Question 1

Figure 13-2
​  
-In Figure 13-2, 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 2

Monopolistic competition is a market structure characterized by many small firms selling a homogeneous product.

Accepted Answer

A) True 
 B)False

Question 3

One market that fits the characteristics of monopolistic competition is

Accepted Answer

A) women's clothing. 
B) wheat farming. 
C) television networks. 
D) electric power generation. 
A) women's clothing. 
B) wheat farming. 
C) television networks. 
D) electric power generation.

Question 4

The behavior of the perfectly competitive firm

Accepted Answer

A) theoretically leads to an inefficient allocation of resources. 
B) maximizes the benefits to consumers, given the resources available to the economy. 
C) reduces output in order to raise prices in the short term. 
D) results in excess capacity and inefficiency. 
A) theoretically leads to an inefficient allocation of resources. 
B) maximizes the benefits to consumers, given the resources available to the economy. 
C) reduces output in order to raise prices in the short term. 
D) results in excess capacity and inefficiency.

Question 5

Explain the prisoner's dilemma case in game theory and its relevance to the maximin criterion.

Accepted Answer

The scenario is of two burglary suspects

Question 6

Firms in oligopoly markets are unable to collude effectively because cooperation is difficult with a large number of firms.

Accepted Answer

A) True 
 B)False

Question 7

If a market situation is an example of a prisoners' dilemma, society can benefit by preventing the firms in the market from cooperating with each other.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

No, because economic profits will entice

Question 9

A monopolistic competitor can expect to earn an economic profit in the long run.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following conditions distinguishes monopolistic competition from perfect competition?

Accepted Answer

A) Number of sellers 
B) Freedom of entry and exit 
C) Perfect information 
D) Homogeneity of the product 
A) Number of sellers 
B) Freedom of entry and exit 
C) Perfect information 
D) Homogeneity of the product

Question 11

The kinked demand curve model explains pricing in monopoly markets.

Accepted Answer

A) True 
 B)False

Question 12

In the long run, a monopolistically competitive firm's demand curve must be tangent to its average cost curve.

Accepted Answer

A) True 
 B)False

Question 13

Excess capacity and inefficiency result under monopolistic competition.

Accepted Answer

A) True 
 B)False

Question 14

The apparent stickiness of the price of goods sold by oligopolists can be explained by the

Accepted Answer

A) contestable markets model. 
B) sales maximization model. 
C) kinked demand curve model. 
D) entry deterrence model. 
A) contestable markets model. 
B) sales maximization model. 
C) kinked demand curve model. 
D) entry deterrence model.

Question 15

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.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

An oligopoly is a market in which at least some firms are large enough to influence market price.

Accepted Answer

A) True 
 B)False

Question 18

All players have dominant strategies.

Accepted Answer

A) True 
 B)False

Question 19

Economic theory of market forms between pure monopoly and perfect competition was largely nonexistent until the work of

Accepted Answer

A) Joan Robinson and Edward Chamberlin. 
B) Adam Smith and David Ricardo. 
C) Alfred Marshall and Francis Edgeworth. 
D) Wassily Leontief and Joseph Schumpeter. 
A) Joan Robinson and Edward Chamberlin. 
B) Adam Smith and David Ricardo. 
C) Alfred Marshall and Francis Edgeworth. 
D) Wassily Leontief and Joseph Schumpeter.

Question 20

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.

Exam 13: Between Competition and Monopoly

Figure 13-2 ​ -In Figure 13-2, which of the graphs represents a monopolistic competitor in long-run equilibrium?

Monopolistic competition is a market structure characterized by many small firms selling a homogeneous product.

One market that fits the characteristics of monopolistic competition is

The behavior of the perfectly competitive firm

Explain the prisoner's dilemma case in game theory and its relevance to the maximin criterion.

Firms in oligopoly markets are unable to collude effectively because cooperation is difficult with a large number of firms.

If a market situation is an example of a prisoners' dilemma, society can benefit by preventing the firms in the market from cooperating with each other.

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

A monopolistic competitor can expect to earn an economic profit in the long run.

Which of the following conditions distinguishes monopolistic competition from perfect competition?

The kinked demand curve model explains pricing in monopoly markets.

In the long run, a monopolistically competitive firm's demand curve must be tangent to its average cost curve.

Excess capacity and inefficiency result under monopolistic competition.

The apparent stickiness of the price of goods sold by oligopolists can be explained by the

An advertising race among oligopolists may be rational if it

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

An oligopoly is a market in which at least some firms are large enough to influence market price.

All players have dominant strategies.

Economic theory of market forms between pure monopoly and perfect competition was largely nonexistent until the work of

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

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 Figure 13-2, which of the graphs represents a monopolistic competitor in long-run equilibrium?