Question 1

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) None of the above
F) A) and B)

Question 2

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) A) and D)
F) B) and C)

Question 3

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) None of the above
F) All of the above

Question 4

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) None of the above
F) C) and D)

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) None of the above
F) All of the above

Question 6

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) All of the above
F) A) and B)

Question 7

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) None of the above
F) A) and D)

Question 8

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) B) and C)
F) C) and D)

Question 9

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) C) and D)
F) B) and C)

Question 10

Strategic behavior is key in defining which market structure?

Accepted Answer

A)  Monopoly
B)  Oligopoly
C)  Monopolistic competition
D)  Perfect competitionE) None of the above
F) A) and B)

Question 11

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) None of the above

Question 12

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) A) and B)
F) A) and C)

Question 13

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) B) and C)

Question 14

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) B) and D)
F) None of the above

Question 15

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) A) and B)

Question 16

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) B) and D)
F) B) and C)

Question 17

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) B) and C)
F) B) and D)

Question 18

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) B) and D)
F) All of the above

Question 19

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) B) and D)
F) None of the above

Question 20

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) None of the above
F) B) and C)

Exam 15: Monopolistic Competition and Oligopoly

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

Correct AnswerverifiedShow Answer

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

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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:

Correct AnswerverifiedShow Answer

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

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

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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 firm. If the firm in the graph were producing Q2 and charging P2,it:

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Strategic behavior is key in defining which market structure?

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

Correct AnswerverifiedShow Answer

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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A company with a strong brand identity:

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One of the defining characteristics of an oligopoly is that:

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

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Which of the following market structures is considered imperfectly competitive?

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Monopolistically competitive firms have an incentive 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:

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The demand curve facing the monopolistically competitive firm is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct Answer
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