Question 1

Which market is most likely to witness such actions and reactions as frequent new-product introductions,free samples,and aggressive advertising campaigns?

Accepted Answer

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

Question 2

The maximin criterion can be defined as which of the following?

Accepted Answer

A) One seeks the maximum of the minimum payoffs to the various available strategies. 
B) One seeks the minimum of the maximum losses among the various available strategies. 
C) One seeks the maximum of the minimum losses to the various available strategies. 
D) One seeks the maximum of the maximum gains of the various available strategies. 
A) One seeks the maximum of the minimum payoffs to the various available strategies. 
B) One seeks the minimum of the maximum losses among the various available strategies. 
C) One seeks the maximum of the minimum losses to the various available strategies. 
D) One seeks the maximum of the maximum gains of the various available strategies. A

Question 3

For collusion to make sense,the payoff matrix must be a

Accepted Answer

A) positive-sum game. 
B) zero-sum game. 
C) negative-sum game. 
D) negative-positive-sum game. 
A) positive-sum game. 
B) zero-sum game. 
C) negative-sum game. 
D) negative-positive-sum game. A

Question 4

Game theory may be used to solve problems of interdependent decision making by large firms.

Accepted Answer

A) True 
 B)False

Question 5

The cost-revenue diagrams for a monopolist and a monopolistic competitor are similar except that the demand curve for the monopolistic competitor is flatter.

Accepted Answer

A) True 
 B)False

Question 6

An oligopoly is a market dominated by a few sellers.

Accepted Answer

A) True 
 B)False

Question 7

Firms have the option of maximizing sales revenue or maximizing profits.If a firm chooses to maximize sales,then it will produce

Accepted Answer

A) more output and charge a lower price. 
B) the same output and charge a lower price. 
C) less output and charge a higher price. 
D) less output and charge a lower price. 
A) more output and charge a lower price. 
B) the same output and charge a lower price. 
C) less output and charge a higher price. 
D) less output and charge a lower price.

Question 8

In the long run,a monopolistically competitive firm produces at minimum average cost.

Accepted Answer

A) True 
 B)False

Question 9

Monopolistically competitive firms can earn large profits in the long run.

Accepted Answer

A) True 
 B)False

Question 10

Monopolistic competitors and perfect competitors are alike in

Accepted Answer

A) having horizontal demand curves. 
B) zero economic profit in the short run. 
C) zero economic profit in the long run. 
D) relying on advertising to attract buyers to their products. 
A) having horizontal demand curves. 
B) zero economic profit in the short run. 
C) zero economic profit in the long run. 
D) relying on advertising to attract buyers to their products.

Question 11

Monopolistic competition is characterized by

Accepted Answer

A) one firm selling several products. 
B) many firms selling the same product. 
C) many firms selling slightly different products. 
D) one firm selling one product. 
A) one firm selling several products. 
B) many firms selling the same product. 
C) many firms selling slightly different products. 
D) one firm selling one product.

Question 12

The kinked demand curve model explains pricing in monopoly markets.

Accepted Answer

A) True 
 B)False

Question 13

According to the kinked demand curve model,an oligopolist may face

Accepted Answer

A) more elastic demand than a monopolistic competitor. 
B) less elastic demand than a monopolistic competitor. 
C) more elastic demand if she raises her price than if she lowers her price. 
D) less elastic demand if she raises her price than if she lowers her price. 
A) more elastic demand than a monopolistic competitor. 
B) less elastic demand than a monopolistic competitor. 
C) more elastic demand if she raises her price than if she lowers her price. 
D) less elastic demand if she raises her price than if she lowers her price.

Question 14

Is it likely that oligopolistic firms will be in both a kinked demand curve situation and also engage in price leadership? Why or why not?

Accepted Answer

No,it is not.The models are not compatib

Question 15

A firm in a monopolistically competitive market makes no economic profit in the long run because

Accepted Answer

A) long-run marginal cost will be too high to make any economic profit. 
B) long-run price will be equal to long run marginal cost. 
C) long-run marginal cost will be equal to long run marginal revenue. 
D) long-run price will be equal to long run average cost. 
A) long-run marginal cost will be too high to make any economic profit. 
B) long-run price will be equal to long run marginal cost. 
C) long-run marginal cost will be equal to long run marginal revenue. 
D) long-run price will be equal to long run average cost.

Question 16

Oligopolistic firms never collude because they have almost no incentive to do so.

Accepted Answer

A) True 
 B)False

Question 17

A cartel is

Accepted Answer

A) a group of oligopolists who try to behave like a single monopolist and split the benefits among themselves. 
B) a government-approved organization for the exchange of technical information among firms. 
C) a form of competition among oligopolists. 
D) a regulated industry that is officially permitted to set the price of its product above long-run average total cost. 
A) a group of oligopolists who try to behave like a single monopolist and split the benefits among themselves. 
B) a government-approved organization for the exchange of technical information among firms. 
C) a form of competition among oligopolists. 
D) a regulated industry that is officially permitted to set the price of its product above long-run average total cost.

Question 18

____ is one in which exactly the amount one competitor gains must be lost by other competitors.

Accepted Answer

A) Nash equilibrium 
B) Prisoner's dilemma 
C) A win-win situation 
D) A zero-sum game 
A) Nash equilibrium 
B) Prisoner's dilemma 
C) A win-win situation 
D) A zero-sum game

Question 19

Economists place cartels among the least-desirable forms of market organization.

Accepted Answer

A) True 
 B)False

Question 20

The demand curve facing a monopolistically competitive firm is generally

Accepted Answer

A) steeper than the demand curve that would face a perfectly competitive firm in the same industry. 
B) less elastic than the demand curve that would face a monopoly in the same industry. 
C) steeper and more elastic than the demand curve that would face a perfectly competitive firm in the same industry. 
D) flatter than the demand curve that would face a monopoly in the same industry. 
A) steeper than the demand curve that would face a perfectly competitive firm in the same industry. 
B) less elastic than the demand curve that would face a monopoly in the same industry. 
C) steeper and more elastic than the demand curve that would face a perfectly competitive firm in the same industry. 
D) flatter than the demand curve that would face a monopoly in the same industry.

Exam 12: Between Competition and Monopoly

Which market is most likely to witness such actions and reactions as frequent new-product introductions,free samples,and aggressive advertising campaigns?

The maximin criterion can be defined as which of the following?

For collusion to make sense,the payoff matrix must be a

Game theory may be used to solve problems of interdependent decision making by large firms.

The cost-revenue diagrams for a monopolist and a monopolistic competitor are similar except that the demand curve for the monopolistic competitor is flatter.

An oligopoly is a market dominated by a few sellers.

Firms have the option of maximizing sales revenue or maximizing profits.If a firm chooses to maximize sales,then it will produce

In the long run,a monopolistically competitive firm produces at minimum average cost.

Monopolistically competitive firms can earn large profits in the long run.

Monopolistic competitors and perfect competitors are alike in

Monopolistic competition is characterized by

The kinked demand curve model explains pricing in monopoly markets.

According to the kinked demand curve model,an oligopolist may face

Is it likely that oligopolistic firms will be in both a kinked demand curve situation and also engage in price leadership? Why or why not?

A firm in a monopolistically competitive market makes no economic profit in the long run because

Oligopolistic firms never collude because they have almost no incentive to do so.

A cartel is

____ is one in which exactly the amount one competitor gains must be lost by other competitors.

Economists place cartels among the least-desirable forms of market organization.

The demand curve facing a monopolistically competitive firm is generally

What Is Economics

The Economy: 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

Securities: Business Finance,and the Economy: The Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: the Price System

The Shortcomings of Free Markets

The Markets Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

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