Question 1

Figure 13-2
​  
-In monopolistic competition, the long-run equilibrium results in zero economic profit of the firms in these industries.The key factor in this is

Accepted Answer

A) differentiated products. 
B) freedom of entry into and exit from the industry. 
C) price discrimination. 
D) brand names. 
A) differentiated products. 
B) freedom of entry into and exit from the industry. 
C) price discrimination. 
D) brand names.

Question 2

Perfect competition and pure monopoly are concepts useful primarily for realistic applications.

Accepted Answer

A) True 
 B)False

Question 3

If firms meet together to decide on prices and outputs, there is

Accepted Answer

A) overt collusion. 
B) tacit collusion. 
C) price leadership. 
D) None of the above are correct. 
A) overt collusion. 
B) tacit collusion. 
C) price leadership. 
D) None of the above are correct.

Question 4

An oligopoly is a market

Accepted Answer

A) with few buyers. 
B) with one buyer. 
C) dominated by a few sellers. 
D) under the control of a few politically powerful individuals. 
A) with few buyers. 
B) with one buyer. 
C) dominated by a few sellers. 
D) under the control of a few politically powerful individuals.

Question 5

Oligopolistic firms never collude because they have almost no incentive to do so.

Accepted Answer

A) True 
 B)False

Question 6

Cartels are relatively rare because

Accepted Answer

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

Question 7

In the long run, a monopolistically competitive firm produces at minimum average cost.

Accepted Answer

A) True 
 B)False

Question 8

Figure 13-3
​  
-Oligopolist A cuts price in an attempt to enlarge his share of the market.His competitors retaliate with identical price cuts.In this case, in Figure 13-3, oligopolist A will move from point A to which point?

Accepted Answer

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

Question 9

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 10

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 11

In John Rawls' A Theory of Justice, people choose the rules for distributing income from behind a veil of ignorance.People understand that ability determines income, but they do not know their abilities or the abilities of others.Rawls argues that people are risk averse and will choose the distribution rule that maximizes their income in the worst-case scenario (they have relatively little ability).An economist would call this strategy

Accepted Answer

A) minimax. 
B) maximin. 
C) irrational. 
D) tacit collusion. 
A) minimax. 
B) maximin. 
C) irrational. 
D) tacit collusion.

Question 12

The models of perfect competition and monopoly are the most realistic.

Accepted Answer

A) True 
 B)False

Question 13

Price leadership is an example of explicit collusion by oligopolies.

Accepted Answer

A) True 
 B)False

Question 14

Why is oligopoly more difficult to model than competition or monopoly?

Accepted Answer

Oligopolistic firms make interdependent

Question 15

In the long run, a monopolistically competitive firm and a perfectly competitive firm both produce at minimum average cost.

Accepted Answer

A) True 
 B)False

Question 16

Oligopolists behave independently of each other.

Accepted Answer

A) True 
 B)False

Question 17

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 responses 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 responses are correct.

Question 18

Firms that practice tacit collusion may receive some of the benefits of a cartel without explicitly organizing a group of firms.

Accepted Answer

A) True 
 B)False

Question 19

In a monopoly market, no dominant strategies are possible.

Accepted Answer

A) True 
 B)False

Question 20

Suppose that firms in a monopolistically competitive industry are earning positive economic profits.In this situation, you would expect

Accepted Answer

A) the number of firms in the market to increase. 
B) each firm will experience an increase in its demand. 
C) there is a downward shift in the firm's average cost curve. 
D) to observe firms reducing their advertising. 
A) the number of firms in the market to increase. 
B) each firm will experience an increase in its demand. 
C) there is a downward shift in the firm's average cost curve. 
D) to observe firms reducing their advertising.

Exam 13: Between Competition and Monopoly

Figure 13-2 ​ -In monopolistic competition, the long-run equilibrium results in zero economic profit of the firms in these industries.The key factor in this is

Perfect competition and pure monopoly are concepts useful primarily for realistic applications.

If firms meet together to decide on prices and outputs, there is

An oligopoly is a market

Oligopolistic firms never collude because they have almost no incentive to do so.

Cartels are relatively rare because

In the long run, a monopolistically competitive firm produces at minimum average cost.

Figure 13-3 ​ -Oligopolist A cuts price in an attempt to enlarge his share of the market.His competitors retaliate with identical price cuts.In this case, in Figure 13-3, oligopolist A will move from point A to which point?

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

Where interdependence is especially pronounced, competition among oligopolists will

The models of perfect competition and monopoly are the most realistic.

Price leadership is an example of explicit collusion by oligopolies.

Why is oligopoly more difficult to model than competition or monopoly?

In the long run, a monopolistically competitive firm and a perfectly competitive firm both produce at minimum average cost.

Oligopolists behave independently of each other.

The monopolistically competitive firm in short-run equilibrium

Firms that practice tacit collusion may receive some of the benefits of a cartel without explicitly organizing a group of firms.

In a monopoly market, no dominant strategies are possible.

Suppose that firms in a monopolistically competitive industry are earning positive economic profits.In this situation, you would expect

What Is Economics

The Economony: 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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of 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

Contemporary Issues in the Useconomy

Filters

Figure 13-2 -In monopolistic competition, the long-run equilibrium results in zero economic profit of the firms in these industries.The key factor in this is

Figure 13-3 -Oligopolist A cuts price in an attempt to enlarge his share of the market.His competitors retaliate with identical price cuts.In this case, in Figure 13-3, oligopolist A will move from point A to which point?