Question 1

There are generally,in most areas,a large number of qualified physicians whose services are highly personalized.In addition to price,factors such as age,sex,location,and personality influence the choice of physician.Thus,the market is best described as

Accepted Answer

A)  perfectly competitive.
B)  a differentiated oligopoly.
C)  a monopoly.
D)  monopolistically competitive.E) A) and D)
F) B) and D)

Question 2

To maximize sales revenue,an oligopolist will expand output until the elasticity of demand becomes

Accepted Answer

A)  negative.
B)  zero.
C)  one.
D)  infinite.E) A) and D)
F) A) and C)

Question 3

Oligopolists use advertising as a way of differentiating their products.

Accepted Answer

A) True 
 B)False

Question 4

The theory of the kinked demand curve is that

Accepted Answer

A)  although the firm sells a differentiated product, too many competitors exist to make it worthwhile speculating on responses to the firm's behavior.
B)  freedom of entry will reduce profits to zero.
C)  a firm's competitors will follow it in a price decrease but not follow it in a price increase.
D)  firms are all seeking the position of joint profit maximization.E) A) and B)
F) A) and C)

Question 5

Cartels usually succumb to divisive forces caused by

Accepted Answer

A)  limited information.
B)  members cheating by giving secret discounts.
C)  entry by new rivals seeking profits.
D)  insufficient profits compared to independent operations.E) C) and D)
F) All of the above

Question 6

Under monopolistic competition,profits cannot persist because new firms will be attracted to the market.

Accepted Answer

A) True 
 B)False

Question 7

In the long run,zero economic profit exists in monopolistic competition and perfect competition.

Accepted Answer

A) True 
 B)False

Question 8

An oligopolist cares very much about what other firms in her industry are doing.

Accepted Answer

A) True 
 B)False

Question 9

The Organization of Petroleum Exporting Countries is a

Accepted Answer

A)  professional trade association for oil companies.
B)  cartel.
C)  consortium for joint ventures in oil exploration.
D)  loose collection of democracies that promote international pipelines.E) A) and C)
F) A) and B)

Question 10

Figure 12-3
 
-Oligopolist A cuts price in an attempt to enlarge his share of the market.His competitors fail to retaliate with price cuts.In this case,in Figure 12-3,oligopolist A will move from point A to which point?

Accepted Answer

A)  B
B)  C
C)  D
D)  EE) A) and B)
F) A) and C)

Question 11

Explain the prisoner's dilemma case in game theory and its relevance to the maximin criterion.

Accepted Answer

The scenario is of two burglary suspects...

Question 12

When comparing industries,a monopolistically competitive industry is less competitive than an oligopoly.

Accepted Answer

A) True 
 B)False

Question 13

Cartels are relatively rare because

Accepted Answer

A)  they are illegal in some countries, including the United States.
B)  members find it difficult to agree on key decisions.
C)  members frequently have an incentive to cheat on the cartel.
D)  All of the above are correct.E) B) and C)
F) All of the above

Question 14

Sales maximization and profit maximization are essentially equivalent.

Accepted Answer

A) True 
 B)False

Question 15

In the past,the Department of Transportation allowed airline mergers that gave the merged airlines market shares of 79 and 82 percent,respectively,in their hub cities.The concept the DOT used to allow mergers where there was obvious concentration was most likely

Accepted Answer

A)  the good trust principle.
B)  contestability.
C)  the efficient market principle.
D)  the monopolistic competition principle.E) All of the above
F) B) and C)

Question 16

The force that leads to zero economic profits for monopolistically competitive firms in the long run is

Accepted Answer

A)  excess capacity.
B)  price wars among firms.
C)  entry by new firms.
D)  excessive advertising.E) None of the above
F) All of the above

Question 17

Which oligopoly model leads to price rigidity? Graphically show why.

Accepted Answer

The kinked demand curve model leads to p...

Question 18

Oligopoly occurs when

Accepted Answer

A)  a few firms sell many different products.
B)  a few firms sell to a few large buyers.
C)  many firms dominate a single market.
D)  a few firms dominate a single market.E) C) and D)
F) B) and D)

Question 19

Demand for a firm has been reliably measured as P = 100 - 5Q where Q is output and P is price in dollars.Total cost is in the table below.Complete the table and indicate the level of output and price which a profit-maximizing firm would select and indicate the same for a sales-maximizing firm.

Accepted Answer

\(\begin{array}{l}
\begin{array}{ccc}
\t...

Question 20

The demand curve for a monopolistic competitor is likely to be steeper than that of a monopolist.

Accepted Answer

A) True 
 B)False

Exam 12: Between Competition and Monopoly

Oligopoly occurs when

Correct AnswerverifiedShow Answer

Sales maximization and profit maximization are essentially equivalent.

Correct AnswerverifiedShow Answer

There are generally,in most areas,a large number of qualified physicians whose services are highly personalized.In addition to price,factors such as age,sex,location,and personality influence the choice of physician.Thus,the market is best described as

Correct AnswerverifiedShow Answer

Which oligopoly model leads to price rigidity? Graphically show why.

Correct AnswerverifiedThe kinked demand curve model leads to p...View AnswerShow Answer

In the past,the Department of Transportation allowed airline mergers that gave the merged airlines market shares of 79 and 82 percent,respectively,in their hub cities.The concept the DOT used to allow mergers where there was obvious concentration was most likely

Correct AnswerverifiedShow Answer

The demand curve for a monopolistic competitor is likely to be steeper than that of a monopolist.

Correct AnswerverifiedShow Answer

Demand for a firm has been reliably measured as P = 100 - 5Q where Q is output and P is price in dollars.Total cost is in the table below.Complete the table and indicate the level of output and price which a profit-maximizing firm would select and indicate the same for a sales-maximizing firm.

Correct Answerverified\(\begin{array}{l}\begin{array}{ccc}\t...View AnswerShow Answer

Oligopolists use advertising as a way of differentiating their products.

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The Organization of Petroleum Exporting Countries is a

Correct AnswerverifiedShow Answer

Figure 12-3 -Oligopolist A cuts price in an attempt to enlarge his share of the market.His competitors fail to retaliate with price cuts.In this case,in Figure 12-3,oligopolist A will move from point A to which point?

Correct AnswerverifiedShow Answer

In the long run,zero economic profit exists in monopolistic competition and perfect competition.

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Cartels are relatively rare because

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Cartels usually succumb to divisive forces caused by

Correct AnswerverifiedShow Answer

Explain the prisoner's dilemma case in game theory and its relevance to the maximin criterion.

Correct AnswerverifiedThe scenario is of two burglary suspects...View AnswerShow Answer

The force that leads to zero economic profits for monopolistically competitive firms in the long run is

Correct AnswerverifiedShow Answer

To maximize sales revenue,an oligopolist will expand output until the elasticity of demand becomes

Correct AnswerverifiedShow Answer

The theory of the kinked demand curve is that

Correct AnswerverifiedShow Answer

Under monopolistic competition,profits cannot persist because new firms will be attracted to the market.

Correct AnswerverifiedShow Answer

An oligopolist cares very much about what other firms in her industry are doing.

Correct AnswerverifiedShow Answer

When comparing industries,a monopolistically competitive industry is less competitive than an oligopoly.

Correct AnswerverifiedShow Answer

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The kinked demand curve model leads to p...
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\(\begin{array}{l}
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The scenario is of two burglary suspects...
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