Question 1

A monopolist is a _______________ and a monopolistic competitor is ______________________.

Accepted Answer

A) price searcher; also a price searcher 
B) price taker; a price searcher 
C) price taker; also a price taker 
D) price searcher; a price taker 
A) price searcher; also a price searcher 
B) price taker; a price searcher 
C) price taker; also a price taker 
D) price searcher; a price taker

Question 2

If two firms that form a cartel agreement are in a prisoner's dilemma game, then

Accepted Answer

A) both firms will have an incentive to break the agreement. 
B) only one firm will have an incentive to break the agreement. 
C) both firms will be worse off if they hold to the agreement than if they break it. 
D) both firms will have an incentive to hold to the agreement. 
A) both firms will have an incentive to break the agreement. 
B) only one firm will have an incentive to break the agreement. 
C) both firms will be worse off if they hold to the agreement than if they break it. 
D) both firms will have an incentive to hold to the agreement.

Question 3

Which of the following statements is true?

Accepted Answer

A) The monopolistic competitor, like the perfectly competitive firm, is resource-allocative efficient. 
B) The monopolistic competitor produces that quantity of output at which price equals marginal cost. 
C) The monopolistic competitor produces the quantity of output with the lowest per-unit costs. 
D) The monopolistic competitor most likely not earn economic profits in the long run. 
A) The monopolistic competitor, like the perfectly competitive firm, is resource-allocative efficient. 
B) The monopolistic competitor produces that quantity of output at which price equals marginal cost. 
C) The monopolistic competitor produces the quantity of output with the lowest per-unit costs. 
D) The monopolistic competitor most likely not earn economic profits in the long run.

Question 4

In the long run, new firms will enter a monopolistic competitive industry until

Accepted Answer

A) minimum average total cost is achieved. 
B) all firms are incurring losses. 
C) economic profits in the industry are zero. 
D) maximum total revenue is achieved. 
A) minimum average total cost is achieved. 
B) all firms are incurring losses. 
C) economic profits in the industry are zero. 
D) maximum total revenue is achieved.

Question 5

____________________ constitute(s)perhaps the most significant barrier to entry into an oligopolistic market.

Accepted Answer

A) Patent rights 
B) Exclusive ownership of essential resources 
C) Legal barriers 
D) Economies of scale 
E) Copyrights 
A) Patent rights 
B) Exclusive ownership of essential resources 
C) Legal barriers 
D) Economies of scale 
E) Copyrights

Question 6

If a perfectly competitive firm and a monopolistic competitor in long run equilibrium face the same demand and cost curves, then the competitive firm will produce a

Accepted Answer

A) greater output and charge a lower price than the monopolistic competitor. 
B) greater output, but charge the same price as the monopolistic competitor. 
C) greater output and charge a higher price than the monopolistic competitor. 
D) smaller output and charge a lower price than the monopolistic competitor. 
E) smaller output and charge a higher price than the monopolistic competitor. 
A) greater output and charge a lower price than the monopolistic competitor. 
B) greater output, but charge the same price as the monopolistic competitor. 
C) greater output and charge a higher price than the monopolistic competitor. 
D) smaller output and charge a lower price than the monopolistic competitor. 
E) smaller output and charge a higher price than the monopolistic competitor.

Question 7

If a contestable market does not satisfy all of the conditions of a perfectly competitive market, that contestable market _______________ achieve resource allocative efficiency.

Accepted Answer

A) will not 
B) will definitely 
C) could possibly 
D) This is a trick question since only monopolies achieve resource allocative efficiency. 
A) will not 
B) will definitely 
C) could possibly 
D) This is a trick question since only monopolies achieve resource allocative efficiency.

Question 8

The monopolistic competitor's demand curve is

Accepted Answer

A) perfectly elastic because of the many buyers and sellers in the market. 
B) downward sloping because of product differentiation. 
C) perfectly elastic because of identical products. 
D) downward sloping because of the few buyers and sellers in the market. 
A) perfectly elastic because of the many buyers and sellers in the market. 
B) downward sloping because of product differentiation. 
C) perfectly elastic because of identical products. 
D) downward sloping because of the few buyers and sellers in the market.

Question 9

The eight-firm concentration ratio for an industry is 0.65. If the top four firms in the industry account for $40 million in sales, what do total sales equal?

Accepted Answer

A) $26 million 
B) $45 million 
C) $11 million 
D) $20 million 
E) There is not enough information to answer the question. 
A) $26 million 
B) $45 million 
C) $11 million 
D) $20 million 
E) There is not enough information to answer the question.

Question 10

One of the necessary conditions for a contestable market is that new firms entering the market have a cost advantage over the existing firms.

Accepted Answer

A) True 
 B)False

Question 11

Monopolistic competitive firms and perfectly competitive firms are similar in that both

Accepted Answer

A) set price equal to marginal cost. 
B) face a horizontal demand curve. 
C) face no barriers to entry or exit. 
D) produce a homogeneous product. 
A) set price equal to marginal cost. 
B) face a horizontal demand curve. 
C) face no barriers to entry or exit. 
D) produce a homogeneous product.

Question 12

The theory of contestable markets concludes that

Accepted Answer

A) a small number of firms in an industry is strong evidence that they will perform in a noncompetitive way. 
B) even if the number of sellers in an industry is small, profits can be zero in the industry. 
C) inefficient producers can survive in a contestable market. 
D) a firm in a contestable market will sell at a price above marginal cost. 
A) a small number of firms in an industry is strong evidence that they will perform in a noncompetitive way. 
B) even if the number of sellers in an industry is small, profits can be zero in the industry. 
C) inefficient producers can survive in a contestable market. 
D) a firm in a contestable market will sell at a price above marginal cost.

Question 13

The percentage of sales accounted for by X number of firms in the industry is called the

Accepted Answer

A) concentration ratio. 
B) oligopoly rate. 
C) interdependence rate. 
D) market power index. 
A) concentration ratio. 
B) oligopoly rate. 
C) interdependence rate. 
D) market power index.

Question 14

List and describe the three assumptions upon which oligopoly behavior are based.

Accepted Answer

The three assumptions of oligopoly are:

Question 15

Wikipedia is an example of a project that follows the pattern of unstructured collaboration.

Accepted Answer

A) True 
 B)False

Question 16

One of the main criticisms of the theory of contestable markets is that the assumption of extremely free entry into (and costless exit from)the industry is unlikely to hold in the real world.

Accepted Answer

A) True 
 B)False

Question 17

Concentration ratios are used to determine

Accepted Answer

A) the number of firms in an industry. 
B) the potential for entry into an industry. 
C) the degree of product differentiation. 
D) the extent (degree)of oligopoly. 
A) the number of firms in an industry. 
B) the potential for entry into an industry. 
C) the degree of product differentiation. 
D) the extent (degree)of oligopoly.

Question 18

Compare and contrast the following market structures: oligopoly and monopolistic competition.

Accepted Answer

Monopolistic competitive firms face many

Question 19

The excess capacity theorem states that in equilibrium a monopolistic competitor will produce an output level larger than the one that would minimize its unit costs.

Accepted Answer

A) True 
 B)False

Question 20

The key behavioral assumption of the cartel theory is that oligopolists in the industry act as if

Accepted Answer

A) all firms in the industry are the same size. 
B) all firms in the industry are price takers. 
C) there is a dominant firm in the industry and many fringe firms. 
D) there is only one firm in the industry. 
A) all firms in the industry are the same size. 
B) all firms in the industry are price takers. 
C) there is a dominant firm in the industry and many fringe firms. 
D) there is only one firm in the industry.

Exam 11: Monopolistic Competition, Oligopoly, and Game Theory

A monopolist is a _______________ and a monopolistic competitor is ______________________.

If two firms that form a cartel agreement are in a prisoner's dilemma game, then

Which of the following statements is true?

In the long run, new firms will enter a monopolistic competitive industry until

____________________ constitute(s)perhaps the most significant barrier to entry into an oligopolistic market.

If a perfectly competitive firm and a monopolistic competitor in long run equilibrium face the same demand and cost curves, then the competitive firm will produce a

If a contestable market does not satisfy all of the conditions of a perfectly competitive market, that contestable market _______________ achieve resource allocative efficiency.

The monopolistic competitor's demand curve is

The eight-firm concentration ratio for an industry is 0.65. If the top four firms in the industry account for $40 million in sales, what do total sales equal?

One of the necessary conditions for a contestable market is that new firms entering the market have a cost advantage over the existing firms.

Monopolistic competitive firms and perfectly competitive firms are similar in that both

The theory of contestable markets concludes that

The percentage of sales accounted for by X number of firms in the industry is called the

List and describe the three assumptions upon which oligopoly behavior are based.

Wikipedia is an example of a project that follows the pattern of unstructured collaboration.

One of the main criticisms of the theory of contestable markets is that the assumption of extremely free entry into (and costless exit from)the industry is unlikely to hold in the real world.

Concentration ratios are used to determine

Compare and contrast the following market structures: oligopoly and monopolistic competition.

The excess capacity theorem states that in equilibrium a monopolistic competitor will produce an output level larger than the one that would minimize its unit costs.

The key behavioral assumption of the cartel theory is that oligopolists in the industry act as if

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages, Union, and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

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A monopolist is a _ and a monopolistic competitor is ________.