Question 1

Monopolistic competition tends to lead firms to have wasted capacity.Why?

Accepted Answer

Under monopolistic competition in the lo...

Question 2

Monopolies can misallocate resources by restricting output in an attempt to raise prices and profits.

Accepted Answer

A) True 
 B)False

Question 3

What are the advantages and disadvantages of resource allocation under monopolistic competition compared to perfect competition?

Accepted Answer

The disadvantage is that monopolisticall...

Question 4

Identify the market structure characterized by many small firms selling somewhat different products.

Accepted Answer

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

Question 5

A market is contestable if

Accepted Answer

A)  the number of firms is larger than oligopoly.
B)  firms spend a lot on advertising.
C)  there is free entry and exit.
D)  firms have kinked demand curves.

Question 6

The development of game theory was the work of

Accepted Answer

A)  Joan Robinson and Edward Chamberlin.
B)  John von Neumann and Oskar Morgenstern.
C)  Wassily Leontief and Joseph Schumpeter.
D)  John Maynard Keynes.

Question 7

Probably the simplest approach to the problem of oligopolistic interdependence is to

Accepted Answer

A)  conduct market experiments.
B)  assume that rivals will pursue a course most detrimental to the firm concerned.
C)  ignore the actions of rivals.
D)  increase the firm's advertising outlay considerably.

Question 8

What are the assumptions of the kinked demand curve model? What is its main conclusion about oligopoly behavior?

Accepted Answer

The model has two main assumptions: The ...

Question 9

The key difference between oligopoly and other market structures is the interdependence among producers.

Accepted Answer

A) True 
 B)False

Question 10

Firms in a perfectly contestable market will earn higher profits than firms in markets that are not perfectly contestable.

Accepted Answer

A) True 
 B)False

Question 11

Monopolistic competition has at least one similarity to perfect competition: firms are free to enter and leave the industry.

Accepted Answer

A) True 
 B)False

Question 12

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.

Question 13

The short-run equilibrium of the firm under monopolistic competition has excess capacity.

Accepted Answer

A) True 
 B)False

Question 14

Displayed below is the payoff matrix of firm B for four different strategies, B1, B2, B3, and B4, and the potential retaliatory responses of firm A (A1, A2, A3, A4) . Table 12-2  If firm B uses the maximin criterion, which strategy will it choose?
​

Accepted Answer

A)  B1
B)  B2
C)  B3
D)  B4

Question 15

If five firms constitute all of the producers in the wristwatch industry, we would call this market a duopoly.

Accepted Answer

A) True 
 B)False

Question 16

Monopolistic competition is different from perfect competition in that every manufacturer

Accepted Answer

A)  has a small monopoly, and differentiates the product.
B)  takes the product quality as given, and chooses price.
C)  takes output level as given, but must choose price.
D)  differentiates product, but cannot advertise successfully.

Question 17

OPEC became a successful cartel in the 1970s by deciding to restrict oil production.

Accepted Answer

A) True 
 B)False

Question 18

Here is an excerpt form an editorial praising capitalism in The Economist: "It is competition that delivers choice, holds prices down, encourages invention and service, and (through all these things) delivers economic growth." To what type of competition does the writer refer? Is it the sort of competition that economists study? Explain.

Accepted Answer

The competition here seems to be monopol...

Question 19

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 compati...

Question 20

A firm in monopolistically competitive market is producing 30 units of output.At this level of production, the firm charges $50 per unit.Its marginal cost is $24 and marginal revenue is $24, and average cost is $20 per unit.Given this information, this firm should

Accepted Answer

A)  maintain its current output, since it is maximizing profits.
B)  decrease output to increase profits.
C)  increase output to increase profits.
D)  shut down.

Exam 13: Between Competition and Monopoly

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?

Correct Answer
verified
No, it is not.The models are not compati...
View Answer

Correct Answer
verified
The competition here seems to be monopol...
View Answer

The development of game theory was the work of

Correct Answer
verified

A firm in monopolistically competitive market is producing 30 units of output.At this level of production, the firm charges $50 per unit.Its marginal cost is $24 and marginal revenue is $24, and average cost is $20 per unit.Given this information, this firm should

Correct Answer
verified

What are the advantages and disadvantages of resource allocation under monopolistic competition compared to perfect competition?

Correct Answer
verified
The disadvantage is that monopolisticall...
View Answer

Monopolistic competition has at least one similarity to perfect competition: firms are free to enter and leave the industry.

Correct Answer
verified

The short-run equilibrium of the firm under monopolistic competition has excess capacity.

Correct Answer
verified

Firms in a perfectly contestable market will earn higher profits than firms in markets that are not perfectly contestable.

Correct Answer
verified

Identify the market structure characterized by many small firms selling somewhat different products.

Correct Answer
verified

OPEC became a successful cartel in the 1970s by deciding to restrict oil production.

Correct Answer
verified

What are the assumptions of the kinked demand curve model? What is its main conclusion about oligopoly behavior?

Correct Answer
verified
The model has two main assumptions: The ...
View Answer

The key difference between oligopoly and other market structures is the interdependence among producers.

Correct Answer
verified

Monopolistic competition is different from perfect competition in that every manufacturer

Correct Answer
verified

Probably the simplest approach to the problem of oligopolistic interdependence is to

Correct Answer
verified

Monopolistic competitors and perfect competitors are alike in

Correct Answer
verified

If five firms constitute all of the producers in the wristwatch industry, we would call this market a duopoly.

Correct Answer
verified

A market is contestable if

Correct Answer
verified

Monopolistic competition tends to lead firms to have wasted capacity.Why?

Correct Answer
verified
Under monopolistic competition in the lo...
View Answer

Displayed below is the payoff matrix of firm B for four different strategies, B1, B2, B3, and B4, and the potential retaliatory responses of firm A (A1, A2, A3, A4) . Table 12-2 If firm B uses the maximin criterion, which strategy will it choose?

Correct Answer
verified

Monopolies can misallocate resources by restricting output in an attempt to raise prices and profits.

Correct Answer
verified

Exam 13: Between Competition and Monopoly

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?

Correct AnswerverifiedNo, it is not.The models are not compati...View AnswerShow Answer

Correct AnswerverifiedThe competition here seems to be monopol...View AnswerShow Answer

The development of game theory was the work of

Correct AnswerverifiedShow Answer

A firm in monopolistically competitive market is producing 30 units of output.At this level of production, the firm charges $50 per unit.Its marginal cost is $24 and marginal revenue is $24, and average cost is $20 per unit.Given this information, this firm should

Correct AnswerverifiedShow Answer

What are the advantages and disadvantages of resource allocation under monopolistic competition compared to perfect competition?

Correct AnswerverifiedThe disadvantage is that monopolisticall...View AnswerShow Answer

Monopolistic competition has at least one similarity to perfect competition: firms are free to enter and leave the industry.

Correct AnswerverifiedShow Answer

The short-run equilibrium of the firm under monopolistic competition has excess capacity.

Correct AnswerverifiedShow Answer

Firms in a perfectly contestable market will earn higher profits than firms in markets that are not perfectly contestable.

Correct AnswerverifiedShow Answer

Identify the market structure characterized by many small firms selling somewhat different products.

Correct AnswerverifiedShow Answer

OPEC became a successful cartel in the 1970s by deciding to restrict oil production.

Correct AnswerverifiedShow Answer

What are the assumptions of the kinked demand curve model? What is its main conclusion about oligopoly behavior?

Correct AnswerverifiedThe model has two main assumptions: The ...View AnswerShow Answer

The key difference between oligopoly and other market structures is the interdependence among producers.

Correct AnswerverifiedShow Answer

Monopolistic competition is different from perfect competition in that every manufacturer

Correct AnswerverifiedShow Answer

Probably the simplest approach to the problem of oligopolistic interdependence is to

Correct AnswerverifiedShow Answer

Monopolistic competitors and perfect competitors are alike in

Correct AnswerverifiedShow Answer

If five firms constitute all of the producers in the wristwatch industry, we would call this market a duopoly.

Correct AnswerverifiedShow Answer

A market is contestable if

Correct AnswerverifiedShow Answer

Monopolistic competition tends to lead firms to have wasted capacity.Why?

Correct AnswerverifiedUnder monopolistic competition in the lo...View AnswerShow Answer

Displayed below is the payoff matrix of firm B for four different strategies, B1, B2, B3, and B4, and the potential retaliatory responses of firm A (A1, A2, A3, A4) . Table 12-2 If firm B uses the maximin criterion, which strategy will it choose? ​

Correct AnswerverifiedShow Answer

Monopolies can misallocate resources by restricting output in an attempt to raise prices and profits.

Correct AnswerverifiedShow Answer

Correct Answer
verified
No, it is not.The models are not compati...
View Answer

Correct Answer
verified
The competition here seems to be monopol...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The disadvantage is that monopolisticall...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The model has two main assumptions: The ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Under monopolistic competition in the lo...
View Answer

Displayed below is the payoff matrix of firm B for four different strategies, B1, B2, B3, and B4, and the potential retaliatory responses of firm A (A1, A2, A3, A4) . Table 12-2 If firm B uses the maximin criterion, which strategy will it choose?

Correct Answer
verified

Correct Answer
verified