Question 1

The Herfindahl-Hirschman (HH)Index is used to

Accepted Answer

A) measure the degree of nonprice competition. 
B) measure the degree of market concentration in an industry. 
C) measure the extent of price leadership. 
D) None of the above 
A) measure the degree of nonprice competition. 
B) measure the degree of market concentration in an industry. 
C) measure the extent of price leadership. 
D) None of the above B

Question 2

In the kinked demand curve model,the demand curve is ________ for price increases and ________ for price decreases.

Accepted Answer

A) unit elastic; relatively elastic 
B) relatively inelastic; relatively elastic 
C) relatively elastic; relatively inelastic 
D) perfectly elastic; perfectly inelastic 
A) unit elastic; relatively elastic 
B) relatively inelastic; relatively elastic 
C) relatively elastic; relatively inelastic 
D) perfectly elastic; perfectly inelastic C

Question 3

Describe the transition from short-run to long-run equilibrium in a monopolistically competitive industry.

Accepted Answer

In the short run,firms in a monopolistically competitive industry may make a positive profit.However,since there are assumed to be no significant barriers to entry,positive profits attract entry.As more firms (or varieties)enter,the demand for each firm (or variety)decreases,and thus prices and profits fall until there is no further incentive for entry.

Question 4

Explain why the "kinked demand curve" model of oligopoly represents a game theory approach to oligopolistic behavior.

Accepted Answer

Game theory usually is defined as studyi

Question 5

Which of the following represents a good example of an oligopoly?

Accepted Answer

A) the agriculture industry 
B) a public utility 
C) the automobile industry 
D) the restaurant industry 
A) the agriculture industry 
B) a public utility 
C) the automobile industry 
D) the restaurant industry

Question 6

If firms are earning economic profit in a monopolistically competitive market,which of the following is most likely to happen in the long run?

Accepted Answer

A) Some firms will leave the market. 
B) Firms will join together to keep others from entering. 
C) New firms will enter the market,thereby eliminating the economic profit. 
D) Firms will continue to earn economic profit. 
A) Some firms will leave the market. 
B) Firms will join together to keep others from entering. 
C) New firms will enter the market,thereby eliminating the economic profit. 
D) Firms will continue to earn economic profit.

Question 7

How is a monopolistically competitive industry like perfect competition? How is it like monopoly?

Accepted Answer

Monopolistic competition is like perfect

Question 8

Convenience stores with gas stations tend to sell an essentially identical variety of products and services.Yet this is generally considered to be a monopolistically competitive industry selling differentiated products.How can this be considered a differentiated product?

Accepted Answer

These stor

Question 9

The existence of a kinked demand curve under oligopoly conditions may result in

Accepted Answer

A) price flexibility. 
B) price rigidity. 
C) competitive pricing. 
D) None of the above 
A) price flexibility. 
B) price rigidity. 
C) competitive pricing. 
D) None of the above

Question 10

Mutual interdependence occurs when

Accepted Answer

A) all firms in an industry are affected by the same macro economic conditions,such as a recession,inflation,interest rates,exchange rates,etc. 
B) the actions of firms are independent of each other. 
C) the actions of one firm in an industry are easily recognized and perhaps copied by others. 
D) monopolists recognize that they must face eventual competition in the long run. 
A) all firms in an industry are affected by the same macro economic conditions,such as a recession,inflation,interest rates,exchange rates,etc. 
B) the actions of firms are independent of each other. 
C) the actions of one firm in an industry are easily recognized and perhaps copied by others. 
D) monopolists recognize that they must face eventual competition in the long run.

Question 11

Why might a concentration ratio be a poor measure of actual industry competition?

Accepted Answer

Concentration ratios measure national co

Question 12

Which of the following industries is most likely to represent the monopolistic competition market structure?

Accepted Answer

A) automobiles 
B) tobacco products 
C) restaurants 
D) farm equipment 
A) automobiles 
B) tobacco products 
C) restaurants 
D) farm equipment

Question 13

In which of these markets would the firms be facing the least elastic demand curve?

Accepted Answer

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

Question 14

Porter's "Five Forces Model" is based on

Accepted Answer

A) the laws of supply and demand. 
B) the law of diminishing returns. 
C) the Structure-Conduct-Performance model. 
D) the key factors affecting demand. 
A) the laws of supply and demand. 
B) the law of diminishing returns. 
C) the Structure-Conduct-Performance model. 
D) the key factors affecting demand.

Question 15

The demand curve,which assumes that competitors will follow price decreases but not price increases,is called

Accepted Answer

A) an industry demand curve. 
B) an inelastic demand curve. 
C) a kinked demand curve. 
D) a competitive demand curve. 
A) an industry demand curve. 
B) an inelastic demand curve. 
C) a kinked demand curve. 
D) a competitive demand curve.

Question 16

In the long run,the most helpful action that a monopolistically competitive firm can take to maintain its economic profit is to

Accepted Answer

A) continue its efforts to differentiate its product. 
B) raise its price. 
C) lower its price. 
D) do nothing,because it will inevitably experience a decline in profits. 
A) continue its efforts to differentiate its product. 
B) raise its price. 
C) lower its price. 
D) do nothing,because it will inevitably experience a decline in profits.

Question 17

In general,there is a(n)________ relationship between the height/strength of the barriers and the number of firms in an industry.

Accepted Answer

A) direct 
B) inverse 
C) constant 
D) random 
A) direct 
B) inverse 
C) constant 
D) random

Question 18

Firms in monopolistic competition would

Accepted Answer

A) persistently realize economic profits in both the short and long run. 
B) may realize economic profits in the long run and normal profits in the short run. 
C) tend to incur persistent losses in both the short and long run. 
D) tend to realize economic profits in the short run and normal profits in the long run. 
A) persistently realize economic profits in both the short and long run. 
B) may realize economic profits in the long run and normal profits in the short run. 
C) tend to incur persistent losses in both the short and long run. 
D) tend to realize economic profits in the short run and normal profits in the long run.

Question 19

Restaurants cluster together.That is,on one corner,there may be four similar fast-food restaurants.How can this be explained using a location game theory model?

Accepted Answer

Similar to the beach kiosk model,restaur

Question 20

The kinked demand curve model best reflects

Accepted Answer

A) mutual interdependence among sellers. 
B) a game theory approach to price-output decisions. 
C) price rigidities in oligopolistic markets. 
D) All of the above 
A) mutual interdependence among sellers. 
B) a game theory approach to price-output decisions. 
C) price rigidities in oligopolistic markets. 
D) All of the above

The Herfindahl-Hirschman (HH)Index is used to

In the kinked demand curve model,the demand curve is for price increases and for price decreases.

Describe the transition from short-run to long-run equilibrium in a monopolistically competitive industry.

Explain why the "kinked demand curve" model of oligopoly represents a game theory approach to oligopolistic behavior.

Which of the following represents a good example of an oligopoly?

If firms are earning economic profit in a monopolistically competitive market,which of the following is most likely to happen in the long run?

How is a monopolistically competitive industry like perfect competition? How is it like monopoly?

Convenience stores with gas stations tend to sell an essentially identical variety of products and services.Yet this is generally considered to be a monopolistically competitive industry selling differentiated products.How can this be considered a differentiated product?

The existence of a kinked demand curve under oligopoly conditions may result in

Mutual interdependence occurs when

Why might a concentration ratio be a poor measure of actual industry competition?

Which of the following industries is most likely to represent the monopolistic competition market structure?

In which of these markets would the firms be facing the least elastic demand curve?

Porter's "Five Forces Model" is based on

The demand curve,which assumes that competitors will follow price decreases but not price increases,is called

In the long run,the most helpful action that a monopolistically competitive firm can take to maintain its economic profit is to

In general,there is a(n)________ relationship between the height/strength of the barriers and the number of firms in an industry.

Firms in monopolistic competition would

Restaurants cluster together.That is,on one corner,there may be four similar fast-food restaurants.How can this be explained using a location game theory model?

The kinked demand curve model best reflects

Introduction

The Firm and Its Goals

Supply and Demand

Demand Elasticity

Demand Estimation and Forecasting Appendices 5A and 5B

The Theory and Estimation of Production Appendices 6A,6B,and 6C

The Theory and Estimation of Cost Appendices 7A,7B,and 7C

Pricing and Output Decisions: Perfect Competition and Monopoly Appendices 8A and 8B

Special Pricing Practices

Game Theory and Asymmetric Information

Capital Budgeting and Risk

The Multinational Corporation in a Global Setting

Government and Industry: Challenges and Opportunities for Todays Manager

The Global Soft Drink Industry

Filters

Exam 9: Pricing and Output Decisions: Monopolistic Competition and Oligopoly

The Herfindahl-Hirschman (HH)Index is used to

In the kinked demand curve model,the demand curve is ________ for price increases and ________ for price decreases.

Describe the transition from short-run to long-run equilibrium in a monopolistically competitive industry.

Explain why the "kinked demand curve" model of oligopoly represents a game theory approach to oligopolistic behavior.

Which of the following represents a good example of an oligopoly?

If firms are earning economic profit in a monopolistically competitive market,which of the following is most likely to happen in the long run?

How is a monopolistically competitive industry like perfect competition? How is it like monopoly?

Convenience stores with gas stations tend to sell an essentially identical variety of products and services.Yet this is generally considered to be a monopolistically competitive industry selling differentiated products.How can this be considered a differentiated product?

The existence of a kinked demand curve under oligopoly conditions may result in

Mutual interdependence occurs when

Why might a concentration ratio be a poor measure of actual industry competition?

Which of the following industries is most likely to represent the monopolistic competition market structure?

In which of these markets would the firms be facing the least elastic demand curve?

Porter's "Five Forces Model" is based on

The demand curve,which assumes that competitors will follow price decreases but not price increases,is called

In the long run,the most helpful action that a monopolistically competitive firm can take to maintain its economic profit is to

In general,there is a(n)________ relationship between the height/strength of the barriers and the number of firms in an industry.

Firms in monopolistic competition would

Restaurants cluster together.That is,on one corner,there may be four similar fast-food restaurants.How can this be explained using a location game theory model?

The kinked demand curve model best reflects

Introduction

The Firm and Its Goals

Supply and Demand

Demand Elasticity

Demand Estimation and Forecasting Appendices 5A and 5B

The Theory and Estimation of Production Appendices 6A,6B,and 6C

The Theory and Estimation of Cost Appendices 7A,7B,and 7C

Pricing and Output Decisions: Perfect Competition and Monopoly Appendices 8A and 8B

Special Pricing Practices

Game Theory and Asymmetric Information

Capital Budgeting and Risk

The Multinational Corporation in a Global Setting

Government and Industry: Challenges and Opportunities for Todays Manager

The Global Soft Drink Industry

Filters

In the kinked demand curve model,the demand curve is for price increases and for price decreases.