Question 1

For an oligopoly,when the quantity effect does not outweigh the price effect,the firm:

Accepted Answer

A)  has no incentive to increase output.
B)  has an incentive to increase output.
C)  has no incentive to decrease output.
D)  None of these statements is true.E) None of the above
F) A) and B)

Question 2

Strategic behavior is key in defining which market structure?

Accepted Answer

A)  Monopoly
B)  Oligopoly
C)  Monopolistic competition
D)  Perfect competitionE) A) and C)
F) A) and B)

Question 3

One of the defining characteristics of an oligopoly is that:

Accepted Answer

A)  strategic interactions between a firm and its rivals have a major impact on its success.
B)  the quantity set by an individual firm affects the others' profits.
C)  the price set by an individual firm affects the others' profits.
D)  All of these statements are true.E) A) and B)
F) A) and C)

Question 4

The demand curve facing the monopolistically competitive firm is:

Accepted Answer

A)  steeper than that of their competition.
B)  flatter than that of a monopolist.
C)  steeper than that of a monopolist.
D)  flatter than that of a perfectly competitive firm.E) All of the above
F) A) and B)

Question 5

The process of entry and exit into a monopolistically competitive market continues until:

Accepted Answer

A)  profits are positive.
B)  profits are negative.
C)  profits are zero.
D)  Any of these statements could be true.E) C) and D)
F) All of the above

Question 6

If government were to regulate a monopolistically competitive market by setting a single price,a consequence would be:

Accepted Answer

A)  less product variety.
B)  lower prices in those markets.
C)  more output supplied to the market.
D)  All of these statements are true.E) B) and D)
F) A) and B)

Question 7

These are the cost and revenue curves associated with a monopolistically competitive firm. 
According to the graph shown,area A represents:

Accepted Answer

A)  profits earned in the short run.
B)  profits earned in the short and long run.
C)  profits earned in the long run.
D)  consumer surplus.E) B) and D)
F) C) and D)

Question 8

Monopolistically competitive firms have an incentive to:

Accepted Answer

A)  engage in tactics for bringing in more customers.
B)  advertise.
C)  engage in brand promotion.
D)  All of these statements are true.E) A) and D)
F) A) and C)

Question 9

A company with a strong brand identity:

Accepted Answer

A)  conveys to customers an implicit guarantee of a product's quality.
B)  promises consistency to customers.
C)  can perpetuate false perceptions of quality or product differences.
D)  All of these statements are true.E) B) and C)
F) A) and C)

Question 10

The fewer the number of firms present in a market,the:

Accepted Answer

A)  more competition is likely to be present.
B)  less likely barriers to entry are present.
C)  more likely market power will exist.
D)  less like a monopoly it will behave.E) B) and C)
F) None of the above

Question 11

This prisoner's dilemma game shows the payoffs associated with two firms,A and B,in an oligopoly and their choices to either collude with one another or not. 
According to the matrix shown,the outcome of the "game" will be:

Accepted Answer

A)  both firms will act like a joint monopolist and both collude.
B)  both firms will compete.
C)  Firm A will compete and Firm will collude.
D)  Firm B will compete and Firm A will collude.E) A) and B)
F) A) and C)

Question 12

These are the cost and revenue curves associated with a firm. 
If the firm in the given graph were to produce Q1 and charge P3,the area A would represent:

Accepted Answer

A)  consumer surplus.
B)  producer surplus.
C)  deadweight loss.
D)  profits.E) A) and D)
F) C) and D)

Question 13

If a monopolistically competitive firm is earning profits in the short run:

Accepted Answer

A)  the entry of competing firms will shift the firm's demand to the right.
B)  the entry of competing firms will shift the firm's demand to the left.
C)  the entry of competing firms will cause price to drop,but not affect the firm's demand curve.
D)  the entry of competing firms will cause price to rise,but not affect the firm's demand curve.E) All of the above
F) B) and C)

Question 14

The welfare loss associated with the outcome in a colluding oligopoly is:

Accepted Answer

A)  smaller than that of a perfectly competitive outcome.
B)  smaller than that of a competitive oligopoly.
C)  the same as that of a perfectly competitive outcome.
D)  None of these statements is true.E) A) and B)
F) All of the above

Question 15

These are the cost and revenue curves associated with a firm. 
If the firm in the graph were producing Q2 and charging P2,it:

Accepted Answer

A)  represents the perfectly competitive outcome.
B)  is an efficient outcome.
C)  is an outcome that eliminates deadweight loss.
D)  All of these statements are true.E) A) and B)
F) None of the above

Question 16

The act of firms working together to make decisions about price and quantity is called:

Accepted Answer

A)  collusion.
B)  price discrimination.
C)  bulk ordering.
D)  promotion.E) A) and B)
F) A) and C)

Question 17

Which of the following market structures is considered imperfectly competitive?

Accepted Answer

A)  Perfect competition
B)  Monopolistic competition
C)  Monopoly
D)  All of these are considered imperfectly competitive.E) B) and D)
F) B) and C)

Question 18

In the short run,product differentiation enables firms in monopolistically competitive markets to:

Accepted Answer

A)  produce a good for which there are no exact substitutes.
B)  standardize goods.
C)  collude.
D)  act like perfectly competitive firms.E) B) and C)
F) C) and D)

Question 19

These are the cost and revenue curves associated with a firm. 
According to the graph,this firm could maximize profits by producing _______ and charging ____.

Accepted Answer

A)  Q1;P2
B)  Q1;P3
C)  Q2;P2
D)  Q1;P1E) A) and D)
F) A) and C)

Question 20

This prisoner's dilemma game shows the payoffs associated with two firms,A and B,in an oligopoly and their choices to either collude with one another or not. 
Given the payoffs in the matrix shown,Firm B:

Accepted Answer

A)  should always choose to compete,regardless of Firm A's actions.
B)  should always choose to collude,regardless of Firm A's actions.
C)  should compete if Firm A competes and collude if Firm A colludes.
D)  should compete if Firm A colludes and collude if Firm A competes.E) None of the above
F) All of the above

Exam 15: Monopolistic Competition and Oligopoly

In the short run,product differentiation enables firms in monopolistically competitive markets to:

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These are the cost and revenue curves associated with a monopolistically competitive firm. According to the graph shown,area A represents:

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Strategic behavior is key in defining which market structure?

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One of the defining characteristics of an oligopoly is that:

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This prisoner's dilemma game shows the payoffs associated with two firms,A and B,in an oligopoly and their choices to either collude with one another or not. Given the payoffs in the matrix shown,Firm B:

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The process of entry and exit into a monopolistically competitive market continues until:

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These are the cost and revenue curves associated with a firm. According to the graph,this firm could maximize profits by producing _______ and charging ____.

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If a monopolistically competitive firm is earning profits in the short run:

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For an oligopoly,when the quantity effect does not outweigh the price effect,the firm:

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Which of the following market structures is considered imperfectly competitive?

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A company with a strong brand identity:

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These are the cost and revenue curves associated with a firm. If the firm in the given graph were to produce Q1 and charge P3,the area A would represent:

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This prisoner's dilemma game shows the payoffs associated with two firms,A and B,in an oligopoly and their choices to either collude with one another or not. According to the matrix shown,the outcome of the "game" will be:

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Monopolistically competitive firms have an incentive to:

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The demand curve facing the monopolistically competitive firm is:

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The fewer the number of firms present in a market,the:

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If government were to regulate a monopolistically competitive market by setting a single price,a consequence would be:

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These are the cost and revenue curves associated with a firm. If the firm in the graph were producing Q2 and charging P2,it:

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The welfare loss associated with the outcome in a colluding oligopoly is:

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The act of firms working together to make decisions about price and quantity is called:

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These are the cost and revenue curves associated with a firm. According to the graph,this firm could maximize profits by producing ___ and charging .

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