Question 1

Which of the following helps prevent firms in the United States from forming collusive agreements?

Accepted Answer

A)  The low demand faced by colluding firms 
B)  The antitrust policy of the government 
C)  The high rate of corporate income taxes 
D)  The low profit earned by firms after colluding 
A)  The low demand faced by colluding firms 
B)  The antitrust policy of the government 
C)  The high rate of corporate income taxes 
D)  The low profit earned by firms after colluding B

Question 2

The firms in a monopolistic competition market produce and charge a price that is ________.

Accepted Answer

A)  not socially efficient and needs to be regulated by the government 
B)  not socially efficient but does not need to be regulated by the government 
C)  socially efficient and does not need to be regulated by the government 
D)  socially efficient but needs to be regulated by the government 
A)  not socially efficient and needs to be regulated by the government 
B)  not socially efficient but does not need to be regulated by the government 
C)  socially efficient and does not need to be regulated by the government 
D)  socially efficient but needs to be regulated by the government B

Question 3

Which of the following will happen if a new firm enters an oligopoly with differentiated products?

Accepted Answer

A)  The market price will fall. 
B)  The market price will rise. 
C)  The existing firms will gain market share. 
D)  Each firm will have an equal market share. 
A)  The market price will fall. 
B)  The market price will rise. 
C)  The existing firms will gain market share. 
D)  Each firm will have an equal market share. A

Question 4

The figure below depicts a monopolistically competitive firm in the short run.
  
-Refer to the figure above.In the short-run,the firm will product at output level ________ and charge price ________.

Accepted Answer

A)  Q₀; P₀ 
B)  Q₁; P₁ 
C)  Q₂; P₂ 
D)  none of the above 
A)  Q₀; P₀ 
B)  Q₁; P₁ 
C)  Q₂; P₂ 
D)  none of the above

Question 5

Which of the following markets has a single firm?

Accepted Answer

A)  Perfect competition 
B)  Monopolistic competition 
C)  Monopoly 
D)  Oligopoly 
A)  Perfect competition 
B)  Monopolistic competition 
C)  Monopoly 
D)  Oligopoly

Question 6

The Herfindahl-Hirschman Index is used to ________.

Accepted Answer

A)  measure the price elasticity of demand faced by a firm 
B)  estimate the degree of competition in an industry 
C)  measure the price elasticity of market supply in an industry 
D)  estimate the profit earned by firms in an industry 
A)  measure the price elasticity of demand faced by a firm 
B)  estimate the degree of competition in an industry 
C)  measure the price elasticity of market supply in an industry 
D)  estimate the profit earned by firms in an industry

Question 7

An industry is deemed concentrated when ________.

Accepted Answer

A)  each firm in that industry has a small market share 
B)  all the firms in that industry charge a price lower than the average cost of production 
C)  most of the firms in that industry earn zero economic profits in the long run 
D)  a few firms account for a large fraction of the total sales in that industry 
A)  each firm in that industry has a small market share 
B)  all the firms in that industry charge a price lower than the average cost of production 
C)  most of the firms in that industry earn zero economic profits in the long run 
D)  a few firms account for a large fraction of the total sales in that industry

Question 8

Firms in a(n)________ produce an efficient scale of output.

Accepted Answer

A)  monopolistically competitive market 
B)  monopoly market 
C)  oligopoly market with differentiated products 
D)  perfectly competitive market 
A)  monopolistically competitive market 
B)  monopoly market 
C)  oligopoly market with differentiated products 
D)  perfectly competitive market

Question 9

The Herfindahl-Hirschman Index approaches ________ when a market consists of a large number of firms of relatively equal size.

Accepted Answer

A)  one 
B)  zero 
C)  100 
D)  500 
A)  one 
B)  zero 
C)  100 
D)  500

Question 10

A monopolistic competitor produces 1,200 units of a good at an average cost of $120 per unit.If the price charged per unit is $135,calculate its total profit.

Accepted Answer

A)  $13,500 
B)  $1,100 
C)  $18,000 
D)  $2,000 
A)  $13,500 
B)  $1,100 
C)  $18,000 
D)  $2,000

Question 11

The table below summarizes the information possessed by a firm in a monopolistically competitive market. Quantity demanded is in thousands of units.
  
-Refer to the table above.The maximum profit earned by the firm is ________.

Accepted Answer

A)  $6,450 
B)  $7,800 
C)  $8,160 
D)  $10,240 
A)  $6,450 
B)  $7,800 
C)  $8,160 
D)  $10,240

Question 12

Homogeneous goods are ________.

Accepted Answer

A)  perfect complements 
B)  perfect substitutes 
C)  similar but not identical 
D)  always inferior goods 
A)  perfect complements 
B)  perfect substitutes 
C)  similar but not identical 
D)  always inferior goods

Question 13

Firm A charges $8.50 for each unit of Good X.If the average total cost of producing 1,000 units of Good X is $12 and the market for Good X is monopolistically competitive,Firm A ________ by producing 1,000 units of Good X.

Accepted Answer

A)  earns a profit of $3,500 
B)  earns a profit of $1,000 
C)  incurs a loss of $1,000 
D)  incurs a loss of $3,500 
A)  earns a profit of $3,500 
B)  earns a profit of $1,000 
C)  incurs a loss of $1,000 
D)  incurs a loss of $3,500

Question 14

A large number of firms in Petrovia sell energy drinks.However,each firm faces a downward-sloping demand curve.The market for energy drinks in Petrovia is an example of a(n)________.

Accepted Answer

A)  perfectly competitive market 
B)  monopolistically competitive market 
C)  monopoly 
D)  oligopoly 
A)  perfectly competitive market 
B)  monopolistically competitive market 
C)  monopoly 
D)  oligopoly

Question 15

Under what situations will a colluding firm cheat?

Accepted Answer

A colluding firm will cheat if it can ch

Question 16

The following figure shows the demand and cost curves faced by a monopolistic competitor.
  
-Refer to the figure above.The optimal price charged by the monopolistic competitor is ________.

Accepted Answer

A)  P₁ 
B)  P₂ 
C)  P₃ 
D)  P₄ 
A)  P₁ 
B)  P₂ 
C)  P₃ 
D)  P₄

Question 17

There are three leading manufacturers of smart phones in Argonesia.Their products are considered to be perfect substitutes.
a)Will these firms earn zero economic profits in the long run? Explain your answer.
b)What can the firms do to earn maximum profit?

Accepted Answer

a) The market for smart phones in Argone

Question 18

The figure below depicts a monopolistically competitive firm in long-run equilibrium.In this equilibrium,the profit-maximizing monopolistically competitive firm ________.

Accepted Answer

A)  earns positive economic profits 
B)  may earn positive or negative economic profits 
C)  earns zero economic profit 
D)  earns negative economic profits 
A)  earns positive economic profits 
B)  may earn positive or negative economic profits 
C)  earns zero economic profit 
D)  earns negative economic profits

Question 19

The following excerpt is from "Sotheby's Agree to Pay $512 Million Collusion Settlement," Wall Street Journal, September 25, 2000.
Sotheby's Holdings Inc. and rival Christie's International agreed to pay $512 million to settle claims by art buyers and sellers that the auction houses colluded on prices and cheated them, with nearly one-third of the tab to be paid by Sotheby's former chairman, A. Alfred Taubman. The proposed civil settlement comes as Justice Department prosecutors are reaching a critical stage in their three-year criminal probe of the world's largest auction houses. They are close to reaching agreements with Sotheby's and its former chief executive, Diane "Dede" Brooks, that would secure their testimony against Mr. Taubman in exchange for leniency and lighter penalties, according to people familiar with the matter.
-Refer to the excerpt above.The story illustrates a government use of so-called whistleblower protection to ________.

Accepted Answer

A)  regulate market power 
B)  regulate the merger of dominant firms 
C)  regulate price 
D)  regulate quantity 
A)  regulate market power 
B)  regulate the merger of dominant firms 
C)  regulate price 
D)  regulate quantity

Question 20

Total surplus is maximized in a(n)________.

Accepted Answer

A)  monopolistically competitive market 
B)  perfectly competitive market 
C)  oligopoly 
D)  monopoly 
A)  monopolistically competitive market 
B)  perfectly competitive market 
C)  oligopoly 
D)  monopoly

Which of the following helps prevent firms in the United States from forming collusive agreements?

The firms in a monopolistic competition market produce and charge a price that is ________.

Which of the following will happen if a new firm enters an oligopoly with differentiated products?

The figure below depicts a monopolistically competitive firm in the short run. -Refer to the figure above.In the short-run,the firm will product at output level and charge price .

Which of the following markets has a single firm?

The Herfindahl-Hirschman Index is used to ________.

An industry is deemed concentrated when ________.

Firms in a(n)________ produce an efficient scale of output.

The Herfindahl-Hirschman Index approaches ________ when a market consists of a large number of firms of relatively equal size.

A monopolistic competitor produces 1,200 units of a good at an average cost of $120 per unit.If the price charged per unit is $135,calculate its total profit.

The table below summarizes the information possessed by a firm in a monopolistically competitive market. Quantity demanded is in thousands of units. -Refer to the table above.The maximum profit earned by the firm is ________.

Homogeneous goods are ________.

Firm A charges $8.50 for each unit of Good X.If the average total cost of producing 1,000 units of Good X is $12 and the market for Good X is monopolistically competitive,Firm A ________ by producing 1,000 units of Good X.

A large number of firms in Petrovia sell energy drinks.However,each firm faces a downward-sloping demand curve.The market for energy drinks in Petrovia is an example of a(n)________.

Under what situations will a colluding firm cheat?

The following figure shows the demand and cost curves faced by a monopolistic competitor. -Refer to the figure above.The optimal price charged by the monopolistic competitor is ________.

There are three leading manufacturers of smart phones in Argonesia.Their products are considered to be perfect substitutes. a)Will these firms earn zero economic profits in the long run? Explain your answer. b)What can the firms do to earn maximum profit?

The figure below depicts a monopolistically competitive firm in long-run equilibrium.In this equilibrium,the profit-maximizing monopolistically competitive firm ________.

Total surplus is maximized in a(n)________.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Consumers and Incentives

Sellers and Incentives

Perfect Competition and the Invisible Hand

Trade

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Monopoly

Game Theory and Strategic Play

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters

Exam 14: Oligopoly and Monopolistic Competition

Which of the following helps prevent firms in the United States from forming collusive agreements?

The firms in a monopolistic competition market produce and charge a price that is ________.

Which of the following will happen if a new firm enters an oligopoly with differentiated products?

The figure below depicts a monopolistically competitive firm in the short run. -Refer to the figure above.In the short-run,the firm will product at output level ________ and charge price ________.

Which of the following markets has a single firm?

The Herfindahl-Hirschman Index is used to ________.

An industry is deemed concentrated when ________.

Firms in a(n)________ produce an efficient scale of output.

The Herfindahl-Hirschman Index approaches ________ when a market consists of a large number of firms of relatively equal size.

A monopolistic competitor produces 1,200 units of a good at an average cost of $120 per unit.If the price charged per unit is $135,calculate its total profit.

The table below summarizes the information possessed by a firm in a monopolistically competitive market. Quantity demanded is in thousands of units. -Refer to the table above.The maximum profit earned by the firm is ________.

Homogeneous goods are ________.

Firm A charges $8.50 for each unit of Good X.If the average total cost of producing 1,000 units of Good X is $12 and the market for Good X is monopolistically competitive,Firm A ________ by producing 1,000 units of Good X.

A large number of firms in Petrovia sell energy drinks.However,each firm faces a downward-sloping demand curve.The market for energy drinks in Petrovia is an example of a(n)________.

Under what situations will a colluding firm cheat?

The following figure shows the demand and cost curves faced by a monopolistic competitor. -Refer to the figure above.The optimal price charged by the monopolistic competitor is ________.

There are three leading manufacturers of smart phones in Argonesia.Their products are considered to be perfect substitutes. a)Will these firms earn zero economic profits in the long run? Explain your answer. b)What can the firms do to earn maximum profit?

The figure below depicts a monopolistically competitive firm in long-run equilibrium.In this equilibrium,the profit-maximizing monopolistically competitive firm ________.

Total surplus is maximized in a(n)________.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Consumers and Incentives

Sellers and Incentives

Perfect Competition and the Invisible Hand

Trade

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Monopoly

Game Theory and Strategic Play

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters

The figure below depicts a monopolistically competitive firm in the short run. -Refer to the figure above.In the short-run,the firm will product at output level and charge price .