Question 1

The airline and long-distance telephone service industries are examples of

Accepted Answer

A)   monopolistic competition
B)   monopolies
C)   oligopolies
D)   perfect competition
E)   oligopolistic competitionF) All of the above
G) A) and E)

Question 2

When oligopolists secretly cooperate for their mutual benefit they are engaging in

Accepted Answer

A)   inclusion
B)   collusion
C)   seclusion
D)   exclusion
E)   discriminationF) A) and B)
G) B) and E)

Question 3

A Nash equilibrium

Accepted Answer

A)   occurs when quantity demanded equals quantity supplied
B)   exists when each player in a game is taking its best action -- given the actions taken by the other players
C)   exists when each player in a game picks the collectively optimal strategy
D)   is a kind of equilibrium that exists only in an oligopoly
E)   is a kind of equilibrium that exists only in a duopolyF) B) and E)
G) A) and B)

Question 4

-Sarah and Marisa are the only two baby-sitters available in a small town.Figure 11-14 indicates different combinations of hourly rates charged by the two teenagers,along with their weekly net earnings.If Sarah and Marisa do not collude,then

Accepted Answer

A)   in equilibrium,both will charge $4 per hour
B)   in equilibrium,both will charge $5 per hour
C)   in equilibrium,Sarah will charge $5 per hour;Marisa will charge $4 per hour
D)   in equilibrium,Sarah will charge $4 per hour;Marisa will charge $5 per hour
E)   there is no predictable equilibriumF) A) and C)
G) C) and E)

Question 5

If consumers are loyal to the products of an existing firm,this loyalty may

Accepted Answer

A)   reduce the incentives for the firm to invest
B)   result in more responsive management and better quality products
C)   reduce the demand for imported goods
D)   serve as a barrier to new entry into the market
E)   force the firm to produce at higher costsF) B) and C)
G) A) and D)

Question 6

-Figure 11-10 shows the long-run market demand curve and the cost structure for a typical monopolistic competitor.The minimum efficient scale (MES) is

Accepted Answer

A)   0
B)   200 units
C)   400 units
D)   800 units
E)   1,200 unitsF) C) and D)
G) None of the above

Question 7

In monopolistic competition,nonprice competition

Accepted Answer

A)   allows firms to earn above-normal profit in the long run
B)   initially causes a leftward shift in the demand curve for each firm's output
C)   causes each firm to move upward along a given average total cost curve
D)   might lead to economic profit in the short run
E)   causes each firm to move toward the right along the given demand curve for its outputF) C) and D)
G) None of the above

Question 8

-The maximum total economic profit,or minimum economic loss,for the monopolistically competitive firm in Figure 11-2 is

Accepted Answer

A)   zero
B)   a profit of $575.00
C)   a profit of $1,562.50
D)   a profit of $2,000.00
E)   a loss of $375.00F) A) and B)
G) None of the above

Question 9

Tacit collusion among firms does not involve explicit agreements on pricing and output levels.

Accepted Answer

A) True 
 B)False

Question 10

In which market structure do firms consider the actions of their rivals when setting prices and output?

Accepted Answer

A)   monopoly
B)   oligopoly
C)   perfect competition
D)   both monopoly and perfect competition
E)   monopolistic competitionF) A) and E)
G) C) and D)

Question 11

Price leadership

Accepted Answer

A)   is a form of explicit collusion
B)   works only when firms have dominant strategies
C)   is a form of tacit collusion
D)   reduces long-run economic profit for individual firms
E)   rarely is effective in setting prices in oligopolistic marketsF) B) and D)
G) C) and E)

Question 12

In which of the following situations is cheating on a collusive agreement is most likely?

Accepted Answer

A)   Prices are publicly posted.
B)   There are few sellers in the market.
C)   The market demand curve is elastic.
D)   There are economies of scale.
E)   Prices are difficult for competitors to observe.F) A) and D)
G) D) and E)

Exam 11: Monopolistic Competition and Oligopoly

In which market structure do firms consider the actions of their rivals when setting prices and output?

Correct Answer
verified

When oligopolists secretly cooperate for their mutual benefit they are engaging in

Correct Answer
verified

Price leadership

Correct Answer
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A Nash equilibrium

Correct Answer
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The airline and long-distance telephone service industries are examples of

Correct Answer
verified

-Sarah and Marisa are the only two baby-sitters available in a small town.Figure 11-14 indicates different combinations of hourly rates charged by the two teenagers,along with their weekly net earnings.If Sarah and Marisa do not collude,then

Correct Answer
verified

In monopolistic competition,nonprice competition

Correct Answer
verified

-The maximum total economic profit,or minimum economic loss,for the monopolistically competitive firm in Figure 11-2 is

Correct Answer
verified

Tacit collusion among firms does not involve explicit agreements on pricing and output levels.

Correct Answer
verified

-Figure 11-10 shows the long-run market demand curve and the cost structure for a typical monopolistic competitor.The minimum efficient scale (MES) is

Correct Answer
verified

If consumers are loyal to the products of an existing firm,this loyalty may

Correct Answer
verified

In which of the following situations is cheating on a collusive agreement is most likely?

Correct Answer
verified

Exam 11: Monopolistic Competition and Oligopoly

In which market structure do firms consider the actions of their rivals when setting prices and output?

Correct AnswerverifiedShow Answer

When oligopolists secretly cooperate for their mutual benefit they are engaging in

Correct AnswerverifiedShow Answer

Price leadership

Correct AnswerverifiedShow Answer

A Nash equilibrium

Correct AnswerverifiedShow Answer

The airline and long-distance telephone service industries are examples of

Correct AnswerverifiedShow Answer

-Sarah and Marisa are the only two baby-sitters available in a small town.Figure 11-14 indicates different combinations of hourly rates charged by the two teenagers,along with their weekly net earnings.If Sarah and Marisa do not collude,then

Correct AnswerverifiedShow Answer

In monopolistic competition,nonprice competition

Correct AnswerverifiedShow Answer

-The maximum total economic profit,or minimum economic loss,for the monopolistically competitive firm in Figure 11-2 is

Correct AnswerverifiedShow Answer

Tacit collusion among firms does not involve explicit agreements on pricing and output levels.

Correct AnswerverifiedShow Answer

-Figure 11-10 shows the long-run market demand curve and the cost structure for a typical monopolistic competitor.The minimum efficient scale (MES) is

Correct AnswerverifiedShow Answer

If consumers are loyal to the products of an existing firm,this loyalty may

Correct AnswerverifiedShow Answer

In which of the following situations is cheating on a collusive agreement is most likely?

Correct AnswerverifiedShow Answer

Correct Answer
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