Question 1

Under perfect competition and monopolistic competition, profits are zero in long-run equilibrium.

Accepted Answer

A) True 
 B)False

Question 2

A perfectly contestable market is one in which there are excessive costs to entry and exit.

Accepted Answer

A) True 
 B)False

Question 3

The theory of the kinked demand curve is used to explain

Accepted Answer

A) bizarre corporate behavior. 
B) sales maximization. 
C) the maximin criterion. 
D) sticky prices in oligopolies. 
A) bizarre corporate behavior. 
B) sales maximization. 
C) the maximin criterion. 
D) sticky prices in oligopolies.

Question 4

Advertising never makes sense for an oligopolistic firm.

Accepted Answer

A) True 
 B)False

Question 5

In an economist's view, a cartel usually offers to society

Accepted Answer

A) all the cost benefits of large-scale production and none of the allocative inefficiencies of monopoly. 
B) all the cost benefits of large-scale production and all of the allocative inefficiencies of monopoly. 
C) none of the cost benefits of large-scale production and none of the allocative inefficiencies of monopoly. 
D) none of the cost benefits of large-scale production and all of the allocative inefficiencies of monopoly. 
A) all the cost benefits of large-scale production and none of the allocative inefficiencies of monopoly. 
B) all the cost benefits of large-scale production and all of the allocative inefficiencies of monopoly. 
C) none of the cost benefits of large-scale production and none of the allocative inefficiencies of monopoly. 
D) none of the cost benefits of large-scale production and all of the allocative inefficiencies of monopoly.

Question 6

In ____, each competing firm is determined to sell at a price that is lower than the prices of its rivals, often regardless of whether that price covers the pertinent cost.

Accepted Answer

A) market skimming 
B) a monopoly 
C) a price war 
D) perfect competition 
A) market skimming 
B) a monopoly 
C) a price war 
D) perfect competition

Question 7

In oligopoly, one expects

Accepted Answer

A) frequent introduction of new or redesigned products. 
B) aggressive advertising campaigns. 
C) intense marketing research into the impact of price changes. 
D) All of the responses are correct. 
A) frequent introduction of new or redesigned products. 
B) aggressive advertising campaigns. 
C) intense marketing research into the impact of price changes. 
D) All of the responses are correct.

Question 8

At any given airport, the airlines hold long-term leases for passenger loading gates.New gates cannot be added without approval of the airlines.Frequent flier programs are also common in the industry.It is, therefore, more difficult for a new airline to enter a given airport (market).Such factors: (i) are called barriers to entry.
(ii) tend to decrease the contestability of the air travel market.

Accepted Answer

A) i and ii 
B) i not ii 
C) ii not i 
D) neither i nor ii 
A) i and ii 
B) i not ii 
C) ii not i 
D) neither i nor ii

Exam 13: Between Competition and Monopoly

Under perfect competition and monopolistic competition, profits are zero in long-run equilibrium.

A perfectly contestable market is one in which there are excessive costs to entry and exit.

The theory of the kinked demand curve is used to explain

Advertising never makes sense for an oligopolistic firm.

In an economist's view, a cartel usually offers to society

In ____, each competing firm is determined to sell at a price that is lower than the prices of its rivals, often regardless of whether that price covers the pertinent cost.

In oligopoly, one expects

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

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