Question 1

If firms in a monopolistically competitive market are earning negative economic profits,the demand curve of a single firm will likely:

Accepted Answer

A)  shift right,as other firms leave the industry.
B)  shift left,as other firms leave the industry.
C)  shift right,as other firms enter the industry.
D)  shift left,as other firms enter the industry.E) A) and B)
F) None of the above

Question 2

These are the cost and revenue curves associated with a firm. 
If the firm in the given graph were to produce Q1 and charge P3,the area B would represent:

Accepted Answer

A)  consumer surplus.
B)  producer surplus.
C)  deadweight loss.
D)  profits.E) A) and D)
F) B) and C)

Question 3

Offering goods that are similar to competitors' products but more attractive in some ways is called:

Accepted Answer

A)  product distinction.
B)  product differentiation.
C)  price-point pinning.
D)  deceptive advertising.E) A) and D)
F) A) and C)

Question 4

These are the cost and revenue curves associated with a firm. 
If the firm in the given graph were to produce Q1 and charge P3,the area C would represent:

Accepted Answer

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

Question 5

The welfare loss created by monopolistically competitive markets:

Accepted Answer

A)  is a hotly debated topic among economists.
B)  is usually not a huge concern to governments.
C)  is a huge concern to governments.
D)  has a widely accepted form of measurement.E) B) and D)
F) C) and D)

Question 6

Long-run economic profits are possible in which of the following market structures?

Accepted Answer

A)  Monopolistic competition
B)  Oligopoly
C)  Perfect competition
D)  Long-run profits are possible in all of these market structures.E) All of the above
F) C) and D)

Question 7

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

Accepted Answer

A)  the price is equal to the firm's marginal cost.
B)  the price is equal to the firm's average total cost.
C)  the price is the same as what a perfectly competitive firm's price would be.
D)  there is no deadweight loss.E) A) and D)
F) B) and C)

Question 8

These are the cost and revenue curves associated with a monopolistically competitive firm. 
According to the graph shown,the monopolistically competitive firm will produce Q1 and charge:

Accepted Answer

A)  P3 in the short run,and enjoy profits.
B)  P2 in the long run,and earn zero profits.
C)  P3 in the long run,and earn zero profits.
D)  P2 in the short run,and enjoy profits.E) A) and D)
F) All of the above

Question 9

A large difference between a monopolistically competitive firm and a monopoly is:

Accepted Answer

A)  the ability for competition to enter the market in the long run.
B)  the ability for competition to enter the market in the short run.
C)  only the monopolistically competitive firm is a price taker.
D)  only the monopolist can set his price equal to demand.E) None of the above
F) B) and C)

Question 10

Understanding the market structure you are operating in defines:

Accepted Answer

A)  the price you should set.
B)  what quantity to produce.
C)  how much your competitor's behavior will affect you.
D)  how advertising will be interpreted by consumers.E) B) and C)
F) A) and D)

Question 11

Knowing that Coke controls 80 percent of the cola market and Pepsi controls 20 percent,we can conclude the cola market is:

Accepted Answer

A)  perfectly competitive.
B)  monopolistically competitive.
C)  an oligopoly.
D)  a monopoly.E) None of the above
F) All of the above

Question 12

The two types of market structures that are imperfectly competitive are:

Accepted Answer

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

Question 13

In the long run,a profit-maximizing monopolistically competitive firm sells at a price that is:

Accepted Answer

A)  equal to average total cost,but higher than marginal cost.
B)  equal to marginal cost and marginal revenue.
C)  equal to average total cost,but lower than marginal cost.
D)  equal to demand,but higher than average total cost and marginal cost.E) B) and D)
F) C) and D)

Question 14

If a firm in a monopolistically competitive market has a demand curve that is shifting to the right,it will stop shifting when:

Accepted Answer

A)  the firm raises its price.
B)  the firm lowers its price.
C)  firms stop entering the market.
D)  firms stop leaving the market.E) All of the above
F) B) and C)

Question 15

Standardized products can appear:

Accepted Answer

A)  only in perfectly competitive markets.
B)  in perfectly competitive and monopolistically competitive markets.
C)  in monopolistically competitive and oligopoly markets.
D)  in perfectly competitive and oligopoly markets.E) A) and D)
F) B) and C)

Question 16

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,how much will be produced if both firms collude?

Accepted Answer

A)  50 million units
B)  65 million units
C)  70 million units
D)  85 million unitsE) All of the above
F) A) and D)

Question 17

A dominant strategy is:

Accepted Answer

A)  when one strategy is always the best for a player to choose,regardless of what other players do.
B)  when one strategy is chosen by a firm first and determines the best strategies of the other players that follow.
C)  when one strategy is chosen and cannot be changed without making at least one of the players worse off.
D)  None of these statements is true.E) All of the above
F) A) and B)

Question 18

Monopolistic competition describes a market with:

Accepted Answer

A)  many firms that sell goods and services that are similar,but slightly different.
B)  few firms that sell goods and services that are similar,but slightly different.
C)  many firms that sell goods and services that are standardized.
D)  few firms that sell goods and services that are standardized.E) All of the above
F) None of the above

Question 19

Collusion is:

Accepted Answer

A)  difficult to maintain since firms always have an incentive to renege.
B)  easy to maintain since firms always have an incentive to renege.
C)  difficult to maintain since firms rarely agree on the terms.
D)  easy to maintain since firms face similar cost curves.E) None of the above
F) B) and D)

Question 20

These are the cost and revenue curves associated with a firm. 
Assuming the firm in the graph shown is producing Q1 and charging P3 in the long run,it is likely showing the cost and revenue curves of a firm in which type of market?

Accepted Answer

A)  Perfect competition
B)  Monopolistic competition
C)  Oligopoly
D)  Any market structure could be represented hereE) A) and B)
F) A) and C)

Exam 15: Monopolistic Competition and Oligopoly

Knowing that Coke controls 80 percent of the cola market and Pepsi controls 20 percent,we can conclude the cola market is:

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If firms in a monopolistically competitive market are earning negative economic profits,the demand curve of a single firm will likely:

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Monopolistic competition describes a market with:

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A dominant strategy is:

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If a firm in a monopolistically competitive market has a demand curve that is shifting to the right,it will stop shifting when:

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These are the cost and revenue curves associated with a firm. If the firm in the given graph were to produce Q1 and charge P3,the area B would represent:

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Understanding the market structure you are operating in defines:

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Standardized products can appear:

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Offering goods that are similar to competitors' products but more attractive in some ways is called:

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These are the cost and revenue curves associated with a firm. If the firm in the given graph were to produce Q1 and charge P3,the area C would represent:

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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,how much will be produced if both firms collude?

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Long-run economic profits are possible in which of the following market structures?

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The two types of market structures that are imperfectly competitive are:

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

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The welfare loss created by monopolistically competitive markets:

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These are the cost and revenue curves associated with a monopolistically competitive firm. According to the graph shown,the monopolistically competitive firm will produce Q1 and charge:

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A large difference between a monopolistically competitive firm and a monopoly is:

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In the long run,a profit-maximizing monopolistically competitive firm sells at a price that is:

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These are the cost and revenue curves associated with a firm. Assuming the firm in the graph shown is producing Q1 and charging P3 in the long run,it is likely showing the cost and revenue curves of a firm in which type of market?

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Collusion is:

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