Question 1

Wikipedia is an example of a project that follows the pattern of unstructured collaboration.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 24-7
  
-Refer to Exhibit 24-7. Total fixed costs are equal to

Accepted Answer

A) $0. 
B) $10. 
C) $60. 
D) $40. 
E) There is not enough information given to answer the question. 
A) $0. 
B) $10. 
C) $60. 
D) $40. 
E) There is not enough information given to answer the question.

Question 3

For a monopoly firm, price is __________ marginal revenue, and for a monopolistic competitive firm, price is __________ marginal revenue.

Accepted Answer

A) less than; equal to 
B) greater than; equal to 
C) greater than; less than 
D) greater than; greater than 
E) equal to; less than 
A) less than; equal to 
B) greater than; equal to 
C) greater than; less than 
D) greater than; greater than 
E) equal to; less than

Question 4

Does the monopolistic competitive firm exhibit resource-allocative efficiency?

Accepted Answer

A) No, because at its chosen quantity of output, price does not equal the lowest possible average total cost. 
B) Yes, because at its chosen quantity of output, price equals marginal cost. 
C) No, because at its chosen quantity of output, price is greater than marginal cost. 
D) Yes, because at its chosen quantity of output, price is less than marginal cost. 
A) No, because at its chosen quantity of output, price does not equal the lowest possible average total cost. 
B) Yes, because at its chosen quantity of output, price equals marginal cost. 
C) No, because at its chosen quantity of output, price is greater than marginal cost. 
D) Yes, because at its chosen quantity of output, price is less than marginal cost.

Question 5

The "prisoner's dilemma" game illustrates a case in which

Accepted Answer

A) individually rational behavior leads to a collectively inefficient outcome. 
B) what is irrational individual behavior turns out to be ultra-irrational group behavior. 
C) the whole is greater than the sum of the parts. 
D) none of the above 
A) individually rational behavior leads to a collectively inefficient outcome. 
B) what is irrational individual behavior turns out to be ultra-irrational group behavior. 
C) the whole is greater than the sum of the parts. 
D) none of the above

Question 6

It has been argued that as a result of not producing the quantity of output where unit cost is minimized, the monopolistic competitive firm charges too __________ a price and produces too __________ output.

Accepted Answer

A) high; little 
B) low; little 
C) high; much 
D) low; much 
A) high; little 
B) low; little 
C) high; much 
D) low; much

Question 7

If a monopolistic competitive firm raises its price, then

Accepted Answer

A) it should expect to lose all of its customers because there are many other sellers of the product. 
B) this is a trick question because the firm does not have the ability to change its price. 
C) it should expect to lose some, but not all, of its customers. 
D) it will be able to increase its profits. 
E) it can sell all it wants because it faces a horizontal demand curve. 
A) it should expect to lose all of its customers because there are many other sellers of the product. 
B) this is a trick question because the firm does not have the ability to change its price. 
C) it should expect to lose some, but not all, of its customers. 
D) it will be able to increase its profits. 
E) it can sell all it wants because it faces a horizontal demand curve.

Question 8

The demand curve facing a monopolistic competitive firm will be __________ than the demand curve facing a perfectly competitive firm because the price elasticity of demand for the monopolistic competitive firm's product is __________ than that for the perfectly competitive firm.

Accepted Answer

A) steeper; higher 
B) flatter; higher 
C) steeper; lower 
D) flatter; lower 
A) steeper; higher 
B) flatter; higher 
C) steeper; lower 
D) flatter; lower

Question 9

The concentration ratio provides a measure of the extent to which an industry

Accepted Answer

A) produces a useful product. 
B) is dominated by a small number of firms. 
C) is earning economic profits. 
D) is earning accounting profits. 
A) produces a useful product. 
B) is dominated by a small number of firms. 
C) is earning economic profits. 
D) is earning accounting profits.

Question 10

Monopolistic competitive firms and perfectly competitive firms are similar in that both

Accepted Answer

A) set price equal to marginal cost. 
B) face a horizontal demand curve. 
C) face no barriers to entry or exit. 
D) produce a homogeneous product. 
E) all of the above 
A) set price equal to marginal cost. 
B) face a horizontal demand curve. 
C) face no barriers to entry or exit. 
D) produce a homogeneous product. 
E) all of the above

Question 11

Which of the following statements is true?

Accepted Answer

A) Monopolistic competitive firms do not experience the law of diminishing marginal returns when they produce output. 
B) Monopolistic competitive firms face a downward-sloping demand curve and a horizontal marginal cost curve. 
C) There are many buyers and few sellers in the theory of monopolistic competition. 
D) Monopolistic competitors are said to underutilize their present plant size. 
E) none of the above 
A) Monopolistic competitive firms do not experience the law of diminishing marginal returns when they produce output. 
B) Monopolistic competitive firms face a downward-sloping demand curve and a horizontal marginal cost curve. 
C) There are many buyers and few sellers in the theory of monopolistic competition. 
D) Monopolistic competitors are said to underutilize their present plant size. 
E) none of the above

Question 12

If the top four firms account for $85 billion in sales and total industry sales are $250 billion, it follows that the four-firm concentration ratio is

Accepted Answer

A) 0.34. 
B) 0.66. 
C) 1.34. 
D) 1.66. 
A) 0.34. 
B) 0.66. 
C) 1.34. 
D) 1.66.

Question 13

Exhibit 24-8
  
-Refer to Exhibit 24-8. The marginal cost of the last unit produced at the profit-maximizing output level equals

Accepted Answer

A) $90. 
B) $40. 
C) $120. 
D) $50. 
A) $90. 
B) $40. 
C) $120. 
D) $50.

Question 14

If the firms of an industry form a cartel, their goal is to

Accepted Answer

A) collectively increase output and thereby earn higher profits. 
B) cut back on output and raise the price of their product to earn higher profits. 
C) maintain a constant level of output, but increase price to earn higher profits. 
D) maintain a constant price level, but increase output to earn higher profits. 
A) collectively increase output and thereby earn higher profits. 
B) cut back on output and raise the price of their product to earn higher profits. 
C) maintain a constant level of output, but increase price to earn higher profits. 
D) maintain a constant price level, but increase output to earn higher profits.

Question 15

A monopolist is a _______________ and a monopolistic competitor is ______________________.

Accepted Answer

A) price searcher; also a price searcher 
B) price taker; a price searcher 
C) price taker; also a price taker 
D) price searcher; a price taker 
A) price searcher; also a price searcher 
B) price taker; a price searcher 
C) price taker; also a price taker 
D) price searcher; a price taker

Question 16

Exhibit 24-6
  
-Refer to Exhibit 24-6. Excess capacity refers to the distance between

Accepted Answer

A) P2 and P1. 
B) Q1 and point C. 
C) Q2 and Q1. 
D) P3 and P1. 
E) P2 and point C. 
A) P2 and P1. 
B) Q1 and point C. 
C) Q2 and Q1. 
D) P3 and P1. 
E) P2 and point C.

Question 17

A firm in a monopolistic competitive market will produce a level of output at which

Accepted Answer

A) P  MR. 
D) P = MC. 
A) P  MR. 
D) P = MC.

Question 18

Concentration ratios are used to determine

Accepted Answer

A) the number of firms in an industry. 
B) the potential for entry into an industry. 
C) the degree of product differentiation. 
D) the extent (degree) of oligopoly. 
E) none of the above 
A) the number of firms in an industry. 
B) the potential for entry into an industry. 
C) the degree of product differentiation. 
D) the extent (degree) of oligopoly. 
E) none of the above

Question 19

The prisoner's dilemma can be used to help analyze such diverse topics as the arms race and the need for speed limit laws.

Accepted Answer

A) True 
 B)False

Question 20

According to the contestable markets theory,

Accepted Answer

A) even if an industry is comprised of a small number of firms, this is not sufficient evidence that the firms perform in a noncompetitive way. 
B) profits cannot be zero in an industry if the number of sellers in the industry is small. 
C) if a market is contestable, inefficient producers are more likely to survive than if the market is not contestable. 
D) b and c 
E) a, b, and c 
A) even if an industry is comprised of a small number of firms, this is not sufficient evidence that the firms perform in a noncompetitive way. 
B) profits cannot be zero in an industry if the number of sellers in the industry is small. 
C) if a market is contestable, inefficient producers are more likely to survive than if the market is not contestable. 
D) b and c 
E) a, b, and c

Exam 24: Monopolistic Competition Oligopoly and Game Theory

Wikipedia is an example of a project that follows the pattern of unstructured collaboration.

Exhibit 24-7 -Refer to Exhibit 24-7. Total fixed costs are equal to

For a monopoly firm, price is __________ marginal revenue, and for a monopolistic competitive firm, price is __________ marginal revenue.

Does the monopolistic competitive firm exhibit resource-allocative efficiency?

The "prisoner's dilemma" game illustrates a case in which

It has been argued that as a result of not producing the quantity of output where unit cost is minimized, the monopolistic competitive firm charges too __________ a price and produces too __________ output.

If a monopolistic competitive firm raises its price, then

The demand curve facing a monopolistic competitive firm will be __________ than the demand curve facing a perfectly competitive firm because the price elasticity of demand for the monopolistic competitive firm's product is __________ than that for the perfectly competitive firm.

The concentration ratio provides a measure of the extent to which an industry

Monopolistic competitive firms and perfectly competitive firms are similar in that both

Which of the following statements is true?

If the top four firms account for $85 billion in sales and total industry sales are $250 billion, it follows that the four-firm concentration ratio is

Exhibit 24-8 -Refer to Exhibit 24-8. The marginal cost of the last unit produced at the profit-maximizing output level equals

If the firms of an industry form a cartel, their goal is to

A monopolist is a _______________ and a monopolistic competitor is ______________________.

Exhibit 24-6 -Refer to Exhibit 24-6. Excess capacity refers to the distance between

A firm in a monopolistic competitive market will produce a level of output at which

Concentration ratios are used to determine

The prisoner's dilemma can be used to help analyze such diverse topics as the arms race and the need for speed limit laws.

According to the contestable markets theory,

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II Gdp and Real Gdp

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

Fiscal Policy and the Federal Budget

Money Banking and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth Resources Technology Ideas and Institutions

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Government and Product Markets Antitrust and Regulation

Factor Markets With Emphasis on the Labor Market

Wages Unions and Labor

The Distribution of Income and Poverty

Interest Rent and Profit

Market Failure Externalities Public Goods and Asymmetric Information

Public Choice and Special Interest Group Politics

Building Theories to Explain Everyday Life From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government Five Topics Considered

Stocks Bonds Futures and Options

Filters

For a monopoly firm, price is marginal revenue, and for a monopolistic competitive firm, price is marginal revenue.

It has been argued that as a result of not producing the quantity of output where unit cost is minimized, the monopolistic competitive firm charges too a price and produces too output.

The demand curve facing a monopolistic competitive firm will be than the demand curve facing a perfectly competitive firm because the price elasticity of demand for the monopolistic competitive firm's product is than that for the perfectly competitive firm.

A monopolist is a _ and a monopolistic competitor is ________.