is more efficient than that of a perfectly competitive outcome.
D)  is less efficient than that of a monopolist.E) None of the above
F) A) and B)

Question 11

Just like a monopolist,a monopolistically competitive firm:

Accepted Answer

A)  cannot sell more without dropping the price.
B)  is a price taker.
C)  sets the price according to marginal revenue and marginal cost;the demand curve doesn't matter.
D)  faces a perfectly elastic demand curve.E) All of the above
F) B) and D)

Question 12

Monopolistically competitive firms have an incentive to:

Accepted Answer

A)  engage in tactics for bringing in more customers.
B)  maximize profits.
C)  engage in tactics to differentiate their product.
D)  All of these statements are true.E) A) and D)
F) B) and D)

Question 13

One way for firms to analyze their choices in an oligopoly is by using:

Accepted Answer

A)  game theory.
B)  cost minimization theory.
C)  marginal revenue maximization strategy.
D)  None of these is an effective method for oligopolists.E) A) and B)
F) A) and C)

Question 14

Branding:

Accepted Answer

A)  can be a barrier to entry.
B)  guarantees high-quality products.
C)  promises the differences in products are completely perceived and not real.
D)  All of these statements are true.E) B) and D)
F) All of the above

Question 15

________________ and ______________ are often found together in a market.

Accepted Answer

A)  Monopolistic competition;oligopoly
B)  Perfect competition;oligopoly
C)  Monopoly;oligopoly
D)  Monopolistic competition;monopolyE) A) and C)
F) A) and D)

Question 16

The more firms there are in a market,the:

Accepted Answer

A)  larger will be the price effect of one firm's output decision.
B)  smaller will be the price effect of one firm's output decision.
C)  more collusion is likely to happen.
D)  None of these statements is true.E) All of the above
F) B) and C)

Question 17

The long run outcome of the monopolistically competitive firm:

Accepted Answer

A)  is efficient.
B)  maximizes total surplus.
C)  minimizes average total cost.
D)  None of these statements is true.E) None of the above
F) All of the above

Question 18

If a monopolistically competitive firm's demand curve is shifting left,it will stop shifting only when:

Accepted Answer

A)  firms stop leaving the industry.
B)  firms stop entering the industry.
C)  the firm raises its price.
D)  the firm lowers its price.E) A) and B)
F) A) and D)

Question 19

If a monopolistically competitive firm has a demand curve that is shifting left,it must be true that:

Accepted Answer

A)  it is currently earning positive economic profits.
B)  firms are entering the market.
C)  the selling price of the good is decreasing.
D)  All of these statements are true.E) A) and D)
F) C) and D)

Question 20

This prisoner's dilemma game shows the payoffs associated with two firms,A and B,in an oligopoly and their choices to either collude with one another or not. 
Given the payoffs in the matrix shown,Firm A:

Accepted Answer

A)  has a dominant strategy to compete.
B)  does not have a dominant strategy.
C)  has a dominant strategy to collude.
D)  None of these statements is true.E) A) and D)
F) A) and B)

Exam 15: Monopolistic Competition and Oligopoly

If a monopolistically competitive firm has a demand curve that is shifting left,it must be true that:

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One way government could try to increase the efficiency of monopolistically competitive markets is to:

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These are the cost and revenue curves associated with a monopolistically competitive firm. According to the graph shown,area B represents:

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Just like a monopolist,a monopolistically competitive firm:

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If a monopolistically competitive firm's demand curve is shifting left,it will stop shifting only when:

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The more firms there are in a market,the:

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This prisoner's dilemma game shows the payoffs associated with two firms,A and B,in an oligopoly and their choices to either collude with one another or not. According to the matrix shown,the firms:

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Like the monopolist,the monopolistically competitive firm:

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If a monopolistically competitive firm is earning profits in the short run:

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One way for firms to analyze their choices in an oligopoly is by using:

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________________ and ______________ are often found together in a market.

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One of the defining characteristics of an oligopoly is that:

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These are the cost and revenue curves associated with a firm. Assuming the firm in the graph is producing Q1 and charging P3,it is likely showing the cost and revenue curves of a firm in:

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This prisoner's dilemma game shows the payoffs associated with two firms,A and B,in an oligopoly and their choices to either collude with one another or not. Given the payoffs in the matrix shown,Firm A:

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A market with many firms that sell goods and services that are close substitutes for one another is called:

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The long run outcome of the monopolistically competitive firm:

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Branding:

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Monopolistically competitive firms have an incentive to:

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The outcome of a competitive oligopoly:

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If producers strongly object to banning advertising:

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__ and are often found together in a market.

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