Question 1

The shutdown condition-the point where the company finds it no longer viable to produce and sell a product-for a competitive firm,in the short run,is where price is

Accepted Answer

A) less than marginal revenue. 
B) less than short-run average total cost. 
C) greater than marginal revenue. 
D) less than average variable cost. 
A) less than marginal revenue. 
B) less than short-run average total cost. 
C) greater than marginal revenue. 
D) less than average variable cost. D

Question 2

Elmer's Glue has captured the market for school glue.It is preferred by both students and parents alike.It takes very little capitalization to enter the market,but nobody succeeds in doing so.The glue clearly needs no patents or secret formulas.This type of market is called a(n)

Accepted Answer

A) pure or perfect competition. 
B) oligopoly. 
C) monopolistic competition. 
D) monopoly. 
A) pure or perfect competition. 
B) oligopoly. 
C) monopolistic competition. 
D) monopoly. C

Question 3

Recently American Airlines started charging $15 for each checked baggage.Why did the company not charge $15 to $20 more per ticket and quietly avoid this publicity?

Accepted Answer

This is a very good example of strategic play at various levels.If the company increased the price,then consumers would switch to other airlines,and this loss in sales would have affected the company heavily.By charging a fee for checked baggage,the company technically shifts the onus on to the consumers.Consumers who have already planned their trips are not going to shift for a mere $15,and new consumers will have to weigh in all the costs and benefits from searching for lower ticket prices.This risky decision made by the company may pay off,since all companies have had to make adjustments in recent months due to cost-push inflation.Indeed,the publicity serves as strategic advertisement that other companies cannot vie with.

Question 4

Under what market structure do we have strategic play?

Accepted Answer

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

Question 5

There are four structural components to a perfectly competitive market.Which one of the four components is the most important to market operation and why?

Accepted Answer

The four structural components to a perf

Question 6

Why would precommitment contracts,licenses,learning curve effects,and brand advantages protect an established corporation from new competitors?

Accepted Answer

Precommitment contracts,licens

Question 7

Explain why OPEC cannot always maintain a high price of oil by restricting production?

Accepted Answer

OPEC members face a prisoner's dilemma p

Question 8

A monopolist's demand curve is P = 10 - 2Q.Thus,the MR is

Accepted Answer

A) 5 - 2Q. 
B) 10 - Q. 
C) 10 - 4Q. 
D) 5 - Q. 
A) 5 - 2Q. 
B) 10 - Q. 
C) 10 - 4Q. 
D) 5 - Q.

Question 9

A necessary condition for market power to exist for a particular company in a market is that

Accepted Answer

A) information must be understood by both buyers and sellers. 
B) effective barriers to entry must exist. 
C) the number of firms should be over 150. 
D) consumers perceive all products as homogeneous. 
A) information must be understood by both buyers and sellers. 
B) effective barriers to entry must exist. 
C) the number of firms should be over 150. 
D) consumers perceive all products as homogeneous.

Question 10

The market environment heavily influences corporate decision-making ability.Discuss the differences in executive decisions concerning pricing,product design,and advertising between a company that exists in a perfectly competitive market and a company in a monopolistically competitive market.

Accepted Answer

In a perfectly competitive market,consum

Question 11

In a monopolistically competitive market,the advantage that a seller has over competitors or newcomers is

Accepted Answer

A) the consumer preference for its brand. 
B) the high price elasticity of demand for its product. 
C) the high price elasticity of supply for its product. 
D) the licenses or patents it has received. 
A) the consumer preference for its brand. 
B) the high price elasticity of demand for its product. 
C) the high price elasticity of supply for its product. 
D) the licenses or patents it has received.

Question 12

As a source of market power,a precommitment contract is an example of a(n)

Accepted Answer

A) newcomer advantage. 
B) incumbent advantage. 
C) incumbent reaction. 
D) newcomer reaction. 
A) newcomer advantage. 
B) incumbent advantage. 
C) incumbent reaction. 
D) newcomer reaction.

Question 13

A new entrant can deter the brand advantage enjoyed by an existing firm by

Accepted Answer

A) offering their product at a comparatively lower price. 
B) getting licenses and patents for their products. 
C) offering government certified products. 
D) investing in specific assets. 
A) offering their product at a comparatively lower price. 
B) getting licenses and patents for their products. 
C) offering government certified products. 
D) investing in specific assets.

Question 14

Currently,a monopolist's MR = $5 and its MC = $10 and it serves 10 consumers.An 11th consumer walks in.Should the company provide service to the additional customer?

Accepted Answer

A) Yes,MC is equal to the number of customers,so it should provide service to the additional customer. 
B) Yes,MR < MC,so it should provide service to the additional customer. 
C) No,MR is less than the number of customers,so it should not provide service to the additional customer. 
D) No,MR < MC,so it should not provide service to the additional customer. 
A) Yes,MC is equal to the number of customers,so it should provide service to the additional customer. 
B) Yes,MR < MC,so it should provide service to the additional customer. 
C) No,MR is less than the number of customers,so it should not provide service to the additional customer. 
D) No,MR < MC,so it should not provide service to the additional customer.

Question 15

An industry demand curve faced by firms in a duopoly is P = 69 - Q,where Q = Q1 + Q2.MC for each firm is 0.How many units should each firm produce? How much money will each firm make?

Accepted Answer

First the anticipated demand curves for

Question 16

Duds is a new laundry detergent trying to break into the market.What might be its big problem?

Accepted Answer

A) The cost it incurs in getting all its employees insured 
B) Entry costs in terms of getting shelf space in the retail stores 
C) Its employment policy 
D) Its outsourcing policy 
A) The cost it incurs in getting all its employees insured 
B) Entry costs in terms of getting shelf space in the retail stores 
C) Its employment policy 
D) Its outsourcing policy

Question 17

Manifold Manufacturing,a large producer of motorcycle parts,is accused of monopolizing the market for a particular motorcycle part.Why would its legal defense team be so interested in a statistical estimate that the price elasticity of demand for its motorcycle part was 0.62?

Accepted Answer

A monopolist would never maximize its pr

Question 18

If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal cost of MC = 1,100 + 2Q,then the firm will produce

Accepted Answer

A) 542 units. 
B) 150 units. 
C) 200 units. 
D) 900 units. 
A) 542 units. 
B) 150 units. 
C) 200 units. 
D) 900 units.

Question 19

If a competitive firm can sell its product at $1,600 per unit and the marginal cost of the firm is MC = 1,100 + 2Q,then the firm will produce

Accepted Answer

A) 1,084 units. 
B) 250 units. 
C) 160 units. 
D) 1,100 units. 
A) 1,084 units. 
B) 250 units. 
C) 160 units. 
D) 1,100 units.

Question 20

While very few markets are "purely competitive" according to the strict economics definition,market analysts often use competition as

Accepted Answer

A) the benchmark from which to judge other market settings. 
B) the standard of an inefficient market structure. 
C) an example of a market with poor entry and exit conditions. 
D) an example of a market with asymmetric information. 
A) the benchmark from which to judge other market settings. 
B) the standard of an inefficient market structure. 
C) an example of a market with poor entry and exit conditions. 
D) an example of a market with asymmetric information.

Exam 6: Market Structure

The shutdown condition-the point where the company finds it no longer viable to produce and sell a product-for a competitive firm,in the short run,is where price is

Elmer's Glue has captured the market for school glue.It is preferred by both students and parents alike.It takes very little capitalization to enter the market,but nobody succeeds in doing so.The glue clearly needs no patents or secret formulas.This type of market is called a(n)

Recently American Airlines started charging $15 for each checked baggage.Why did the company not charge $15 to $20 more per ticket and quietly avoid this publicity?

Under what market structure do we have strategic play?

There are four structural components to a perfectly competitive market.Which one of the four components is the most important to market operation and why?

Why would precommitment contracts,licenses,learning curve effects,and brand advantages protect an established corporation from new competitors?

Explain why OPEC cannot always maintain a high price of oil by restricting production?

A monopolist's demand curve is P = 10 - 2Q.Thus,the MR is

A necessary condition for market power to exist for a particular company in a market is that

The market environment heavily influences corporate decision-making ability.Discuss the differences in executive decisions concerning pricing,product design,and advertising between a company that exists in a perfectly competitive market and a company in a monopolistically competitive market.

In a monopolistically competitive market,the advantage that a seller has over competitors or newcomers is

As a source of market power,a precommitment contract is an example of a(n)

A new entrant can deter the brand advantage enjoyed by an existing firm by

Currently,a monopolist's MR = $5 and its MC = $10 and it serves 10 consumers.An 11th consumer walks in.Should the company provide service to the additional customer?

An industry demand curve faced by firms in a duopoly is P = 69 - Q,where Q = Q1 + Q2.MC for each firm is 0.How many units should each firm produce? How much money will each firm make?

Duds is a new laundry detergent trying to break into the market.What might be its big problem?

Manifold Manufacturing,a large producer of motorcycle parts,is accused of monopolizing the market for a particular motorcycle part.Why would its legal defense team be so interested in a statistical estimate that the price elasticity of demand for its motorcycle part was 0.62?

If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal cost of MC = 1,100 + 2Q,then the firm will produce

If a competitive firm can sell its product at $1,600 per unit and the marginal cost of the firm is MC = 1,100 + 2Q,then the firm will produce

While very few markets are "purely competitive" according to the strict economics definition,market analysts often use competition as

Introduction

Economists View of Behavior

Exchange and Markets

Demand

Production and Cost

Pricing With Market Power

Economics of Strategy: Creating and Capturing Value

Economics of Strategy: Game Theory

Incentive Conflicts and Contracts

Organizational Architecture

Decision Rights: the Level of Empowerment

Decision Rights: Bundling Tasks Into Jobs and Subunits

Attracting and Retaining Qualified Employees

Incentive Compensation

Individual Performance Evaluation

Divisional Performance Evaluation

Corporate Governance

Vertical Integration and Outsourcing

Leadership: Motivating Change Within Organizations

Understanding the Business Environment: the Economics of Regulation

Ethics and Organizational Architecture

Organizational Architecture and the Process of Management Innovation

Filters

Currently,a monopolist's MR = $5 and its MC = $10 and it serves 10 consumers.An 11^th consumer walks in.Should the company provide service to the additional customer?

An industry demand curve faced by firms in a duopoly is P = 69 - Q,where Q = Q₁ + Q₂.MC for each firm is 0.How many units should each firm produce? How much money will each firm make?