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Monopolistic Competition and Oligopoly Multiple Choice Questions
CHAPTER 23
Monopolistic Competition and Oligopoly
Topic Question numbers
___________________________________________________________________________________________________
1. Monopolistic competition: definition; characteristics 1-17
2. Demand curve 18-24
3. Price-output behavior 25-78
4. Efficiency aspects 79-88
5. Oligopoly: definition; characteristics 89-112
6. Concentration ratio; Herfindahl Index 113-140
7. Game theory 141-156
8. Kinked-demand curve model 157-176
9. Collusion; cartels; price leadership 177-194
10. Advertising 195-200
11. Efficiency aspects 201-204
12. Review of four structures 205-226
Consider This 227-228
Last Word 229-233
True-False 234-258
___________________________________________________________________________________________________
Multiple Choice Questions
Monopolistic competition: definition; characteristics
1. Monopolistic competition means:
A) a market situation where competition is based entirely on product differentiation and advertising.
B) a large number of firms producing a standardized or homogeneous product.
C) many firms producing differentiated products.
D) a few firms producing a standardized or homogeneous product.
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2. Monopolistic competition is characterized by a:
A) few dominant firms and low entry barriers.
B) large number of firms and substantial entry barriers.
C) large number of firms and low entry barriers.
D) few dominant firms and substantial entry barriers.
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3. Under monopolistic competition entry to the industry is:
A) completely free of barriers.
B) more difficult than under pure competition but not nearly as difficult as under pure monopoly.
C) more difficult than under pure monopoly.
D) blocked.
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4. Monopolistic competition resembles pure competition because:
A) both industries emphasize nonprice competition.
B) in both instances firms will operate at the minimum point on their long-run average total cost curves.
C) both industries entail the production of differentiated products.
D) barriers to entry are either weak or nonexistent.
Ans:
Econ: 445-446 LO: 23-1 Micro: 211-212 Topic: 1 Type: Application of Concept
5. Which of the following is not a basic characteristic of monopolistic competition?
A) the use of trademarks and brand names C) recognized mutual interdependence
B) product differentiation D) a relatively large number of sellers
Ans:
Econ: 446 LO: 23-1 Micro: 212 Topic: 1 Type: Definition
6. Nonprice competition refers to:
A) competition between products of different industries, for example, competition between aluminum and steel in the manufacture of automobile parts.
B) price increases by a firm that are ignored by its rivals.
C) advertising, product promotion, and changes in the real or perceived characteristics of a product.
D) reductions in production costs that are not reflected in price reductions.
Ans:
Econ: 447 LO: 23-1 Micro: 213 Status: New Topic: 1 Type: Application of Concept
7. Which of the following is not characteristic of monopolistic competition?
A) relatively large numbers of sellers
B) production at minimum ATC in the long-run
C) product differentiation
D) relatively easy entry to the industry
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8. The restaurant, legal assistance, and clothing industries are each illustrations of:
A) countervailing power. C) monopolistic competition.
B) homogeneous oligopoly. D) pure monopoly.
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9. If the number of firms in a monopolistically competitive industry increases and the degree of product differentiation diminishes:
A) the likelihood of realizing economic profits in the long run would be enhanced.
B) individual firms would now be operating at outputs where their average total costs would be higher.
C) the industry would more closely approximate pure competition.
D) the likelihood of collusive pricing would increase.
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10. Economic analysis of a monopolistically competitive industry is more complicated than that of pure competition because:
A) of product differentiation and consequent product promotion activities.
B) monopolistically competitive firms cannot realize an economic profit in the long run.
C) the number of firms in the industry is larger.
D) monopolistically competitive producers use strategic pricing strategies to combat rivals.
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11. A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from:
A) the likelihood of collusion.
B) product differentiation.
C) high entry barriers.
D) mutual interdependence in decision making.
Ans:
Econ: 446 LO: 23-1 Micro: 212 Topic: 1 Type: Definition
12. Nonprice competition refers to:
A) low barriers to entry.
B) product development, advertising, and product packaging.
C) the differences in information which consumers have regarding various products.
D) an industry or firm in long-run equilibrium.
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13. A significant difference between a monopolistically competitive firm and a purely competitive firm is that the:
A) former does not seek to maximize profits.
B) latter recognizes that price must be reduced to sell more output.
C) former sells similar, although not identical, products.
D) former's demand curve is perfectly inelastic.
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14. A monopolistically competitive industry combines elements of both competition and monopoly. It is correct to say that the competitive element results from:
A) a relatively large number of firms and the monopolistic element from product differentiation.
B) product differentiation and the monopolistic element from high entry barriers.
C) a perfectly elastic demand curve and the monopolistic element from low entry barriers.
D) a highly inelastic demand curve and the monopolistic element from advertising and product promotion.
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15. Monopolistically competitive and purely competitive industries are similar in that:
A) both are assured of short-run economic profits.
B) both produce differentiated products.
C) the demand curves facing individual firms are perfectly elastic in both industries.
D) there are few, if any, barriers to entry.
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16. The monopolistic competition model predicts that:
A) allocative efficiency will be achieved.
B) productive efficiency will be achieved.
C) firms will engage in nonprice competition.
D) firms will realize economic profits in the long run.
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17. Use your basic knowledge and your understanding of market structures to answer this question. Which of the following companies most closely approximates a monopolistic competitor?
A) Subway Sandwiches B) Pittsburgh Plate Glass C) Ford Motor Company D) Microsoft.
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Demand curve
18. A monopolistically competitive firm has a:
A) highly elastic demand curve. C) highly inelastic demand curve.
B) perfectly inelastic demand curve. D) perfectly elastic demand curve.
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19. The monopolistically competitive seller's demand curve will become more elastic the:
A) more significant the barriers to entering the industry.
B) greater the degree of product differentiation.
C) larger the number of competitors.
D) smaller the number of competitors.
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20. The larger the number of firms and the smaller the degree of product differentiation the:
A) greater the divergence between the demand and the marginal revenue curves of the monopolistically competitive firm.
B) larger will be the monopolistically competitive firm's fixed costs.
C) less elastic is the monopolistically competitive firm's demand curve.
D) more elastic is the monopolistically competitive firm's demand curve.
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21. The demand curve of a monopolistically competitive producer is:
A) less elastic than that of either a pure monopolist or a pure competitor.
B) less elastic than that of a pure monopolist, but more elastic than that of a pure competitor.
C) more elastic than that of a pure monopolist, but less elastic than that of a pure competitor.
D) more elastic than that of either a pure monopolist or a pure competitor.
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22. A monopolistically competitive firm's marginal revenue curve:
A) is downsloping and coincides with the demand curve.
B) coincides with the demand curve and is parallel to the horizontal axis.
C) is downsloping and lies below the demand curve.
D) does not exist because the firm is a "price maker."
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23. In comparing the demand curve of a pure monopolist with that of a monopolistically competitive firm, we would expect the monopolistic competitor to have a:
A) perfectly elastic demand curve and the monopolist to have a perfectly inelastic demand curve.
B) generally more elastic demand curve.
C) generally less elastic demand curve.
D) demand curve whose elasticity coefficient is 1 at all possible prices.
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24. The price elasticity of a monopolistically competitive firm's demand curve varies:
A) inversely with the number of competitors and the degree of product differentiation.
B) directly with the number of competitors and the degree of product differentiation.
C) directly with the number of competitors, but inversely with the degree of product differentiation.
D) inversely with the number of competitors, but directly with the degree of product differentiation.
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Price-output behavior
25. In the short-run, a profit-maximizing monopolistically competitive firm sets it price:
A) equal to marginal revenue. C) equal to marginal cost.
B) above marginal cost. D) below marginal cost.
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26. In the long-run, a profit-maximizing monopolistically competitive firm sets it price:
A) above marginal cost. C) below marginal cost.
B) equal to marginal revenue. D) equal to marginal cost.
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27. In the short-run, the price charged by a monopolistically competitive firm attempting to maximize profits:
A) must be less than ATC.
B) must be more than ATC.
C) may be either equal to ATC, less than ATC, or more than ATC.
D) must be equal to ATC.
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28. In the long-run, the price charged by the monopolistically competitive firm attempting to maximize profits:
A) must be less than ATC.
B) must be more than ATC.
C) may be either equal to ATC, less than ATC, or more than ATC.
D) will be equal to ATC.
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29. Monopolistically competitive firms:
A) realize normal profits in the short run but losses in the long run.
B) incur persistent losses in both the short run and long run.
C) may realize either profits or losses in the short run, but realize normal profits in the long run.
D) persistently realize economic profits in both the short run and long run.
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30. The monopolistically competitive seller maximizes profit by producing at the point where:
A) total revenue is at a maximum. C) marginal revenue equals marginal cost.
B) average costs are at a minimum. D) price equals marginal revenue.
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31. In the long-run, the price charged by a monopolistically competitive firm seeking to maximize profit will:
A) be less than both MC and ATC. C) exceed ATC, but equal MC.
B) exceed MC, but equal ATC. D) exceed both MC and ATC.
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32. Which of the following is correct for a monopolistically competitive firm in long-run equilibrium?
A) MC = ATC B) MC exceeds MR C) P exceeds minimum ATC D) P = MC
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33. In the long-run, economic theory predicts that a monopolistically competitive firm will:
A) earn an economic profit. C) realize all economies of scale.
B) equate price and marginal cost. D) have excess production capacity.
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34. Excess capacity refers to the:
A) amount by which actual production falls short of the minimum ATC output.
B) fact that entry barriers artificially reduce the number of firms in an industry.
C) differential between price and marginal costs which characterizes monopolistically competitive firms.
D) fact that most monopolistically competitive firms encounter diseconomies of scale.
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Use the following to answer questions 35-38:
35. Refer to the above diagram for a monopolistically competitive firm in short-run equilibrium. This firm's profit-maximizing price will be:
A) $10. B) $13. C) $16. D) $19.
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36. Refer to the above diagram for a monopolistically competitive firm in short-run equilibrium. The profit-maximizing output for this firm will be:
A) 210. B) 180. C) 160. D) 100.
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37. Refer to the above diagram for a monopolistically competitive firm in short-run equilibrium. This firm will realize an economic:
A) loss of $320. B) loss of $480. C) profit of $280. D) profit of $600. E) profit of $360.
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38. Refer to the above diagram for a monopolistically competitive firm in short-run equilibrium. Assume the firm is part of an increasing-cost industry. In the long run firms will:
A) leave this industry, causing both demand and the ATC curve to shift upward.
B) enter this industry, causing demand to rise and the ATC curve to shift downward.
C) enter this industry, causing demand to fall and the ATC curve to shift upward.
D) enter this industry, causing both demand and the ATC curve to shift upward.
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39. In the short run a monopolistically competitive firm's economic profit:
A) will be maximized where price equals average total cost.
B) may be positive, zero, or negative.
C) are always positive.
D) will always be zero.
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Use the following to answer questions 40-42:
40. In short-run equilibrium, the monopolistically competitive firm shown above will set its price:
A) below ATC. B) above ATC. C) below MC. D) below MR.
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41. The monopolistically competitive firm shown in the above figure:
A) is in long-run equilibrium.
B) might realize an economic profit or a loss, depending on its choice of output level.
C) cannot operate profitably, at least in the short run.
D) can realize an economic profit.
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42. If all monopolistically competitive firms in the industry have profit circumstances similar to the firm shown above:
A) new firms will enter the industry. C) all firms will exit the industry.
B) some firms will exit the industry. D) no firms will exit the industry.
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Use the following to answer questions 43-45:
43. In short-run equilibrium, the monopolistically competitive firm shown in the above figure will set its price:
A) below ATC. B) above ATC. C) below MC. D) below MR.
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44. The monopolistically competitive firm shown in the above figure:
A) will realize allocative efficiency at its profit-maximizing output.
B) cannot operate at a loss.
C) is in long-run equilibrium.
D) is realizing an economic profit.
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45. If all monopolistically competitive firms in the industry have profit circumstances similar to the firm shown above:
A) new firms will enter the industry. C) some firms will exit the industry.
B) all firms will exit the industry. D) no firms will enter the industry.
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Use the following to answer questions 46-48:
46. Refer to the above diagrams, which pertain to monopolistically competitive firms. Short-run equilibrium entailing economic loss is shown by:
A) diagram a only. B) diagram b only. C) diagram c only. D) both diagrams a and c.
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47. Refer to the above diagrams, which pertain to monopolistically competitive firms. A short-run equilibrium entailing economic profits is shown by:
A) diagram a only. B) diagram b only. C) diagram c only. D) both diagrams b and c.
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48. Refer to the above diagrams, which pertain to monopolistically competitive firms. Long-run equilibrium is shown by:
A) diagram a only. B) diagram b only. C) diagram c only. D) both diagrams b and c.
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49. Which of the following is not characteristic of long-run equilibrium under monopolistic competition?
A) price equals minimum average total cost C) marginal cost equals marginal revenue
B) price is equal to average total cost D) price exceeds marginal cost
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Use the following to answer questions 50-52:
50. Refer to the above diagram for a monopolistically competitive firm. Long-run equilibrium price will be:
A) above A. B) EF. C) A. D) B.
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51. Refer to the above diagram for a monopolistically competitive firm. Long-run equilibrium output will be:
A) greater than E. B) E. C) D. D) C.
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52. Refer to the above diagram for a monopolistically competitive firm. If more firms would enter the industry and product differentiation would weaken:
A) resource misallocation would become more severe.
B) the demand curve would become more elastic.
C) equilibrium output would decline and equilibrium price would rise.
D) equilibrium output would decline and equilibrium price would fall.
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53. Long-run equilibrium for a monopolistically competitive firm where economic profits are zero results from:
A) rising marginal costs. C) relatively easy entry.
B) a perfectly elastic product demand curve. D) product differentiation and development.
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Use the following to answer questions 54-55:
Econ: 447 LO: 23-2 Micro: 213 Topic: 3 Type: Graphical
54. In long-run equilibrium, the firm shown in the diagram above will:
A) earn a normal profit. B) go bankrupt. C) incur a loss. D) realize an economic profit.
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Econ: 449 LO: 23-2 Micro: 215 Topic: 3 Type: Graphical
55. In long-run equilibrium, production for the firm shown in the diagram above is:
A) greater than would occur under pure competition.
B) less efficient than in a purely competitive market.
C) more efficient than in a purely competitive market.
D) optimally efficient.
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Econ: 447 LO: 23-2 Micro: 213 Topic: 3 Type: Application of Concept
56. When a monopolistically competitive firm is in long-run equilibrium:
A) production takes place where ATC is minimized.
B) marginal revenue equals marginal cost and price equals average total cost.
C) normal profit is zero and price equals marginal cost.
D) economic profit is zero and price equals marginal cost.
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Econ: 448 LO: 23-2 Micro: 214 Topic: 3 Type: Application of Concept
57. In the long run, new firms will enter a monopolistically competitive industry:
A) provided economies of scale are being realized.
B) even though losses are incurred in the short run.
C) until minimum average total cost is achieved.
D) until economic profits are zero.
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Econ: 448 LO: 23-2 Micro: 214 Topic: 3 Type: Application of Concept
58. If some firms leave a monopolistically competitive industry, the demand curves of the remaining firms will:
A) be unaffected. C) become more elastic.
B) shift to the left. D) shift to the right.
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Econ: 447 LO: 23-2 Macro: 213 Topic: 3 Type: Application of Concept
59. When a monopolistically competitive firm is in long-run equilibrium:
A) P = MC = ATC. C) MR > MC and P = minimum ATC.
B) MR = MC and minimum ATC > P. D) MR = MC and P > minimum ATC.
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Econ: 448 LO: 23-2 Micro: 214 Topic: 3 Type: Application of Concept
60. Other things equal, if more firms enter a monopolistically competitive industry:
A) the demand curves facing existing firms would shift to the right.
B) the demand curves facing existing firms would shift to the left.
C) the demand curves facing existing firms would become less elastic.
D) losses would necessarily occur.
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Econ: 448 LO: 23-2 Micro: 214 Topic: 3 Type: Application of Concept
61. Which of the following statements is correct?
A) Purely competitive firms, monopolistically competitive firms, and pure monopolies all earn zero economic profits in the long run.
B) Purely competitive firms, monopolistically competitive firms, and pure monopolies all earn positive economic profits in the long run.
C) In the long run purely competitive firms and monopolistically competitive firms earn zero economic profits, while pure monopolies may or may not earn economic profits.
D) Monopolistically competitive firms earn zero economic profits in both the short run and the long run.
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Econ: 447 LO: 23-2 Micro: 213 Topic: 3 Type: Application of Concept
62. For a monopolistically competitive firm in long-run equilibrium:
A) price will equal marginal cost.
B) price will equal average total cost.
C) marginal revenue will exceed marginal cost.
D) economic profits will be some positive amount.
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Econ: 448 LO: 23-2 Micro: 214 Topic: 3 Type: Application of Concept
63. In long-run equilibrium both purely competitive and monopolistically competitive firms will:
A) produce at minimum average total cost. C) achieve allocative efficiency.
B) earn economic profits. D) equate marginal cost and marginal revenue.
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Econ: 449 LO: 23-2 Micro: 215 Topic: 3 Type: Application of Concept
64. In long-run equilibrium monopolistic competition entails:
A) an efficient allocation of resources.
B) an overallocation of resources.
C) an underallocation of resources.
D) production at the minimum attainable average total cost.
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Econ: 448 LO: 23-2 Micro: 214 Topic: 3 Type: Application of Concept
65. Which of the following statements concerning a monopolistically competitive industry is correct?
A) If there are short-run losses, firms will leave the industry and the demand curves of the remaining firms will shift to the right.
B) If there are short-run economic profits, firms will enter the industry and the demand curves of existing firms will shift to the right.
C) If there are short-run losses, firms will leave the industry and the demand curves of the remaining firms will shift to the left.
D) If there are short-run economic profits, firms will leave the industry and the demand curves of the remaining firms will shift to the right.
Ans:
Use the following to answer questions 66-71:
Answer the next question(s) on the basis of the following demand and cost data for a specific firm:
Econ: 448 LO: 23-1 Micro: 214 Topic: 3 Type: Table
66. If columns (1) and (3) of the demand data shown above are this firm's demand schedule, the profit-maximizing level of output will be:
A) 12 units. B) 8 units. C) 10 units. D) 9 units.
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Econ: 448 LO: 23-1 Micro: 214 Topic: 3 Type: Table
67. If columns (1) and (3) of the demand data shown above are this firm's demand schedule, the profit-maximizing price will be:
A) $9. B) $7. C) $11. D) $6.
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Econ: 448 LO: 23-1 Micro: 214 Topic: 3 Type: Table
68. If columns (1) and (3) of the demand data shown above are this firm's demand schedule, economic profit will be:
A) $10. B) $19. C) $6. D) $8.
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Econ: 448 LO: 23-2 Micro: 214 Topic: 3 Type: Table
69. Suppose that entry into the industry changes this firm's demand schedule from columns (1) and (3) shown above to columns (2) and (3). Economic profit will:
A) fall by $10. B) fall to $6. C) increase by $10. D) decline to zero.
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Econ: 448 LO: 23-1 Micro: 214 Topic: 3 Type: Table
70. Suppose that entry into this industry changes this firm's demand schedule from columns (1) and (3) shown above to columns (2) and (3). We can conclude that this industry is:
A) a pure monopoly. C) a constant cost industry.
B) purely competitive. D) monopolistically competitive.
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Econ: 448 LO: 23-2 Micro: 214 Topic: 3 Type: Table
71. With the demand schedule shown above by columns (2) and (3), in long-run equilibrium:
A) price will equal average total cost. C) marginal cost will exceed price.
B) total cost will exceed total revenue. D) price will equal marginal revenue.
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Econ: 448 LO: 23-1 Micro: 214 Topic: 3 Type: Application of Concept
72. An important similarity between a monopolistically competitive firm and a purely competitive firm is that:
A) both face perfectly elastic demand schedules.
B) economic profit tends toward zero for both.
C) both realize productive efficiency.
D) both realize allocative efficiency.
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Econ: 448 LO: 23-1 Micro: 214 Topic: 3 Type: Application of Concept
73. An important similarity between a monopolistically competitive firm and a pure monopolist is that both:
A) realize an economic profit in the long run.
B) achieve allocative efficiency.
C) face demand curves which are less than perfectly elastic.
D) achieve productive efficiency.
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Econ: 448 LO: 23-1 Micro: 214 Topic: 3 Type: Application of Concept
74. The less elastic a monopolistic competitor's long-run demand curve, the:
A) less its excess capacity.
B) higher its price relative to that of a pure competitor having the same cost curves.
C) higher its long-run profits.
D) lower its average total cost at its equilibrium level of output.
Ans:
Use the following to answer questions 75-77:
Econ: 447 LO: 23-2 Micro: 213 Topic: 3 Type: Graphical
75. Refer to the above diagram for a monopolistically competitive producer. The firm is:
A) minimizing losses in the long run. C) minimizing losses in the short run.
B) realizing a normal profit in the long run. D) about to leave the industry.
Ans:
Econ: 447-449 LO: 23-1 Micro: 213-215 Topic: 3 Type: Graphical
76. Refer to the above diagram for a monopolistically competitive producer. This firm is experiencing:
A) a shortage of production capacity. C) excess capacity of CD.
B) excess capacity of DE. D) diseconomies of scale.
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Econ: 449 LO: 23-1 Micro: 215 Topic: 3 Type: Graphical
77. Refer to the above diagram for a monopolistically competitive producer. If this firm were to realize productive efficiency, it would:
A) also realize an economic profit. C) incur a loss.
B) also achieve allocative efficiency. D) have to produce a smaller output.
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Econ: 448 LO: 23-2 Micro: 214 Topic: 3 Type: Application of Concept
78. In the long run a monopolistically competitive firm:
A) earns an economic profit. C) produces where P = ATC.
B) produces where MR exceeds MC. D) achieves allocative efficiency.
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Efficiency aspects
Econ: 449 LO: 23-1 Micro: 215 Topic: 4 Type: Definition
79. Monopolistically competitive industries are inefficient because:
A) they realize diseconomies of scale.
B) advertising costs retard technological advance and product development.
C) monopolistically competitive industries are overpopulated with firms whose plants are underutilized.
D) monopolistically competitive sellers engage in misleading advertising.
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Econ: 450 LO: 23-1 Micro: 216 Topic: 4 Type: Application of Concept
80. The economic inefficiencies of monopolistic competition may be offset by the fact that:
A) advertising expenditures shift the average cost curve upward.
B) available capacity is fully utilized.
C) resources are optimally allocated to the production of the product.
D) consumers have a number of variations of the product from which to choose.
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Econ: 449 LO: 23-2 Micro: 215 Topic: 4 Type: Application of Concept
81. Inefficiencies occur under monopolistic competition because:
A) each firm's demand curve becomes more elastic as we move down the curve.
B) each firm's marginal revenue curve coincides with its demand curve.
C) each firm's downsloping demand curve is tangent to the ATC curve in the long run.
D) entry barriers greatly restrict the entry of new firms.
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Econ: 450 LO: 23-1 Micro: 216 Topic: 4 Type: Fact
82. A significant benefit of monopolistic competition compared with pure competition is:
A) less likelihood of X-inefficiency.
B) improved resource allocation.
C) greater product variety.
D) stronger incentives to achieve economies of scale.
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Econ: 450 LO: 23-1 Micro: 216 Topic: 4 Type: Application of Concept
83. Product variety is likely to be greater in:
A) monopolistic competition than in pure competition.
B) pure competition than in monopolistic competition.
C) homogenous oligopoly than in monopolistic competition.
D) homogenous oligopoly than in differentiated oligopoly.
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Econ: 450 LO: 23-1 Micro: 216 Topic: 4 Type: Application of Concept
84. Which of the following is correct?
A) The excess capacity problem diminishes as the monopolistically competitive firm's demand curve becomes less elastic.
B) The excess capacity problem means that monopolistically competitive firms typically produce at some point on the rising segment of their average total cost curve.
C) The greater the degree of product variation, the lesser is the excess capacity problem.
D) The greater the degree of product variation, the greater is the excess capacity problem.
Ans:
Econ: 449 LO: 23-2 Micro: 215 Topic: 4 Type: Application of Concept
85. In monopolistically competitive markets resources are:
A) overallocated because long-run equilibrium occurs where price exceeds marginal cost.
B) underallocated because long-run equilibrium occurs where price exceeds marginal cost.
C) overallocated because long-run equilibrium occurs where marginal cost exceeds price.
D) underallocated because long-run equilibrium occurs where marginal cost exceeds price.
Ans:
Econ: 449 LO: 23-2 Micro: 215 Topic: 4 Type: Application of Concept
86. In long-run equilibrium a monopolistically competitive producer achieves:
A) neither productive efficiency nor allocative efficiency.
B) both productive efficiency and allocative efficiency.
C) productive efficiency, but not allocative efficiency.
D) allocative efficiency, but not productive efficiency.
Ans:
Econ: 449 LO: 23-2 Micro: 215 Topic: 4 Type: Application of Concept
87. The less elastic a monopolistic competitor's long-run demand curve, the:
A) greater its excess capacity.
B) lower its price relative to that of a pure competitor having the same cost curves.
C) higher its long-run economic profit.
D) lower its average total cost at its equilibrium level of output.
Ans:
Econ: 449 LO: 23-2 Micro: 215 Status: New Topic: 4 Type: Application of Concept
88. The more elastic a monopolistic competitor's long-run demand curve, the:
A) greater its excess capacity.
B) the higher its price relative to that of a pure competitor having the same cost curves.
C) lower its long-run profit.
D) lower its average total cost at its profit maximizing level of output.
Ans:
Oligopoly: definition; characteristics
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Application of Concept
89. In which of these continuums of degrees of competition (highest to lowest) is oligopoly properly placed?
A) pure competition, oligopoly, pure monopoly, monopolistic competition
B) oligopoly, pure competition, monopolistic competition, pure monopoly
C) monopolistic competition, pure competition, pure monopoly, oligopoly
D) pure competition, monopolistic competition, oligopoly, pure monopoly
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Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Definition
90. The term oligopoly indicates:
A) a one-firm industry.
B) many producers of a differentiated product.
C) a few firms producing either a differentiated or a homogeneous product.
D) an industry whose four-firm concentration ratio is low.
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Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Application of Concept
91. In an oligopolistic market:
A) one firm is always dominant.
B) products may be standardized or differentiated.
C) the four largest firms account for 20 percent or less of total sales.
D) the industry is monopolistically competitive.
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Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Definition
92. Oligopolistic industries are characterized by:
A) a few dominant firms and substantial entry barriers.
B) a few dominant firms and no barriers to entry.
C) a large number of firms and low entry barriers.
D) a few dominant firms and low entry barriers.
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Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Application of Concept
93. The automobile, household appliance, and automobile tire industries are all illustrations of:
A) homogeneous oligopoly. C) pure monopoly.
B) monopolistic competition. D) differentiated oligopoly.
Ans:
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Complex Analysis
94. Use your basic knowledge and your understanding of market structures to answer this question. Which of the following companies most closely approximates a differentiated oligopolist in a highly concentrated industry?
A) Subway Sandwiches C) Ford Motor Company
B) Pittsburgh Plate Glass D) Kaiser Aluminum.
Ans:
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Complex Analysis
95. Use your basic knowledge and your understanding of market structures to answer this question. Which of the following companies most closely approximates a homogenous oligopolist in a highly concentrated industry?
A) Kellogg B) Pittsburgh Plate Glass C) Ford Motor Company D) Starbucks Coffee.
Ans:
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Application of Concept
96. The mutual interdependence that characterizes oligopoly arises because:
A) the products of various firms are homogeneous.
B) the products of various firms are differentiated.
C) a small number of firms produce a large proportion of industry output.
D) the demand curves of firms are kinked at the prevailing price.
Ans:
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Application of Concept
97. Barriers to entry in oligopolistic industries may consist of:
A) diseconomies of scale. C) ownership of essential resources.
B) diminishing returns. D) patent expirations.
Ans:
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Application of Concept
98. The copper, aluminum, cement, and industrial alcohol industries are examples of:
A) interproduct competition. C) monopolistic competition.
B) homogeneous oligopoly. D) differentiated oligopoly.
Ans:
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Application of Concept
99. Which of the following is the best example of oligopoly?
A) women's dress manufacturing C) restaurants
B) automobile manufacturing D) cotton farming
Ans:
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Application of Concept
100. If there are significant economies of scale in an industry, then:
A) a firm that is large may be able to produce at a lower unit cost than can a small firm.
B) a firm that is large will have to charge a higher price than will a small firm.
C) entry to that industry will be easy.
D) firms must differentiate their products to earn economic profits.
Ans:
Econ: 456 LO: 23-3 Micro: 222 Topic: 5 Type: Application of Concept
101. In which of the following market models do demand and marginal revenue diverge?
A) pure monopoly, oligopoly, and monopolistic competition
B) pure monopoly, oligopoly, and pure competition
C) pure monopoly only
D) oligopoly only
Ans:
Econ: 455 LO: 23-3 Micro: 221 Topic: 5 Type: Application of Concept
102. Oligopoly is difficult to analyze primarily because:
A) the number of firms is too large to make collusion understandable.
B) the price and output decisions of any one firm depend on the reactions of its rivals.
C) output may be either homogenous or differentiated.
D) neither allocative nor productive efficiency is achieved.
Ans:
Econ: 455 LO: 23-3 Micro: 221 Topic: 5 Type: Application of Concept
103. Oligopoly is more difficult to analyze than other market models because:
A) the number of firms is so large that market behavior cannot be accurately predicted.
B) the marginal cost and marginal revenue curves of an oligopolist play no part in the determination of equilibrium price and quantity.
C) of mutual interdependence and the fact that oligopoly outcomes are less certain than in other market models.
D) unlike the firms of other market models, it cannot be assumed that oligopolists are profit maximizers.
Ans:
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Application of Concept
104. Which of the following is an illustration of differentiated oligopoly?
A) the aluminum industry C) the soft drink industry
B) the steel industry D) retail stores in large cities
Ans:
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Application of Concept
105. Which of the following industries is an illustration of homogeneous oligopoly?
A) household laundry products B) personal computers C) aluminum D) the auto industry
Ans:
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Definition
106. Differentiated oligopoly exists where a small number of firms are:
A) producing goods that differ in terms of quality and design.
B) setting price and output collusively.
C) setting price and output independently.
D) producing virtually identical products.
Ans:
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Definition
107. Homogeneous oligopoly exists where a small number of firms are:
A) producing virtually identical products. C) setting price and output collusively.
B) setting price and output independently. D) producing differentiated products.
Ans:
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Definition
108. Oligopolistic industries:
A) are characterized by a relatively large number of small sellers.
B) may produce either standardized or differentiated products.
C) always produce differentiated products.
D) always produce standardized products.
Ans:
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Application of Concept
109. Which of the following is a unique feature of oligopoly?
A) mutual interdependence C) product differentiation
B) advertising expenditures D) nonprice competition
Ans:
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Application of Concept
110. Prices are likely to be least flexible:
A) in oligopoly. C) where product demand is inelastic.
B) in monopolistic competition. D) in pure competition.
Ans:
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Definition
111. Mutual interdependence means that each oligopolistic firm:
A) faces a perfectly elastic demand for its product.
B) must consider the reactions of its rivals when it determines its price policy.
C) produces a product identical to those of its rivals.
D) produces a product similar but not identical to the products of its rivals.
Ans:
Econ: 451 LO: 23-3 Micro: 217 Topic: 5 Type: Application of Concept
112. Clear-cut mutual interdependence with respect to the price-output policies exists in:
A) pure monopoly B) oligopoly C) monopolistic competition D) pure competition
Ans:
Concentration ratio; Herfindahl Index
Econ: 452 LO: 23-3 Micro: 218 Topic: 6 Type: Definition
113. Concentration ratios measure the:
A) geographic location of the largest corporations in each industry.
B) degree to which product price exceeds marginal cost in various industries.
C) percentage of total sales accounted for by the four largest firms in the industry.
D) number of firms in an industry.
Ans:
Econ: 452 LO: 23-3 Micro: 218 Topic: 6 Type: Application of Concept
114. If the four-firm concentration ratio for industry X is 80:
A) the four largest firms account for 80 percent of total sales.
B) each of the four largest firms accounts for 20 percent of total sales.
C) the four largest firms account for 20 percent of total sales.
D) the industry is monopolistically competitive.
Ans:
Econ: 452 LO: 23-3 Micro: 218 Topic: 6 Type: Application of Concept
115. An industry having a four-firm concentration ratio of 85 percent:
A) approximates pure competition. C) is a pure monopoly.
B) is monopolistically competitive. D) is an oligopoly.
Ans:
Econ: 452 LO: 23-3 Micro: 218 Topic: 6 Type: Application of Concept
116. As a general rule, oligopoly exists when the four-firm concentration ratio:
A) exceeds the Herfindahl index. C) is 40 percent or more.
B) is less than the Herfindahl index. D) is 15 percent or more.
Ans:
Econ: 452 LO: 23-3 Micro: 218 Topic: 6 Type: Application of Concept
117. Aluminum competes with copper in the market for power transmission lines. This illustrates:
A) mutual interdependence. C) interindustry competition.
B) differentiated oligopoly. D) homogeneous oligopoly.
Ans:
Econ: 453 LO: 23-3 Micro: 219 Topic: 6 Type: Application of Concept
118. The Herfindahl index for a pure monopolist is:
A) 100. B) 10,000. C) 100,000. D) 10.
Ans:
Econ: 453 LO: 23-3 Micro: 219 Topic: 6 Type: Application of Concept
119. Industries X and Y both have four-firm concentration ratios of 65 percent, but the Herfindahl index for X is 1,500 while that for Y is 2,000. These data suggest:
A) greater market power in X than in Y.
B) greater market power in Y than in X.
C) that X is more technologically progressive than Y.
D) that price competition is stronger in Y than in X.
Ans:
Econ: 452 LO: 23-3 Micro: 218 Topic: 6 Type: Application of Concept
120. Suppose that total sales in an industry in a particular year are $600 million and sales by the top four sellers are $200 million, $150 million, $100 million, and $50 million, respectively. We can conclude that:
A) price leadership exists in this industry.
B) the concentration ratio is more than 80 percent.
C) this industry is a differentiated oligopoly.
D) the firms in this industry face a kinked demand curve.
Ans:
Econ: 452 LO: 23-3 Micro: 218 Topic: 6 Type: Application of Concept
121. The four-firm sales concentration ratio for an industry measures the:
A) geographic concentration of firms.
B) extent to which the four largest firms dominate the production of a good.
C) percentage of the industry's capital facilities owned by the four largest firms.
D) degree of X-inefficiency in the industry.
Ans:
Econ: 452 LO: 23-3 Micro: 218 Topic: 6 Type: Application of Concept
122. Concentration ratios:
A) may overstate the degree of competition because they ignore imported products.
B) may overstate the degree of competition because interindustry competition is ignored.
C) may understate the degree of competition because they ignore imported products.
D) provide detailed insights as to the price and output behavior of firms which comprise the various industries.
Ans:
Econ: 452 LO: 23-3 Micro: 218 Topic: 6 Type: Application of Concept
123. If a product such as cement or bricks is costly to ship and, therefore, markets are very localized, the national concentration ratio for that industry:
A) will be greater than 50 percent.
B) may understate the degree of monopoly.
C) may overstate the degree of monopoly.
D) will yield an accurate impression of the degree of monopoly.
Ans:
Econ: 452 LO: 23-3 Micro: 218 Topic: 6 Type: Application of Concept
124. Concentration ratios may be inaccurate indicators of the degree of monopoly power in an industry because:
A) they include interindustry competition.
B) foreign competition is not considered.
C) they are only calculated for local and regional markets.
D) they do not distinguish between normal and economic profit.
Ans:
Econ: 452 LO: 23-3 Micro: 218 Topic: 6 Type: Application of Concept
125. If an industry evolves from monopolistic competition to oligopoly, we would expect:
A) the four-firm concentration ratio to decrease.
B) the four-firm concentration ratio to increase.
C) the four-firm concentration ratio to remain the same.
D) barriers to entry to weaken.
Ans:
Econ: 452 LO: 23-3 Micro: 218 Topic: 6 Type: Definition
126. Interindustry competition means that:
A) in oligopolistic industries a few large firms compete with one another in bidding down product pr
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Tutor has posted answer for $22.00. See answer's preview
************* *********** means: A)a market ********* ***** competition ** based ******** on product differentiation and advertising B)a ***** ****** ** ***** ********* a ************ ** *********** *************** ***** ********* ************** ************* *** ***** ********* * ************ ** *********** **************************** LO:23-1 ********* ******* ************************************** *********** ** ************* by ********* dominant ***** *** *** entry ***************** ****** ** firms *** *********** ***** barriers C)large number ** firms and *** ***** barriers D)few ******** ***** *** substantial ***** ***************************** LO:23-1 ********* Topic:1 ******************************* ************ competition ***** ** *** ******** ***************** **** ** **************** difficult than under **** competition *** *** nearly ** ********* ** under pure monopoly C)more difficult **** ***** **** **************************************** ******* Micro:212 ******* Type:ApplicationofConcept4Monopolistic competition ********* pure *********** because: A)both ********** emphasize ******** ***************** both ********* ***** **** ******* at *** minimum point on ***** long-run ******* total **** ************** industries ****** *** ********** ** differentiated ******************** to ***** *** either weak ** nonexistent Ans:D Econ:445-446 ******* ************* ******* ******************************* ** *** following ** not * ***** ************** of ************ ******************* use of ********** *** ***** ***************** ****** interdependence B)product ****************** ********** large ****** ** sellers Ans:B Econ:446 LO:23-1 Micro:212 ******* Type:Definition6Nonprice *********** ****** ****************** ******* ******** ** ********* ********** *** example competition ******* ******** and ***** in the *********** ** ********** ************** ********* ** * **** that *** ignored by its ********************* ******* ********* *** ******* in *** **** ** perceived characteristics ** a ********************* ** ********** costs **** *** not ********* ** ***** reductions Ans:C Econ:447 LO:23-1 ********* Status:New ******* ******************************* ** *** ********* ** *** ************** ** monopolistic ************************** ***** ******* ** ********************* ** ******* ATC ** *** ******************* ***************************** **** ***** ** *** industry Ans:B Econ:445 ******* Micro:211 ********** Topic:1 Type:ApplicationofConcept8The restaurant legal assistance *** ******** ********** *** each illustrations ********************* powerC)monopolistic ************************** *************** ***************************** ******* ********* ******* **************************** *** ****** ** firms ** * **************** *********** industry ********* *** the degree ** product *************** ****************** ********** of ********* ******** profits in *** **** run ***** ** enhanced B)individual ***** ***** *** be ********* ** ******* ***** their ******* ***** costs would ** higher C)the ******** would **** closely approximate **** ****************** ********** ** collusive pricing ***** ***************************** ******* ********* ********** ******* *********************************** ******** ** * monopolistically competitive ******** ** **** *********** than **** ** **** *********** ************** ******* differentiation *** ********** ******* promotion ****************************** *********** ***** ****** ******* an ******** ****** ** *** **** ********** ****** of ***** ** *** ******** ** ************************** competitive producers *** strategic pricing ********** ** ****** *************************** ******* ********* ******* **************************** **************** *********** industry ******** elements ** both *********** and ******** *** ******** ******* ******* ************ ********** of collusion B)product differentiation C)high entry ****************** *************** ** ******** *************************** ******* Micro:212 ******* Type:Definition12Nonprice *********** refers to: A)low ******** ** **************** *********** *********** *** ******* **************** *********** in information ***** consumers **** ********* various ************** ******** ** **** ** ******** equilibrium Ans:B Econ:445 ******* ********* ******* Type:ApplicationofConcept13A significant ********** between a monopolistically *********** **** *** * ****** competitive firm ** that ************** **** not **** ** ******** ***************** ********** **** ***** **** ** ******* ** **** **** output C)former ***** similar ******** not identical ******************** ****** ***** ** ********* ****************************** ******* ********* Topic:1 Type:ApplicationofConcept14A monopolistically competitive industry combines elements ** **** *********** *** ******** ** ** ******* ** say **** *** *********** element ******* ********** relatively large ****** of ***** and *** ************ ******* **** ******* ************************** differentiation *** the ************ ******* **** **** ***** ************* ********* elastic ****** ***** *** the ************ ******* **** *** entry barriers D)a ****** inelastic demand ***** *** *** ************ ******* **** advertising *** ******* ****************************** ******* Micro:212 ******* Type:ApplicationofConcept15Monopolistically *********** and ****** *********** industries *** similar ** ************* are assured ** ********* economic *************** produce differentiated *************** ****** ****** ****** individual ***** *** perfectly ******* ** both ******************* *** *** ** any ******** to ************************** LO:23-1 ********* ******* Type:ApplicationofConcept16The monopolistic competition ***** ******** ******************* ********** will be achieved B)productive ********** **** be ***************** will ****** ** ******** ******************** **** realize ******** profits ** *** **** ************************ ******* ********* ******* Type:ComplexAnalysis17Use your basic ********* *** **** understanding ** ****** ********** ** answer **** question Which of the following ********* **** ******* ************ * monopolistic *************** ****** ********** B) ********** ***** ***** C) **** ***** Company ** ************************ ***************** ******* ********* Topic:2 Type:Definition18A monopolistically *********** **** *** ************ ******* ****** ************* ********* ****** ****************** ********* demand **************** ******* ****** curve Ans:A Econ:448 ******* Micro:214 ******* Type:ApplicationofConcept19The monopolistically competitive ******** ****** ***** will become **** ******* ************ significant *** ******** ** ******** the ******************* *** ****** ** ******* ************************* *** ****** of ********************** the ****** of ******************************** ******* ********* Topic:2 ****************************** ****** *** ****** ** ***** *** *** ******* the degree ** ******* *************** *************** *** divergence ******* *** ****** *** *** ******** ******* curves ** *** **************** *********** firm B)larger **** ** *** **************** *********** ****** ***** ************* ******* ** *** **************** *********** ****** demand curve D)more ******* ** the **************** competitive ****** ****** curve Ans:D Econ:448 LO:23-1 ********* ******* ****************************** ****** ***** ** * **************** competitive ******** *********** ******* **** **** ** ****** * **** monopolist ** * **** competitor B)less ******* **** **** ** * **** ********** *** **** ******* than that ** * pure ****************** ******* than **** ** a **** ********** *** **** ******* than **** of * **** competitor D)more ******* **** **** ** ****** * **** ********** ** a pure ******************************* ******* ********* ******* **************************** **************** *********** firm's marginal revenue ************ *********** and ********* **** the demand ****************** **** the ****** ***** *** ** ******** ** the ********** axis C)is *********** *** **** ***** *** ****** ************* *** ***** ******* the **** ** a ****** *************************** ******* ********* Topic:2 Type:ApplicationofConcept23In ********* *** ****** ***** ** a **** monopolist **** that ** * monopolistically competitive **** ** would expect *** ************ ********** to have *************** ******* ****** ***** and *** ********** ** **** * perfectly ********* ****** ****************** **** ******* ****** curve C)generally **** elastic demand *************** curve ***** ********** coefficient ** * ** all ******** *************************** ******* ********* Topic:2 ****************************** ***** ********** ** * monopolistically *********** ****** demand curve ******************** with the ****** ** *********** *** the degree of product *************************** **** the ****** of *********** *** *** degree ** ******* differentiation C)directly **** *** ****** ** *********** *** inversely **** *** degree of product **************************** with the ****** of competitors but directly **** the ****** ** ******* ************************************ ******************** LO:23-1 ********* Status:New Topic:3 Type:ApplicationofConcept25In the short-run a profit-maximizing **************** *********** **** **** ** *************** ** ******** revenueC)equal to ******** cost B)above marginal *********** ******** cost Ans:C Econ:447 ******* Micro:213 ********** ******* Type:ApplicationofConcept26In *** long-run * ***************** monopolistically *********** **** sets it *************** marginal *********** ******** cost B)equal to ******** revenueD)equal ** ******** ************************* ******* Micro:213 ********** ******* ***************************** *** ********* *** price charged ** a monopolistically *********** firm ********** ** ******** **************** ** **** **** *********** ** more **** ********** be ****** ***** ** ATC **** than *** ** more than ATC D)must be ***** ** ************************ ******* Micro:214 ********** ******* ***************************** *** long-run *** ***** ******* by the monopolistically *********** **** ********** to maximize **************** be **** **** ATC B)must ** more **** ********** ** either ***** to ATC **** than ATC ** **** **** *********** ** ***** ** ************************ ******* ********* ******* Type:ApplicationofConcept29Monopolistically *********** ***************** ****** profits ** *** short *** *** ****** in the **** run B)incur ********** ****** in both *** ***** *** *** **** ********** ******* ****** ******* ** ****** ** *** ***** *** *** ******* ****** profits in *** **** ******************* ******* ******** ******* ** both *** short *** *** long ************************ ******* ********* Topic:3 Type:ApplicationofConcept30The **************** *********** seller maximizes ****** ** producing ** the point *************** ******* is ** * ***************** ******* ****** ******** cost B)average costs *** at * ************** ****** ******** revenue Ans:C Econ:447 ******* ********* ********** Topic:3 ***************************** *** ******** *** price ******* ** * monopolistically competitive firm ******* ** ******** ****** *********** **** **** **** MC *** *********** ATC *** ***** ************ MC but ***** *********** **** ** *** ************************ ******* ********* ******* ******************************** ** the following ** correct *** * monopolistically competitive **** ** long-run **************** MC * *** B) ** ******* MR ** * ******* ******* ATC D) * * *********************** ******* Micro:215 Topic:3 Type:ApplicationofConcept33In *** ******** ******** ****** predicts **** * monopolistically *********** **** ************* an economic *************** *** economies ** scale B)equate ***** *** marginal ********** ****** ********** ***************************** ******* ********* Topic:3 Type:Definition34Excess ******** ****** ** the: A)amount ** which ****** ********** falls ***** of *** minimum *** ************** that entry ******** ************ ****** *** ****** ** firms ** ** ************************ ******* price and ******** ***** which ************* **************** competitive ************* **** most **************** *********** ***** ********* diseconomies ** ******************* the ********* ** ****** ********* ********************** ******* Micro:213 ******* ********************* ** the ***** ******* for * **************** *********** **** in ********* *********** **** ****** ***************** ***** **** ******* *** ** *** ** $16 ** $19 Ans:C Econ:447 ******* Micro:213 ******* ********************* ** the above diagram *** * **************** *********** **** in ********* equilibrium *** ***************** ****** *** **** **** **** ******* *** B) *** C) *** ** ************************ ******* Micro:213 ********** Topic:3 ********************* to *** above ******* for a **************** *********** **** ** short-run *********** This **** will realize ** ************* loss ** $320 ** **** of $480 ** ****** ** $280 ** ****** ** **** ** profit ** ************************* LO:23-2 Micro:214 ******* Type:Graphical38Refer ** the ***** ******* for * monopolistically *********** **** in ********* *********** Assume *** **** is **** of an *************** ******** ** *** **** run firms ************** **** industry ******* both ****** *** *** ATC curve ** ***** *************** this ******** causing ****** ** **** *** the *** ***** ** shift ***************** **** industry ******* ****** ** fall *** the *** ***** ** ***** upward D)enter **** ******** causing **** ****** *** *** *** curve to ***** *************************** LO:23-1 ********* ******* Type:ApplicationofConcept39In *** ***** run a **************** competitive ****** ******** *************** ** ********* where ***** ****** ******* ***** *********** be positive zero or negative C)are ****** **************** always ** zero Ans:B Use *** following ** answer ********* ********************** LO:23-1 ********* ******* Type:Graphical40In ********* *********** *** **************** competitive **** shown ***** will *** *** ********** ***** *** B) ***** *** ** below MC ** below MR Ans:A Econ:447 ******* Micro:213 ******* ******************* monopolistically *********** **** ***** ** *** ***** ************* ** ******** ******************** ******* ** ******** ****** ** * **** ********* ** *** ****** ** ****** level C)cannot ******* profitably ** ***** in *** short run D)can ******* an ******** *************************** ******* Micro:214 ******* Type:Graphical42If *** monopolistically competitive ***** ** *** ******** **** ****** ************* ******* ** *** firm ***** ************* ***** **** ***** the industryC)all ***** **** exit *** **************** ***** **** **** *** industryD)no ***** **** **** *** ********************** *** following ** answer questions ********************** ******* ********* ******* ****************** short-run equilibrium *** monopolistically *********** **** ***** ** the ***** ****** **** set *** ********** ***** ATC B) ***** *** ** ***** ** ** ***** *********************** ******* ********* ******* Type:Graphical44The monopolistically competitive **** ***** in *** above *************** ******* ********** ********** at *** ***************** output B)cannot ******* ** * loss C)is ** long-run equilibrium D)is realizing an economic profit Ans:D Econ:448 ******* ********* Topic:3 ****************** all **************** competitive firms ** *** ******** **** ****** ************* ******* ** *** **** shown ************* ***** **** enter the ************** ***** **** exit the industry B)all ***** **** exit *** ************ ***** **** ***** *** ********************** the ********* ** ****** questions ********************** ******* Micro:213 Topic:3 Type:Graphical46Refer ** *** ***** diagrams ***** ******* ** **************** *********** ***** ********* *********** ********* ******** loss ** ***** by: A) ******* * **** ** ******* * only ** ******* c only D) both ******** * *** ********************** ******* Micro:213 Topic:3 Type:Graphical47Refer to *** ***** ******** which ******* ** **************** *********** ***** * ********* *********** ********* ******** ******* ** ***** ******* ******* * **** ** ******* * **** ** diagram * only D) **** diagrams * and ********************** LO:23-2 Micro:213 Topic:3 ********************* ** *** ***** ******** ***** ******* ** monopolistically competitive firms Long-run *********** ** shown ******* diagram * only ** ******* * **** ** ******* * **** ** **** ******** b *** c Ans:A Econ:447 ******* ********* Topic:3 Type:ApplicationofConcept49Which ** *** following ** *** characteristic ** ******** *********** ***** monopolistic ********************* equals ******* ******* ***** costC)marginal cost ****** marginal **************** ** ***** ** average ***** costD)price ******* ******** ****************** *** ********* ** ****** ********* 50-52: Econ:447 ******* ********* ******* Type:Graphical50Refer to *** ***** diagram *** * **************** competitive **** ******** *********** ***** will ******* ***** * ** ** ** * ** ********************** ******* Micro:213 ******* ********************* ** *** above ******* *** * **************** *********** **** ******** *********** output **** be: A) ******* **** E ** E ** * D) ********************** ******* ********* ******* Type:Graphical52Refer to *** ***** ******* for * **************** *********** **** ** **** ***** ***** enter *** industry *** ******* differentiation ***** ******************* ************* would become **** ************* demand ***** ***** become **** ********************** ****** would decline *** equilibrium ***** would rise D)equilibrium ****** ***** ******* *** *********** ***** ***** ************************* ******* ********* Topic:3 *********************************** *********** for * **************** *********** **** where economic ******* are zero ******* *************** ******** ***************** easy ********** ********* ******* ******* ****** ************** *************** and ************************* the ********* to ****** ********* 54-55: Econ:447 ******* Micro:213 ******* Type:Graphical54In ******** equilibrium *** firm shown ** *** diagram ***** will: A) **** * ****** ****** ** go ******** ** ***** * **** ** ******* ** ******** *************************** ******* Micro:215 ******* ****************** long-run equilibrium production *** *** **** shown ** *** ******* ***** ************** **** ***** ***** ***** pure ******************* ********* **** ** a ****** *********** market C)more efficient **** ** * ****** *********** ******************* ****************************** LO:23-2 ********* Topic:3 Type:ApplicationofConcept56When a **************** *********** **** ** ** long-run ************************** ***** place ***** *** ** ********************* ******* equals ******** cost *** ***** ****** ******* ***** ************** profit is zero *** price ****** ******** **************** ****** ** **** and ***** ****** marginal cost Ans:B Econ:448 ******* ********* ******* Type:ApplicationofConcept57In *** **** *** *** firms **** ***** a **************** competitive ********************* ********* ** scale *** ***** **************** ****** ****** are ******** ** the short ************ minimum ******* ***** **** is achieved D)until ******** ******* *** ************************* ******* ********* ******* ***************************** **** firms leave * **************** *********** ******** the demand curves ** *** remaining ***** *********** ****************** more **************** ** the *********** to *** ************************** ******* ********* ******* ******************************* a monopolistically *********** firm ** ** ******** equilibrium: A)P * ** = ******* **** MC *** * * ******* ********* = MC *** ******* *** **** PD)MR * ** *** P **** ******* ************************ ******* ********* Topic:3 ******************************** ****** equal ** **** firms ***** * monopolistically *********** **************** ****** curves facing ******** ***** ***** ***** ** *** ************ ****** curves ****** ******** ***** ***** ***** to the *********** demand curves facing ******** ***** ***** become less elastic D)losses ***** *********** ************************** LO:23-2 Micro:214 Topic:3 Type:ApplicationofConcept61Which ** the following ********** is ****************** *********** firms **************** *********** firms *** **** ********** all **** **** ******** ******* ** *** **** ************* *********** ***** **************** *********** ***** *** pure ********** *** **** ******** ******** ******* ** *** **** ********* *** **** run purely *********** ***** and monopolistically *********** ***** **** **** ******** profits ***** **** monopolies *** ** *** *** earn ******** *************************** competitive ***** **** zero economic ******* ** **** *** ***** *** *** the **** ************************ ******* ********* Topic:3 ****************************** * **************** competitive **** in ******** equilibrium: A)price **** ***** ******** ************* **** ***** ******* ***** **************** revenue **** exceed ******** **************** profits **** be **** ******** amount Ans:B Econ:448 ******* ********* ******* ***************************** ******** *********** **** ****** *********** *** **************** *********** ***** **************** ** ******* ******* ***** ************* allocative ****************** ******** profitsD)equate ******** **** *** marginal **************************** ******* Micro:215 ******* ***************************** ******** *********** ************ competition entails: A)an efficient ********** ** *************** ************** ** resources C)an *************** ** resources D)production ** the ******* attainable ******* total cost Ans:A Econ:448 LO:23-2 ********* ******* ******************************** ** *** following ********** ********** * **************** *********** ******** ** ************** ***** *** short-run ****** ***** **** ***** *** ******** and the ****** ****** of *** remaining ***** will ***** to *** *********** ***** are ********* economic profits ***** **** ***** *** ******** *** *** demand ****** ** ******** firms **** ***** to *** right C)If ***** *** short-run ****** ***** **** ***** *** ******** *** the ****** ****** ** *** remaining firms **** ***** ** *** ********** ***** *** ********* ******** ******* ***** **** ***** the ******** and the ****** ****** ** the remaining ***** will ***** ** *** ******************* *** following to ****** questions ************** *** next question(s) on the basis ** *** ********* ****** and cost data for * ******** ********************* ******* Micro:214 ******* Type:Table66If columns *** and *** of *** ****** **** shown ***** *** **** ****** demand schedule *** ***************** ***** ** ****** **** ******* 12 ***** ** * ***** ** ** units D) 9 ************************** ******* Micro:214 ******* ************** columns *** *** *** ** *** ****** data ***** ***** are this ****** ****** ******** the ***************** ***** **** ******* $9 B) $7 ** *** ** *********************** LO:23-1 ********* Topic:3 ************** ******* *** *** *** ** *** ****** data ***** above *** this ****** demand schedule ******** ****** will ******* *** ** *** C) ** D) $8 Ans:D Econ:448 ******* ********* ******* Type:Table69Suppose that ***** **** *** ******** ******* **** ****** demand ******** **** columns *** *** (3) ***** ***** ** ******* *** *** *** ******** profit will: A) **** ** *** ** **** ** ** ** ******** ** $10 ** decline ** zero Ans:D Econ:448 ******* ********* Topic:3 ******************* that ***** **** **** ******** ******* **** ****** ****** schedule from ******* (1) *** *** ***** above to columns *** *** (3) ** *** ******** **** **** industry ******** pure *********** ******** **** ****************** ***************************** ******************************** LO:23-2 ********* ******* **************** *** ****** ******** ***** ***** by columns (2) and *** ** long-run ********************* **** ***** ******* ***** ************** **** **** ****** ************** **** **** ****** ***** ************** will ***** ******** **************************** ******* ********* ******* ***************************** ********* ********** ******* * **************** competitive **** *** a ****** competitive **** is ************* **** perfectly elastic ****** schedules B)economic profit ***** toward zero for ************ ******* productive ****************** ******* ********** ******************************* LO:23-1 Micro:214 Topic:3 ***************************** ********* ********** ******* a **************** *********** firm and * pure ********** ** **** both: A)realize ** ******** ****** ** *** long run B)achieve allocative efficiency C)face ****** ****** which *** **** **** perfectly elastic D)achieve ********** ******************************* ******* ********* ******* Type:ApplicationofConcept74The **** ******* * monopolistic ************ ******** demand ***** ************ *** ****** capacity B)higher its price ******** ** that of * **** ********** having *** **** **** **************** *** ******** **************** *** ******* ***** cost at its *********** ***** ** ******************** *** ********* ** ****** ********* ********************** ******* Micro:213 ******* ********************* ** the ***** ******* *** * **************** *********** producer *** **** ***************** losses ** *** **** runC)minimizing losses in *** ***** **************** * ****** ****** ** *** long ********** to ***** *** ********************************* ******* ************* ******* ********************* ** *** ***** ******* for * monopolistically competitive producer This firm is ****************** shortage ** ********** capacityC)excess capacity of ************ ******** ** **************** of ************************** ******* ********* ******* ********************* to *** ***** diagram *** * monopolistically *********** ******** If **** **** were ** ******* ********** efficiency ** ************** ******* ** ******** profitC)incur a ************ achieve ********** **************** to produce * ******* *************************** LO:23-2 ********* ******* ***************************** the **** *** * **************** *********** ************** ** economic **************** where * * *************** ***** ** ******* MCD)achieves ********** ******************************* aspects Econ:449 ******* ********* ******* ********************************* competitive ********** *** *********** **************** realize ************ ** ******************** costs ****** technological advance *** ******* ******************************* *********** industries *** ************* **** ***** ***** ****** *** underutilized D)monopolistically *********** ******* ****** ** ********** ******************************** LO:23-1 ********* ******* ****************************** ******** ************** ** ************ competition may ** ****** ** *** **** that: A)advertising ************ ***** the ******* cost curve upward B)available capacity ** ***** utilized C)resources *** ********* ********* ** *** production ** *** ******************** **** * ****** ** ********** ** the product **** ***** ** choose Ans:D Econ:449 ******* ********* ******* Type:ApplicationofConcept81Inefficiencies occur ***** monopolistic *********** **************** ****** ****** curve ******* **** elastic ** we move **** the ************* ****** marginal ******* ***** coincides with *** ****** ************* firm's *********** ****** ***** ** tangent ** the *** ***** in the **** run D)entry barriers ******* ******** *** ***** ** *** firms Ans:C Econ:450 LO:23-1 ********* ******* ************ significant benefit ** ************ *********** ******** **** pure *********** is: A)less ********** of ************************** resource ********************* ******* ******************* ********** ** ******* economies ** scale Ans:C Econ:450 ******* Micro:216 ******* ********************************** variety ** likely to ** ******* ******************* *********** **** in **** ******************* *********** **** ** ************ ************************* ********* **** ** ************ competition D)homogenous ********* **** in ************** oligopoly Ans:A Econ:450 ******* Micro:216 Topic:4 ******************************** ** *** ********* ** correct? A)The excess ******** problem ********** ** *** **************** *********** ****** ****** ***** becomes **** ************** ****** capacity ******* ***** **** monopolistically *********** ***** ********* produce at **** ***** on *** ****** ******* of ***** average ***** **** ************ ******* the degree ** ******* ********* *** lesser is *** ****** ******** ************** greater *** ****** ** product variation *** ******* ** *** ****** ******** **************************** ******* ********* ******* Type:ApplicationofConcept85In **************** competitive ******* resources ********************* ******* ******** equilibrium occurs ***** ***** ******* ******** ********************** ******* ******** equilibrium occurs where price ******* ******** cost C)overallocated ******* ******** equilibrium ****** ***** marginal cost exceeds *********************** ******* ******** equilibrium occurs ***** marginal **** exceeds ************************** LO:23-2 ********* ******* Type:ApplicationofConcept86In long-run *********** * **************** *********** ******** ******************** productive ********** nor ********** efficiency B)both productive ********** *** ********** efficiency C)productive ********** *** *** ********** efficiency D)allocative ********** *** *** ********** efficiency Ans:A Econ:449 ******* ********* ******* ****************************** **** ******* a ************ ************ ******** demand ***** *************** *** excess capacity B)lower *** ***** ******** ** **** ** * **** competitor having *** **** **** **************** *** ******** ******** profit D)lower *** ******* ***** **** at *** *********** ***** of output Ans:A Econ:449 ******* ********* ********** ******* Type:ApplicationofConcept88The more ******* * ************ competitor's ******** ****** ***** *************** its excess capacity B)the ****** *** price ******** ** that ** a **** competitor ****** *** same **** *************** *** ******** *************** *** ******* total cost at *** profit ********** ***** ** output Ans:D Oligopoly: definition; *************************** LO:23-3 ********* ******* Type:ApplicationofConcept89In ***** ** ***** continuums ** ******* ** competition ******** ** ******* is ********* properly *************** *********** ********* **** ******** monopolistic ************************ **** *********** ************ *********** pure ************************ *********** **** *********** **** ******** oligopoly D)pure competition ************ *********** ********* **** monopoly Ans:D Econ:451 ******* ********* ******* ******************** term oligopoly *************** ******** **************** ********* of * differentiated ************ *** ***** producing ****** * ************** or * *********** ************* industry ***** ********* concentration ***** ** ************************ LO:23-3 ********* ******* ***************************** ** oligopolistic market: A)one **** ** always ******************** may ** standardized ** ********************* four ******* ***** account for ** ******* ** less ** ***** ************ ******** ** monopolistically ******************************** ******* ********* Topic:5 ****************************** ********** are characterized ******** few ******** ***** and substantial ***** ************* *** dominant ***** *** ** barriers ** ********** ***** ****** ** firms *** *** ***** ************* *** ******** ***** and *** ***** barriers Ans:A Econ:451 LO:23-3 ********* ******* ****************************** automobile ********* appliance *** ********** **** ********** *** all ************* ****************** *************** ************************ *************************** ****************************** LO:23-3 ********* ******* Type:ComplexAnalysis94Use your basic ********* *** **** ************* ** ****** structures ** answer **** question ***** ** *** ********* ********* **** ******* approximates * ************** oligopolist ** a ****** ************ industry? A)Subway **************** Motor Company B)Pittsburgh Plate GlassD)Kaiser ***************************** ******* ********* Topic:5 ************************* your basic ********* *** **** ************* of market ********** ** ****** **** ******** Which ** *** following companies **** ******* approximates * ********** oligopolist ** a highly ************ ************* ******* ** Pittsburgh Plate ***** ** **** ***** ******* ** ********* *************************** ******* Micro:217 Topic:5 Type:ApplicationofConcept96The ****** interdependence **** ************* ********* ****** because: A)the ******** of ******* firms are ****************** ******** of ******* ***** *** ******************* ***** ****** of ***** ******* * ***** proportion ** ******** ************* ****** ****** of ***** *** kinked at *** prevailing ************************** ******* ********* Topic:5 *********************************** ** ***** in oligopolistic ********** *** consist of: A)diseconomies of **************** ** ********* ************************ returnsD)patent ******************************** ******* ********* ******* ****************************** ****** ******** cement *** ********** ******* ********** *** examples of: A)interproduct ************************* ************************** oligopolyD)differentiated oligopoly Ans:B Econ:451 ******* ********* ******* ******************************** of *** ********* ** *** **** ******* ** ********************* ***** **************************************** manufacturingD)cotton **************************** LO:23-3 Micro:217 ******* Type:ApplicationofConcept100If ***** *** *********** economies of ***** ** ** ******** ********** **** **** is ***** *** ** **** ** ******* at * ***** **** cost **** can a small ********* **** that ** large **** **** ** ****** a ****** ***** **** **** * ***** ************* ** **** industry will ** easy D)firms **** ************* their ******** ** **** ******** **************************** LO:23-3 ********* ******* ****************************** ***** ** *** following ****** models do demand *** ******** ******* **************** ******** oligopoly *** ************ ******************* ******** oligopoly *** **** ******************* ******** ***************** ************************* LO:23-3 Micro:221 ******* ************************************* is ********* ** ******* ********* because: A)the number ** ***** is *** ***** ** make ********* ********************* ***** *** ****** ********* ** *** one **** ****** ** *** ********* ** *** **************** *** ** ****** ********** ** ************************* allocative nor productive efficiency is achieved Ans:B Econ:455 ******* Micro:221 ******* Type:ApplicationofConcept103Oligopoly is **** ********* ** ******* than ***** ****** ****** because: A)the ****** ** ***** ** ** ***** **** market behavior cannot be accurately **************** ******** cost *** ******** ******* ****** ** ** oligopolist play ** **** in *** ************* of *********** price and quantity C)of ****** *************** *** *** **** **** ********* outcomes *** **** ******* **** ** ***** ****** models D)unlike *** ***** ** other market ****** ** cannot ** ******* that oligopolists are ****** maximizers Ans:C Econ:451 ******* ********* ******* ********************************* of *** following ** ** illustration ** ************** oligopoly? A)the ******** industryC)the **** ***** industry B)the steel industryD)retail ****** ** ***** *************************** LO:23-3 ********* ******* ********************************* ** *** following ********** ** ** illustration ** *********** oligopoly? A) ********* ******* ******** ** ******** ********* ** ******** ** the auto industry Ans:C Econ:451 LO:23-3 ********* Topic:5 Type:Definition106Differentiated oligopoly ****** ***** * ***** number ** firms ***************** ***** **** differ ** ***** ** ******* *** ***************** ***** and ****** collusively C)setting ***** *** ****** ************************** virtually identical products Ans:A Econ:451 ******* ********* ******* ***************************** ********* exists where * ***** ****** ** ***** ***************** ********* ********* ***************** price *** ****** ********************** price *** ****** ************************ ************** ***************************** ******* Micro:217 ******* ******************************* ****************** ************* ** * relatively ***** number ** small ************** produce ****** ************ ** ************** ****************** ******* ************** ****************** ******* ************ products Ans:B Econ:451 LO:23-3 ********* ******* ********************************* ** *** following ** a ****** feature ** ******************** ************************ ****************************** ********************** ******************************** LO:23-3 Micro:217 ******* Type:ApplicationofConcept110Prices *** likely ** ** ***** *************** **************** ******* ****** is *************** ************ *************** pure ******************************** LO:23-3 Micro:217 ******* Type:Definition111Mutual *************** ***** that each ************* ************** * ********* ******* ****** for *** product B)must ******** the ********* of its rivals **** ** ********** its ***** ****************** * ******* ********* to ***** ** its ****************** * ******* similar *** *** identical to *** ******** of its *************************** LO:23-3 Micro:217 ******* ************************************* ****** *************** **** respect to *** ************ ******** ****** ******* **** monopoly ** oligopoly ** monopolistic *********** ** pure *********************************** ****** ********** ***************** LO:23-3 Micro:218 ******* Type:Definition113Concentration ratios ******* ****************** location ** the largest ************ ** **** industry B)degree ** which product price ******* marginal **** in ******* ************************ ** ***** sales ********* for by *** **** largest ***** in the industry D)number of firms in ** industry Ans:C Econ:452 ******* ********* ******* Type:ApplicationofConcept114If *** ********* ************* ***** *** ******** * ** ********** four largest ***** account *** ** ******* ** ***** ************* ** *** **** ******* ***** ******** *** ** ******* ** ***** sales C)the **** ******* ***** ******* *** ** ******* ** ***** ************ ******** ** **************** ******************************** ******* ********* ******* ****************************** ******** ****** * four-firm ************* ***** ** ** ************************ **** *************** * pure ************** **************** *************** ** ****************************** ******* ********* ******* Type:ApplicationofConcept116As a ******* **** ********* ****** **** *** ********* concentration ***************** the ********** ********* ** ******* or ********** **** than *** Herfindahl ********* ** ******* ** ************************* LO:23-3 Micro:218 ******* ************************************ competes **** ****** ** *** market *** power transmission ***** This illustrates: A)mutual ****************************** competition B)differentiated ********************** ****************************** ******* ********* ******* ******************************* ********** ***** for * **** ********** ******* 100 B) ***** ** ****** ** *********************** ******* ********* ******* ************************************** * and * **** have ********* concentration ratios ** ** ******* but the ********** ***** *** X ** **** ***** **** *** * ** **** ***** **** suggest: A)greater ****** ***** in * **** ** ************ market ***** ** * **** ** ********* * ** **** *************** *********** than ********* ***** *********** ** ******** ** * **** ** ********************** ******* ********* ******* Type:ApplicationofConcept120Suppose **** ***** ***** ** ** ******** ** * ********** **** *** **** million *** ***** by the *** four ******* *** **** ******* $150 million **** million *** *** million ************ ** *** conclude that: A)price ********** ****** ** this *************** ************* ***** ** **** than ** *************** ******** ** * ************** **************** ***** ** this industry **** * ****** ****** ************************** LO:23-3 ********* ******* ******************************* ********* ***** ************* ratio for ** industry ******** ****************** ************* of *************** ** ***** *** four ******* firms dominate the ********** ** * good C)percentage ** *** ********** ******* ********** ***** by the **** ******* *************** ** X-inefficiency ** *** ***************************** ******* ********* Topic:6 ***************************************** ratios: A)may ********* *** degree of *********** because **** ****** imported *************** ********* *** ****** of competition ******* interindustry *********** ** ************** understate the degree ** *********** because **** ****** imported ******************* ******** ******** ** to *** price *** ****** ******** ** ***** ***** comprise the ******* industries Ans:C Econ:452 ******* ********* Topic:6 ****************************** * ******* **** ** ****** or ****** ** ****** ** **** *** ********* markets *** **** ********* *** ******** concentration ***** for **** industry: A)will ** greater **** ** ************** ********** *** degree ** monopoly C)may ********* the degree ** **************** ***** an ******** impression ** *** ****** ** ***************************** LO:23-3 ********* Topic:6 ***************************************** ****** may be ********** ********** ** *** degree of ******** power ** ** industry **************** include ************* ********************** *********** ** not ****************** are **** calculated for ***** *** ******** *************** ** *** *********** between ****** and economic *************************** ******* ********* ******* ****************************** ** ******** ******* **** ************ *********** ** ********* we ***** ************** ********* concentration ***** to *************** four-firm concentration ratio to *************** ********* ************* ratio ** ****** *** same D)barriers ** entry ** *************************** ******* ********* Topic:6 Type:Definition126Interindustry competition ***** *********** oligopolistic ********** * few ***** ***** ******* **** one ******* in ******* down ******* *********** some ******* *** ********* ** * ********** product ***** **** *********** **** products ******** ** ***** industries C)firms **** sell * ******* ** *** ***** ** ********** are ***** **** ***** that *** *** product ** *** next ***** ** **************** **** ********** ***** *** ******* a ****** ** ***** ********* identical ***************************** LO:23-3 ********* Topic:6 ****************************** *** *** *** ******* ** *** ****** ****** of **** **** ** an ******** (as ******** by ******* ** ******** ****** *** *** calculating: A)the ********* ************* ratioC)the ****** ** collusion B)the ********** ********** Lerner ************************** LO:23-3 ********* ******* ******************************* Herfindahl ****************** *** ****** ******* ** ************* ******************* another **** for *** ********* ************* ************** us ******* oligopolistic ***** are ******** ** ****************** much ******* ****** to ****** ***** than to ******* ***** ** ** ***************************** ******* ********* ******* Type:ApplicationofConcept129If the four-firm concentration ratio in ** ************* ******** ** 100 ******* *** **** **** *** ** ***** ********** ** sales the ********** ***** ******* 10000 B) 2500 ** **** D) ************************* LO:23-3 ********* ******* ********************************** six ***** comprising an ******** **** ****** shares of ** ** 10 ** ** *** ** ******* *** Herfindahl Index *** this ******** ******* 2000 ** **** ** **** ** *********************** ******* ********* Topic:6 Type:ApplicationofConcept131Suppose the Herfindahl ******* *** ********** * B *** * *** 1200 **** *** 7500 ************ ***** **** imply *************** ***** ** ******** ** industry *********** power ** ******** ** industry *********** ***** is ******** ** ******** ************* * ** **** ************ **** ******** *************** the following to ****** ********* 132-136: Econ:452 ******* ********* ******* **************** ******** ************* ** *** ***** *********** is: A)an oligopolyC)a monopolistically competitive ************* ****** *********** *********** **** monopoly Ans:A Econ:452 ******* Micro:218 ******* **************** ********* ************* ***** *** the above ******** ********** percent B)indeterminate ***** ** ***** **** which **** ***** *** included C)80 percent D)20 **************************** ******* ********* ******* Type:Table134The ********** ***** *** the ***** ******** is: A) **** ** **** ** ***** ** *********************** ******* Micro:219 Topic:6 *************** all the firms ** *** ***** ******** merged into * ****** **** *** ********** Index ***** *********** *** ** **** ** ***** ** ******************************* ******* ************* Status:New ******* ******************** **** ***** ** **** industry ************ split ** such **** there **** *** ***** each **** a *** ******* ****** ***** The four-firm ************* ratio and *** Herfindahl ***** ************ would ******* 100 ******* and ***** ** * percent and * ** *** ******* *** 16 ** 4 ******* *** 100 Ans:D Use the ********* ** ****** ********* ************************ ******* ********* Topic:6 ********************************* ** *** ***** **** *** four-firm ************* ***** *** **** ******** ********* ************* ************** ************************ because ** ***** **** ***** four ***** are included Ans:B Econ:453 ******* ********* ******* ********************************* to the ***** **** The ********** ***** *** this ******** ******* 95 ** **** ** **** ** 2950 Ans:D Econ:452 LO:23-3 ********* Topic:6 Type:ApplicationofConcept139Refer ** *** ***** data **** ******** **************** **** *********** B) ************ *********** C) ********* D) pure ********************************* LO:23-3 ************* ********** Topic:6 ********************************* to *** **** ***** ** **** * ****** with **** C the industry's ********* concentration ***** would **** and *** ********** ***** would ********* ***** **** ** ***** rise C) remain *** ***** **** ** remain *** ***** ******************* ****************** ******* ********* Topic:7 ******************************** ************* *** analysis ** *** ****** *** firms) ****** ** ********* situations B)is best ****** *** ********* purely *********** ****************** **** ******* ******* rival ***** *** ************************* **** ************ among ***** ******* **************************** ******* ********* ******* Type:ApplicationofConcept142The ***** ** *** ****** *** ****** ****** in ********* situations ** *********** cost-benefit ******** ** ********* analysis ** ********* ********* ** game *************************** ******* ********* Topic:7 Type:ApplicationofConcept143The terms ********* ******** *** ****** ****** **** relate directly ********** ******* *********** modelC)game ************* ************ competition modelD)the ***** ********** ************************** ******* Micro:219 ******* Type:ApplicationofConcept144Game ****** ** **** ****** ** analyze *** ******* behavior of: A) **** monopolists B) **** *********** ** monopolistic competitors D) oligopolists Ans:D Econ:454 ******* Micro:220 ******* ******************************** ****** can be **** ** *********** **** *********************** ******** *** ********* ********* ** ******************** ********* ** ************ ******** ***** ******* ******* **************** ** either *********** ** **************************** *** following to answer ********* 146-151: Econ:453 LO:23-4 ********* ******* Type:Table146The ***** ****** best ******************** theoryC)product ********************** *************** problemD)price discrimination Ans:A Econ:453 ******* ********* ******* ****************** to *** ***** ******* where *** ********* **** show profits ** ******** ** ******* ****** profits *** ***** ** *** ********* ****** and ******* ******* ** the ********* ****** of each **** ** both ***** ****** * ********** policy: A)Alpha **** ******* * *** million ****** and **** * $30 ******* profit B)each **** ******* * *** million ************** **** realize * $10 ******* ****** and Alpha a *** ******* profit D)each will realize * *** ******* profit Ans:B Econ:453 ******* ********* ******* ****************** to *** ***** ******* ******* the ********* **** **** ******* ** ******** of dollars ****** ******* are ***** ** *** ********* ****** *** ******* profits ** *** southwest ****** ** **** **** ** **** commits ** * ********** ****** ***** will gain the ******* ****** *********** ******** * ********** ****************** a low-price policy C)adopting * ********* ****** *** only ** **** ****** ** do *** **************** ** ********* competition ************************* ******* Micro:219 ******* ****************** ** the ***** ******* ***** *** ********* **** show ******* ** millions of ******* ****** ******* are shown in *** ********* ****** *** Alpha's profits in *** ********* ****** ** each **** **** *********** ******* *** outcome ** this ******* **** will ********* ** ********* * B) * ** * ** ********************** LO:23-4 ********* Topic:7 ****************** ** *** ***** ******* where *** ********* **** **** profits ** millions of dollars ****** ******* *** ***** in *** ********* ****** *** ******* profits in *** ********* corner of **** **** If ***** *** Beta ****** in ********* the ******* ** the **** **** be at ********* * ** B ** * D) D Ans:A Econ:453 LO:23-4 ********* Topic:7 ****************** to *** ***** ******* where the ********* **** **** profits ** ******** ** ******* ****** ******* *** shown ** *** ********* ****** *** ******* ******* in *** southwest ****** of each cell ** Alpha and **** ***** ** * high-price policy ******* ********* the ********** ** ***** on **** ********* ** ************ by the **** that: A)Beta *** increase *** ****** ** ******** *** ************* *** ******** *** ****** ** increasing *** ***** ***** *************** Alpha and **** can **** **** **** ******* ** both ***** to * ********* *************** *** ******** its ****** ** ******** *** ********** ******************* *** ********* ** ****** questions ************************ LO:23-4 ********* ******* ****************** ** *** above ************** table *** * ******* If *** ***** *** ****** independently *** **** * sets *** ***** at ** **** Y will ******* *** largest profit by selecting: A) * price ****** than $6 ** * ***** ******* ** and ** ** ** D) *********************** ******* ********* ******* ****************** ** *** ***** profits-payoff table *** a ******* ** ********* ***** X *** Y are charging ** *** ** ******************** *** ***** **** be ********** ***** ************ will find ** advantageous to ***** *** ***** if ** *** certain X ***** not alter *** price C)X **** **** ** ************ to ***** *** ***** if ** *** ******* * would not ***** *** price D)both ***** ***** find it ************ ** ******* ** ***** ***** ****** ** ** ************************* ******* ********* Topic:7 ****************** ** *** ***** ************** ***** for a ******* ** initially **** *** ***** was ** *** *** ***** was ******** ***** **** it profitable ** *** ***** ******** Y **** *** ********** would find it ********** ** *** price provided X **** cut ********** ***** **** it profitable ** ***** ***** ** ** provided X ***** **** raise ***** ** ********** ***** ***** ****** ** simultaneously ******** ***** ****** ** **************** *** ********* to ****** ********* ************************ LO:23-4 ********* ******* ********************************* to *** ***** **** theory ****** ***** the ********* **** **** *** ******* resulting from alternative ************ ** *********** strategies *** Ajax and **** Ajax's ******* *** shown ** *** ***** ***** part ** **** ***** Acme's ******* *** ***** ** *** ***** **** ******* ********* *** ******* of *** **** is ********* * ** * C) * D) D Ans:A Econ:453 ******* ********* Topic:7 Type:ApplicationofConcept156Refer ** *** above **** ****** matrix ***** *** ********* data show *** ******* ********* **** alternative combinations ** *********** strategies *** **** *** **** ****** ******* *** shown ** *** ***** ***** **** ** **** cell; Acme's ******* are ***** ** the ***** **** **** collusion *** ** ******** *** ******* ** *** **** is cell: A) * ** * ** * D) D Ans:D Kinked-demand ***** ***************** ******* ********* ******* *********************************** ** ************* ******** ******* *** ****** **** ignore a price ******** *** ***** * price *** ** **** **** *** firm ********* its: A)demand ***** ** ***** ** unit ********** throughout B)supply ***** ** ****** ***** ******* below *** ***** ***** than *************** curve ** kinked being ******* ***** the ***** price than *************** curve ** kinked being ******* ***** the ***** ***** than ************************** ******* ********* Topic:8 ******************************* kinked-demand ***** ** ** *********** is ***** ** *** ********** ******************** will follow * price *** *** ignore a ***** *********************** **** ***** **** ***** **** *** price ************************ will ignore * ***** cut but follow * ***** ***************** ** no ******* differentiation Ans:A Econ:457 LO:23-5 ********* ******* ******************************* ************* curve ********* a situation in ***** an *********** **** ***************** in *********** *** going ***** ****** there ** * rather ***** change ** costs B)anxious to either ******** ** lower price C)anxious ** ******** ***** *** not ** ***** price D)anxious to lower ***** *** *** ** increase ************************** ******* ********* Topic:8 Type:ApplicationofConcept160If an ********* ** ***** **** a ************* ***** that is relatively elastic ***** *** ********** inelastic ***** the ***** ***** **** it ***************** ***** ******* by ********** ***** *** ***** ***** ******* ** ********** ***************** total revenue ** ****** ********** ** ********** price C)increase ***** ******* ** ****** ********** ** ********** ***************** ***** ******* ** ********** price but ***** ***** ******* ** ********** ************************** ******* ********* ******* ******************************* ************* ***** model ** oligopoly is ****** ** explaining: A)the *** **** ********* works B)why ************* ****** and outputs *** ********* ********* ** changes ** ******** *********** ************* prices ***** ****** **** ******************* ******* ** which ************ ***** **** one **************************** ******* ********* ******* Type:ApplicationofConcept162The ************* ***** ***** ***** ** ******* price rigidity ***************** ** * gap in *** ******** ******* ***** ****** ***** ******* in ******** **** will *** ****** ****** ** *************** ** ********* above *** ******* ***** *** ***** ************ ***** assumes ***** are ******** ** **** form ** **************** ********** ******** ******* ***** ** ********* ******* at the going ************************** ******* ********* ******* ****************************** ********* ************ ********** ****** *********** X's ***** ******* then ************** ***** **** ** **** ******* **** ** *** other ************ ******* X's ***** ***************** curve **** be **** ******* **** if the other ************ matched X's ***** changes C)marginal revenue ***** **** **** * ******** gap D)demand *** ******** ******* ****** **** ***************************** ******* ********* ******* ****************************** ** oligopolist is ***** **** a marginal ******* ***** that *** * *** in ** ** *** ****** that: A)it ** colluding **** *** ****** ** ******** ***** ************** ****** curve is kinked C)it ** ******* * ************ product D)it ** selling * ************** **************************** LO:23-5 ********* Topic:8 ******************************* ************* curve model ** oligopoly: A)assumes * firm's ****** will ****** a price *** *** ***** a ***** ******************** the *********** **** changes in **** costs **** have no ****** on *********** price *** ***************** * ****** ****** **** ***** any price ****** ** *** initiate D)assumes * firm's ****** will ****** *** ***** change ** *** initiate Ans:B Use *** following ** ****** questions 166-169: Econ:455-456 ******* ************* ******* ********************** ** *** above ******* *** * ************ oligopolist ******* **** *** **** ** initially in equilibrium ** ***** * ***** the *********** price *** quantity *** * *** * ***** ** *** following statements is ****************** ***** ** assumes that rivals **** match *** ***** ****** ********* ** **** ********************* ****** ** and ** **** ****** that ****** **** ignore any ***** ****** ********* ** **** ********************* ****** ** and ** **** ****** that rivals will ***** *** ***** ****** initiated by **** ********************* ***** D2 ******* **** ****** **** ***** *** ***** change ********* ** **** ************************************ ******* Micro:221-222 ******* ********************** ** *** above diagram *** * ************ *********** Suppose that *** **** ** ********* ** *********** at ***** * where the *********** ***** *** quantity are * and * ** the ****** ****** will ****** *** ***** ******** but match *** ***** reduction **** *** ****** demand ***** **** ******* ***** B) ***** ** ***** ** ****************************** LO:23-5 Micro:221-222 ******* ********************** ** the ***** ******* for * ************ oligopolist We assume **** *** **** is ********* ** equilibrium ** ***** * ***** the *********** ***** and quantity *** * *** * If the ****** ****** **** ignore *** price increase but ***** *** price reduction *** ****** ******** ******* curve **** ******* D1ED2 ** ******** C) ******* ** MR1bMR1 Ans:B Econ:455-456 LO:23-5 ************* ******* Type:Graphical169Refer to the ***** ******* for * ************ oligopolist We ****** **** *** firm ** ********* ** equilibrium ** ***** * ***** *** *********** price *** quantity *** P and * If the ****** rivals **** ****** *** ***** ******** *** match *** ***** reduction over what ***** ***** ******** **** rise ******* disturbing *********** ***** and *********** bE ** ** ** Qa ** **************** *** following ** ****** questions ************************ LO:23-5 ********* Topic:8 ******************** ***** ******* portrays: A) **** competition ** ********* oligopoly ** ************ ********* ** **** ***************************** ******* ********* ******* ********************** ** *** ***** ******* Equilibrium ****** ******* * ** h ** * D) f ********************* ******* Micro:222 ******* ********************** ** the ***** ******* *********** ***** ******* * B) * ** c D) ************************** ******* ************* Topic:8 Type:Graphical173Refer to the ***** diagram **** ****** ****** and marginal revenue ****** are based ** *** ********** ************ **** *** ** ********* **************** **** ***** both * ***** increase *** * ***** ****************** will ***** * price increase but ignore * price ****************** will ignore * price increase but ***** a ***** decrease Ans:D Econ:455-456 LO:23-5 Micro:221-222 ******* ********************** ** the ***** diagram In equilibrium *** *********** realizing an ******** ****** ** ** per ************** ***** **** in *** ***** ********* ********* * ********** ********* ** ******** ****** of ** *** ************************* LO:23-5 ********* ******* Type:ApplicationofConcept175According ** *** ************* ***** ***** ** ************* **** will ******* ***************** total cost is ****************** ****** ******** **************** revenue equals ******** *********** ****** ***** ********** *** ******* ***** **** curve Ans:C Econ:456 LO:23-5 ********* ******* Type:ApplicationofConcept176A kink *** ***** in ** ************* ****** ***** ******************** *** ******************** abrupt ****** ** ***** ********** ************* **** will ****** ***** **** ** rivals *** **** ***** their price ****************** ** * *** ** ******** ************************ cartels; ***** ********************** LO:23-6 ********* ******* Type:ApplicationofConcept177OPEC ******** ** ******* ******** tacit ***************** ************* ********************** ************ **************** competitive ***************************** LO:23-6 ********* ******* Type:ApplicationofConcept178Oligopolistic firms ****** in collusion *************** **** ***** ** production B)realize allocative efficiency that is *** * * ** level ** output C)earn ******* ******************* ******************************* ******* ********* Topic:9 ******************************* ********** ** * cartel ***** ********** ** ******* when: A)firms *** ********* * ************** rather **** * *********** *************** *** ****** curves ** ******* ************ *** **** ************** number ** ***** ******** ** ********** large D)the ******* ** ** *** ********* ***** ** the ******** ************************** ******* ********* ******* Type:ApplicationofConcept180Cartels are ********* ** maintain in the **** *** because: A)they *** illegal ** *** ************** countries B)individual members may find ** ********** ** ***** on agreements C)it ** **** ********** *** *** industry ** charge a lower price *** ******* more *************** ******** *** insignificant ** ************* industries Ans:B Econ:457-460 LO:23-6 ************* Topic:9 Type:ApplicationofConcept181Three major means ** collusion ** ************ *************** ***** ************** *** ***** leadership B)market ******* ****** *************** *** ******* differentiation C)cartels ************* ******* and product ************************ ************** * = ** pricing and ****** ************************************ ******* ********* ******* Type:ApplicationofConcept182If *** firms in ** ************* industry *** ********* ** effective ****** *** ********* ****** *** ***** will approximate those of: A)a purely competitive ************* **** ************* **************** *********** ************** industry **** a *** four-firm concentration ************************** ******* ********* Topic:9 ************** *** ****** ****** ******* ************* common ** ********** that ******* ********** *********** ********* ** *** ********* ******************** ** monopolistically *********** industries D)encouraged ** ********** ****** ** ***** *** ******* economies ** scale Ans:B Econ:459 ******* ********* ******* Type:ApplicationofConcept184Assume *** ******* ************* of ******* **** ** * **** ***** * ****** agreement ** establish the ***** ** their ******* at ** ***** *** **** **** **** ************** multiproduct ******* ** a ****** ** * ***** ************* D) ***** ******************************* ******* ********* ******* ******************************* ***** ****** **** collusion among oligopolistic producers would ** ******* ** achieve ** ***** of the following *********** ****** large ****** of ***** ********* * differentiated product B)a **** ***** ****** ** ***** ********* * ************** product C)a ****** ***** number ** ***** producing a *********** ************ **** ***** number ** ***** producing * homogeneous **************************** ******* Micro:223 ******* Type:Definition186Suppose *** **** ***** ******** manufacturers of ***** game ******* ****** * ******* ******** ** ***** **** agreed to ****** *** **** ***** *** products and to ********** ***** ******** **** ** the ************ **** assigned **** ** *** ******** **** **** describes: A) cost-plus pricing B) ************ pricing C) * ****** ** ***** ******************************* ******* Micro:223 ******* Type:Definition187Which ** the following statements ** correct? A)A ****** ** ******* * ****** agreement among oligopolists **** **** ******* ***** *** ********** each firm's market share B)The practice ** ***** ********** ** ****** ****** ***** ** * ****** written agreement C)All ************ heavily advertise ***** products D)Active and fr
