Question 1

Firms that maximize sales always produce more than profit-maximizing firms.

Accepted Answer

A) True 
 B)False

Question 2

All players have dominant strategies.

Accepted Answer

A) True 
 B)False

Question 3

Oligopolists behave independently of each other.

Accepted Answer

A) True 
 B)False

Question 4

Is it likely that oligopolistic firms will be in both a kinked demand curve situation and also engage in price leadership? Why or why not?

Accepted Answer

No, it is not.The models are not compati

Question 5

The most widely used approach for the analysis of oligopoly behavior is

Accepted Answer

A)  game theory. 
B)  role playing. 
C)  strategic engineering. 
D)  input-output analysis. 
A)  game theory. 
B)  role playing. 
C)  strategic engineering. 
D)  input-output analysis.

Question 6

All of the following are possible characteristics of oligopoly except

Accepted Answer

A)  free entry into the industry. 
B)  significant economies of scale. 
C)  interdependence among sellers. 
D)  homogeneous product. 
A)  free entry into the industry. 
B)  significant economies of scale. 
C)  interdependence among sellers. 
D)  homogeneous product.

Question 7

An empirical study determines that price exceeds marginal cost at the levels of output of firms in long-run equilibrium in the widget industry.The widget industry may therefore

Accepted Answer

A)  be monopolistically competitive. 
B)  have firms whose goal is sales maximization. 
C)  have firms that act as price leaders. 
D)  All of the above are correct. 
A)  be monopolistically competitive. 
B)  have firms whose goal is sales maximization. 
C)  have firms that act as price leaders. 
D)  All of the above are correct.

Question 8

Monopolistic competition is different from perfect competition in that every manufacturer

Accepted Answer

A)  has a small monopoly, and differentiates the product. 
B)  takes the product quality as given, and chooses price. 
C)  takes output level as given, but must choose price. 
D)  differentiates product, but cannot advertise successfully. 
A)  has a small monopoly, and differentiates the product. 
B)  takes the product quality as given, and chooses price. 
C)  takes output level as given, but must choose price. 
D)  differentiates product, but cannot advertise successfully.

Question 9

The kinked demand curve is an explanation of sticky prices.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

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

Question 11

Monopolistic competition is common in

Accepted Answer

A)  retail selling. 
B)  farming. 
C)  basic manufacturing. 
D)  electric power generation. 
A)  retail selling. 
B)  farming. 
C)  basic manufacturing. 
D)  electric power generation.

Question 12

Which of the following best expresses the attitude toward competition of a firm engaged in tacit collusion with its rivals?

Accepted Answer

A)  A rolling stone gathers no moss. 
B)  Waste not, want not. 
C)  Do unto others as you would have them do unto you. 
D)  Ask, and ye shall receive. 
A)  A rolling stone gathers no moss. 
B)  Waste not, want not. 
C)  Do unto others as you would have them do unto you. 
D)  Ask, and ye shall receive.

Question 13

Average cost is higher with a monopolistically competitive firm than with a perfectly competitive firm.

Accepted Answer

A) True 
 B)False

Question 14

To maximize sales revenue, an oligopolist will expand output until the marginal revenue curve cuts the horizontal axis.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Can positive economic profits persist under monopolistic competition in the long run.Why?

Accepted Answer

No, because economic profits will entice

Question 17

The Organization of Petroleum Exporting Countries (OPEC) is an example of

Accepted Answer

A)  a price leadership system. 
B)  a generally unsuccessful cartel. 
C)  an organization devoted to tacit collusion. 
D)  a successful cartel. 
A)  a price leadership system. 
B)  a generally unsuccessful cartel. 
C)  an organization devoted to tacit collusion. 
D)  a successful cartel.

Question 18

Repeated games can lead to tacit collusion.

Accepted Answer

A) True 
 B)False

Question 19

If an oligopolist cuts the prices of its products,

Accepted Answer

A)  customers will switch to a rival firm. 
B)  customers will remain unchanged in number. 
C)  customers will switch from rival firms to buy from them. 
D)  rival firms will not react. 
A)  customers will switch to a rival firm. 
B)  customers will remain unchanged in number. 
C)  customers will switch from rival firms to buy from them. 
D)  rival firms will not react.

Question 20

An oligopoly using a maximin strategy must believe that the losses from underestimating a competitor's skill are worse than those from overestimating it.

Accepted Answer

A) True 
 B)False

Exam 12: Between Competition and Monopoly

Firms that maximize sales always produce more than profit-maximizing firms.

All players have dominant strategies.

Oligopolists behave independently of each other.

Is it likely that oligopolistic firms will be in both a kinked demand curve situation and also engage in price leadership? Why or why not?

The most widely used approach for the analysis of oligopoly behavior is

All of the following are possible characteristics of oligopoly except

An empirical study determines that price exceeds marginal cost at the levels of output of firms in long-run equilibrium in the widget industry.The widget industry may therefore

Monopolistic competition is different from perfect competition in that every manufacturer

The kinked demand curve is an explanation of sticky prices.

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

Monopolistic competition is common in

Which of the following best expresses the attitude toward competition of a firm engaged in tacit collusion with its rivals?

Average cost is higher with a monopolistically competitive firm than with a perfectly competitive firm.

To maximize sales revenue, an oligopolist will expand output until the marginal revenue curve cuts the horizontal axis.

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

Can positive economic profits persist under monopolistic competition in the long run.Why?

The Organization of Petroleum Exporting Countries (OPEC) is an example of

Repeated games can lead to tacit collusion.

If an oligopolist cuts the prices of its products,

An oligopoly using a maximin strategy must believe that the losses from underestimating a competitor's skill are worse than those from overestimating it.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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