Question 1

A market which firms can enter if they choose and exit without losing money invested is

Accepted Answer

A)  pure monopoly. 
B)  duopoly. 
C)  contestable. 
D)  a market where there are kinked demand curves. 
A)  pure monopoly. 
B)  duopoly. 
C)  contestable. 
D)  a market where there are kinked demand curves.

Question 2

Figure 12-2
  
-In Figure 12-2, which of the graphs represents a monopolistic competitor in long-run equilibrium?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 3

Where interdependence is especially pronounced, competition among oligopolists will

Accepted Answer

A)  resemble military tactics and strategies. 
B)  disappear. 
C)  lead to large increases in product output. 
D)  entice more firms to enter the market. 
A)  resemble military tactics and strategies. 
B)  disappear. 
C)  lead to large increases in product output. 
D)  entice more firms to enter the market.

Question 4

The goal of the manager of a firm is sales maximization.The firm will produce

Accepted Answer

A)  the output level at which MR = 0. 
B)  as much output as it can. 
C)  the same output that it would if the goal was profit maximization. 
D)  the same output that it would if the goal was cost minimization. 
A)  the output level at which MR = 0. 
B)  as much output as it can. 
C)  the same output that it would if the goal was profit maximization. 
D)  the same output that it would if the goal was cost minimization.

Question 5

Society benefits from monopolistic competition because the firms are allocatively efficient.

Accepted Answer

A) True 
 B)False

Question 6

The maximin criterion seeks to minimize the maximum payoffs in order to win.

Accepted Answer

A) True 
 B)False

Question 7

For the monopolistic competitor, MR = P.

Accepted Answer

A) True 
 B)False

Question 8

According to the excess capacity theorem, if every firm under monopolistic competition expanded its output,

Accepted Answer

A)  cost per unit of output would rise. 
B)  social benefits would increase. 
C)  cost per unit of output would decrease. 
D)  MC and AC would remain unchanged. 
A)  cost per unit of output would rise. 
B)  social benefits would increase. 
C)  cost per unit of output would decrease. 
D)  MC and AC would remain unchanged.

Question 9

Figure 12-1
  
-In Figure 12-1, for a monopolistically competitive firm, long-run equilibrium can occur only at the quantity indicated by which point?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 10

A successful cartel may end up charging the ____ price and obtaining ____ profits.

Accepted Answer

A)  monopolistic competition; zero economic 
B)  oligopoly; monopoly 
C)  monopoly; zero economic 
D)  monopoly; monopoly 
A)  monopolistic competition; zero economic 
B)  oligopoly; monopoly 
C)  monopoly; zero economic 
D)  monopoly; monopoly

Question 11

The maximin criterion can be defined as which of the following?

Accepted Answer

A)  One seeks the maximum of the minimum payoffs to the various available strategies. 
B)  One seeks the minimum of the maximum losses among the various available strategies. 
C)  One seeks the maximum of the minimum losses to the various available strategies. 
D)  One seeks the maximum of the maximum gains of the various available strategies. 
A)  One seeks the maximum of the minimum payoffs to the various available strategies. 
B)  One seeks the minimum of the maximum losses among the various available strategies. 
C)  One seeks the maximum of the minimum losses to the various available strategies. 
D)  One seeks the maximum of the maximum gains of the various available strategies.

Question 12

The monopolistically competitive firm in short-run equilibrium

Accepted Answer

A)  faces a downward-sloping demand curve. 
B)  has a marginal revenue curve which lies below its demand curve. 
C)  maximizes profit where MR = MC. 
D)  All of the above are correct. 
A)  faces a downward-sloping demand curve. 
B)  has a marginal revenue curve which lies below its demand curve. 
C)  maximizes profit where MR = MC. 
D)  All of the above are correct.

Question 13

Cartels usually succumb to divisive forces caused by

Accepted Answer

A)  limited information. 
B)  members cheating by giving secret discounts. 
C)  entry by new rivals seeking profits. 
D)  insufficient profits compared to independent operations. 
A)  limited information. 
B)  members cheating by giving secret discounts. 
C)  entry by new rivals seeking profits. 
D)  insufficient profits compared to independent operations.

Question 14

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

Accepted Answer

A)  negative. 
B)  zero. 
C)  one. 
D)  infinite. 
A)  negative. 
B)  zero. 
C)  one. 
D)  infinite.

Question 15

Cartels are

Accepted Answer

A)  difficult to organize. 
B)  difficult to preserve. 
C)  especially unlikely to succeed if the members sell many varied products. 
D)  All of the above are correct. 
A)  difficult to organize. 
B)  difficult to preserve. 
C)  especially unlikely to succeed if the members sell many varied products. 
D)  All of the above are correct.

Question 16

Economists tend to be concerned about entry barriers.Why are entry barriers so important?

Accepted Answer

Economists see barriers as the primary r

Question 17

Monopolistic competitors and perfect competitors are alike in

Accepted Answer

A)  having horizontal demand curves. 
B)  zero economic profit in the short run. 
C)  zero economic profit in the long run. 
D)  relying on advertising to attract buyers to their products. 
A)  having horizontal demand curves. 
B)  zero economic profit in the short run. 
C)  zero economic profit in the long run. 
D)  relying on advertising to attract buyers to their products.

Question 18

A duopoly is a form of oligopoly with two firms.

Accepted Answer

A) True 
 B)False

Question 19

The airline dominating Charlotte, North Carolina, once contended that it could not overcharge for fear of potential competition, if not at Charlotte, then at Raleigh, a two-hour drive away.Do you find this argument compelling, given the theory of contestable markets?

Accepted Answer

The theory of contestable markets holds

Question 20

An advertising race among oligopolists may be rational if it

Accepted Answer

A)  is defense advertising. 
B)  raises entry barriers. 
C)  increases cost per unit of sales. 
D)  encourages new entrants. 
A)  is defense advertising. 
B)  raises entry barriers. 
C)  increases cost per unit of sales. 
D)  encourages new entrants.

Exam 12: Between Competition and Monopoly

A market which firms can enter if they choose and exit without losing money invested is

Figure 12-2 -In Figure 12-2, which of the graphs represents a monopolistic competitor in long-run equilibrium?

Where interdependence is especially pronounced, competition among oligopolists will

The goal of the manager of a firm is sales maximization.The firm will produce

Society benefits from monopolistic competition because the firms are allocatively efficient.

The maximin criterion seeks to minimize the maximum payoffs in order to win.

For the monopolistic competitor, MR = P.

According to the excess capacity theorem, if every firm under monopolistic competition expanded its output,

Figure 12-1 -In Figure 12-1, for a monopolistically competitive firm, long-run equilibrium can occur only at the quantity indicated by which point?

A successful cartel may end up charging the ____ price and obtaining ____ profits.

The maximin criterion can be defined as which of the following?

The monopolistically competitive firm in short-run equilibrium

Cartels usually succumb to divisive forces caused by

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

Cartels are

Economists tend to be concerned about entry barriers.Why are entry barriers so important?

Monopolistic competitors and perfect competitors are alike in

A duopoly is a form of oligopoly with two firms.

The airline dominating Charlotte, North Carolina, once contended that it could not overcharge for fear of potential competition, if not at Charlotte, then at Raleigh, a two-hour drive away.Do you find this argument compelling, given the theory of contestable markets?

An advertising race among oligopolists may be rational if 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

Filters

A successful cartel may end up charging the price and obtaining profits.