Question 1

Since only a few firms dominate the oligopoly market,cutthroat competition does not exist.

Accepted Answer

A) True 
 B)False  False

Question 2

A monopolistically competitive firm may earn above normal profits or may incur losses in the short run.

Accepted Answer

A) True 
 B)False  True

Question 3

A Nash equilibrium occurs when:

Accepted Answer

A) a unilateral move by a participant makes him better off. 
B) one can deviate from the equilibrium and improve the outcome. 
C) no one can move from the equilibrium and improve the outcome. 
D) participants have an incentive to deviate from the equilibrium. 
E) no one is better off. 
A) a unilateral move by a participant makes him better off. 
B) one can deviate from the equilibrium and improve the outcome. 
C) no one can move from the equilibrium and improve the outcome. 
D) participants have an incentive to deviate from the equilibrium. 
E) no one is better off. C

Question 4

The Gulf Cartel and Sinaloa Cartel are the two major cartels in illegal drug trade in Mexico.Although,each of these cartels are better off sharing the market,they have an incentive to try to take the entire market.In which of the following ways is cheating among these cartel members dealt with in this region?

Accepted Answer

A) Through government taxation policy 
B) Through legally enforceable contracts 
C) Through restrictions on the supply of inputs used by the firms 
D) Through output quota and price ceiling 
E) Through violence and drug wars 
A) Through government taxation policy 
B) Through legally enforceable contracts 
C) Through restrictions on the supply of inputs used by the firms 
D) Through output quota and price ceiling 
E) Through violence and drug wars

Question 5

A monopolistically competitive market is marked by the barriers to entry of new firms in the long run.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is true of the model of monopolistic competition?

Accepted Answer

A) Barriers to entry enable firms to enjoy positive profits in the long run. 
B) The number of firms declines over time as a result of economies of scale. 
C) The monopolistically competitive firms enjoy a greater market power than a monopolist. 
D) Firms tend to locate near each other in order to minimize total travel costs for consumers. 
E) The firms end up charging same prices for their individual products. 
A) Barriers to entry enable firms to enjoy positive profits in the long run. 
B) The number of firms declines over time as a result of economies of scale. 
C) The monopolistically competitive firms enjoy a greater market power than a monopolist. 
D) Firms tend to locate near each other in order to minimize total travel costs for consumers. 
E) The firms end up charging same prices for their individual products.

Question 7

For years,Intel was able to charge a higher price for microchips because:

Accepted Answer

A) it had a higher quality product than its rivals. 
B) it spent less on advertising than its rivals. 
C) consumers knew that Intel had the best employees. 
D) Intel relied more on foreign labor. 
E) of its successful product differentiation. 
A) it had a higher quality product than its rivals. 
B) it spent less on advertising than its rivals. 
C) consumers knew that Intel had the best employees. 
D) Intel relied more on foreign labor. 
E) of its successful product differentiation.

Question 8

Which of the following theories applies to strategic behavior?

Accepted Answer

A) Field Theory 
B) Game Theory 
C) Theory of Consumers' Behavior 
D) Social Contract Theory 
E) Rational Choice Theory 
A) Field Theory 
B) Game Theory 
C) Theory of Consumers' Behavior 
D) Social Contract Theory 
E) Rational Choice Theory

Question 9

Why is each firm in a monopolistically competitive industry considered as a "mini" monopoly?

Accepted Answer

A) There is a large number of sellers in the market 
B) Each firm in monopolistic competition is a price taker 
C) The product of each firm is unique in some way or the other 
D) Each firm faces a perfectly elastic demand curve 
E) There exists a large number of close substitutes of the products 
A) There is a large number of sellers in the market 
B) Each firm in monopolistic competition is a price taker 
C) The product of each firm is unique in some way or the other 
D) Each firm faces a perfectly elastic demand curve 
E) There exists a large number of close substitutes of the products

Question 10

When firms in an illegal market form a cartel,_____.

Accepted Answer

A) they are able to supply higher quality products 
B) it becomes more difficult for police to detect their activities 
C) they are able to increase profits by behaving as a monopolist 
D) they result in a deadweight loss 
E) they rely on goodwill to ensure the stability of the cartel 
A) they are able to supply higher quality products 
B) it becomes more difficult for police to detect their activities 
C) they are able to increase profits by behaving as a monopolist 
D) they result in a deadweight loss 
E) they rely on goodwill to ensure the stability of the cartel

Question 11

Which of the following is true of a successful cartel?

Accepted Answer

A) A successful cartel offers consumers the lowest possible price for a product. 
B) A successful cartel minimizes profits for its members. 
C) A successful cartel behaves as a monopolist in the market. 
D) A successful cartel produces a quantity greater than that produced in a competitive market. 
E) A successful cartel is always stable. 
A) A successful cartel offers consumers the lowest possible price for a product. 
B) A successful cartel minimizes profits for its members. 
C) A successful cartel behaves as a monopolist in the market. 
D) A successful cartel produces a quantity greater than that produced in a competitive market. 
E) A successful cartel is always stable.

Question 12

A most-favored customer is one who:

Accepted Answer

A) buys a firm's product regularly. 
B) is an acquaintance of the owner of the firm. 
C) is given the guarantee of receiving the lowest price for a product. 
D) spends the maximum amount of money on a firm's product. 
E) has a high purchasing power. 
A) buys a firm's product regularly. 
B) is an acquaintance of the owner of the firm. 
C) is given the guarantee of receiving the lowest price for a product. 
D) spends the maximum amount of money on a firm's product. 
E) has a high purchasing power.

Question 13

An oligopoly market consists of:

Accepted Answer

A) many firms which produce a standardized product. 
B) at least five firm one of which dominates the market. 
C) firms that make independent pricing and output decisions. 
D) a group of firms that dominate the market. 
E) firms which face perfectly elastic demand curves. 
A) many firms which produce a standardized product. 
B) at least five firm one of which dominates the market. 
C) firms that make independent pricing and output decisions. 
D) a group of firms that dominate the market. 
E) firms which face perfectly elastic demand curves.

Question 14

The market structure in which the largest quantity of output is sold at the minimum possible price is:

Accepted Answer

A) monopoly. 
B) perfect competition. 
C) oligopoly. 
D) monopolistic competition. 
E) duopoly. 
A) monopoly. 
B) perfect competition. 
C) oligopoly. 
D) monopolistic competition. 
E) duopoly.

Question 15

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms). Table 11.2   
-Refer to Table 11.2.If firm B follows its dominant strategy but firm A does not,firm B will earn a profit of:

Accepted Answer

A) $45. 
B) $40. 
C) $20. 
D) $60. 
E) $50 
A) $45. 
B) $40. 
C) $20. 
D) $60. 
E) $50

Question 16

The objective of creating a brand name is:

Accepted Answer

A) to reduce the price of the product. 
B) to ensure a steady supply of the good in the market. 
C) to reduce the price elasticity of demand. 
D) to reduce the cost of production of the firm. 
E) to attract rival firms into the market. 
A) to reduce the price of the product. 
B) to ensure a steady supply of the good in the market. 
C) to reduce the price elasticity of demand. 
D) to reduce the cost of production of the firm. 
E) to attract rival firms into the market.

Question 17

Advertising,brand names,packaging,and celebrity endorsements all occur in monopolistically competitive markets because:

Accepted Answer

A) significant barriers to entry exist in the real world. 
B) in the real world,there are very few markets with many firms. 
C) that gives the producer some command over the prices of their products. 
D) product differentiation seldom occurs in the real world. 
E) monopolistically competitive firms have an incentive to spend as much money as possible compared to their rivals. 
A) significant barriers to entry exist in the real world. 
B) in the real world,there are very few markets with many firms. 
C) that gives the producer some command over the prices of their products. 
D) product differentiation seldom occurs in the real world. 
E) monopolistically competitive firms have an incentive to spend as much money as possible compared to their rivals.

Question 18

A cartel is an organization of firms in which there is a dominant firm which dictates price and output decisions to the other member firms.

Accepted Answer

A) True 
 B)False

Question 19

In a monopolistically competitive industry,firms which enter the market in the long run produce a close substitute and not a standardized product.

Accepted Answer

A) True 
 B)False

Question 20

Strategic behavior occurs when a firm takes a particular strategy without considering the policies of its rivals.

Accepted Answer

A) True 
 B)False

Since only a few firms dominate the oligopoly market,cutthroat competition does not exist.

A monopolistically competitive firm may earn above normal profits or may incur losses in the short run.

A Nash equilibrium occurs when:

A monopolistically competitive market is marked by the barriers to entry of new firms in the long run.

Which of the following is true of the model of monopolistic competition?

For years,Intel was able to charge a higher price for microchips because:

Which of the following theories applies to strategic behavior?

Why is each firm in a monopolistically competitive industry considered as a "mini" monopoly?

When firms in an illegal market form a cartel,_____.

Which of the following is true of a successful cartel?

A most-favored customer is one who:

An oligopoly market consists of:

The market structure in which the largest quantity of output is sold at the minimum possible price is:

The objective of creating a brand name is:

Advertising,brand names,packaging,and celebrity endorsements all occur in monopolistically competitive markets because:

A cartel is an organization of firms in which there is a dominant firm which dictates price and output decisions to the other member firms.

In a monopolistically competitive industry,firms which enter the market in the long run produce a close substitute and not a standardized product.

Strategic behavior occurs when a firm takes a particular strategy without considering the policies of its rivals.

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Exam 11: Monopolistic Competition and Oligopoly

Since only a few firms dominate the oligopoly market,cutthroat competition does not exist.

A monopolistically competitive firm may earn above normal profits or may incur losses in the short run.

A Nash equilibrium occurs when:

A monopolistically competitive market is marked by the barriers to entry of new firms in the long run.

Which of the following is true of the model of monopolistic competition?

For years,Intel was able to charge a higher price for microchips because:

Which of the following theories applies to strategic behavior?

Why is each firm in a monopolistically competitive industry considered as a "mini" monopoly?

When firms in an illegal market form a cartel,_____.

Which of the following is true of a successful cartel?

A most-favored customer is one who:

An oligopoly market consists of:

The market structure in which the largest quantity of output is sold at the minimum possible price is:

The objective of creating a brand name is:

Advertising,brand names,packaging,and celebrity endorsements all occur in monopolistically competitive markets because:

A cartel is an organization of firms in which there is a dominant firm which dictates price and output decisions to the other member firms.

In a monopolistically competitive industry,firms which enter the market in the long run produce a close substitute and not a standardized product.

Strategic behavior occurs when a firm takes a particular strategy without considering the policies of its rivals.

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters