Question 1

As the name monopolistic competition implies, a firm's decisions in this setting will in certain ways resemble _______ and in other ways resemble _______.

Accepted Answer

A)   monopoly; imperfect competition
B)   monopoly; perfect competition
C)   imperfect competition; perfect competition
D)   imperfect competition; oligopoly

Question 2

Which of the following would most likely create the setting for an oligopoly?

Accepted Answer

A)   government grants Alex, Trent, and Alyse each a patent for their respective molybdenum based electric car batteries
B)   market demand is two or more times less than quantity needed to produce at the minimum of the AC curve
C)   market demand is two or more times more than quantity needed to produce at the minimum of the MC curve
D)   insurmountable technological difficulty associated with producing similar products acts as an effective barrier to entry

Question 3

How can parties who find themselves in a prisoner's dilemma situation avoid the undesired outcome and cooperate with each other?

Accepted Answer

A)   one oligopoly can physically beat up another oligopoly
B)   by seeking alternatives to create pressure for members to keep output up and prices up
C)   find effective ways to penalize firms who do not cooperate
D)   sign legally enforceable contracts setting out their mutual agreement to act like a monopoly

Question 4

If oligopolistic firms banded together with the intention of acting like a monopoly, it would likely result in their being able to

Accepted Answer

A)   divide up the monopoly level of profit amongst themselves.
B)   hold down output in the short-run.
C)   charge a higher price in the short-run.
D)   both b and c above are correct.

Question 5

Which of the following is a question economists have struggled to address with only partial success?

Accepted Answer

A)   Whether monopolistic competition provides optimal productive or allocative efficiency?
B)   Whether a market-oriented economy produces the optimal amount of variety?
C)   Does a market-orientated economy provide productive or allocative efficiency?
D)   Does a monopolistically competitive industry displays allocative efficiency in the short run?

Question 6

Identify and briefly discuss the ways to conceive how advertising works in the framework of monopolistic competition.

Accepted Answer

In the framework of monopolistic competi...

Question 7

A monopolistic competitor has the following information on cost and demand.  What will the firm's profits equal in the long run?

Accepted Answer

A)   $0
B)   $91
C)   $102
D)   $228

Question 8

The demand curve as perceived by a perfectly competitive firm is _______.

Accepted Answer

A)   flat
B)   downward sloping
C)   upward sloping
D)   hump shaped

Question 9

If one firm operating in an oligopoly raises its price and other firms do not do so,

Accepted Answer

A)   the sales of the firm with the higher price will decline slightly.
B)   the egos of all the top executives will eventually lead to cooperation at that higher price.
C)   the sales of the firm that increased its price will decline sharply.
D)   the firm with the increased price will have its higher profits sustained through cooperation.

Question 10

The typical slope of the demand curve as perceived by a monopolistic competitor will

Accepted Answer

A)   be steeper than the demand curve perceived by a monopolist.
B)   reflect that firm's ability raise its price without losing all of its customers.
C)   show less of a decline in demand than would a monopoly that raised its prices.
D)   be reflective of a perfectly competitive firm and all of the above.

Question 11

If a monopolistic competitor raises its price, it _______ customers than a perfectly
Competitive firm, but _______ that raised its prices would.

Accepted Answer

A)   will lose more; it will lose as many
B)   will lose more; it will lose more
C)   will lose fewer; it will lose more
D)   will lose fewer; it will lose as many

Question 12

If each of two competing monopolists undertakes equal advertising efforts to attract consumers away from the other, the total result is

Accepted Answer

A)   they will both increase market share.
B)   they will simply neutralize one another's efforts.
C)   they will both lose market share.
D)   they will both improve their industrial position.

Question 13

A monopolistic competitor has the following information about cost and demand.

What will this firm's profits equal in the short run?

Accepted Answer

A)   -$55
B)   $0
C)   $250
D)   $280

Question 14

Oligopoly firms acting individually may seek to gain profits _______.

Accepted Answer

A)   by expanding levels of output and cutting prices
B)   by selling products that are distinctive in some way
C)   by having a mini-monopoly on a particular brand name
D)   by having a mini-monopoly or through tough competition

Question 15

The single most common form of competition in the U.S. is

Accepted Answer

A)   perfect competition among firms with differentiated products.
B)   monopolistic competition among firms with differentiated products.
C)   oligopolistic competition in a certain market with similar products.
D)   perfect competition because it displays product and allocative efficiencies.

Question 16

In the highly competitive setting in which oligopoly firms operate, which of the following are considered to be typical temptations each may face?

Accepted Answer

A)   to cooperate to generate and then divide up monopoly-like profits
B)   to cooperate to mutually decide what price to charge
C)   to cooperate to make decisions about what quantity to produce
D)   to cooperate to act as a single monopoly and all of the above

Question 17

Through the process of exit, monopolistically competitive firms remaining in the market

Accepted Answer

A)   are no longer earning zero economic profits.
B)   will each have ongoing negative earnings.
C)   are no longer earning losses.
D)   have positive earnings.

Question 18

The following table shows the demand curve and cost information for a firm that is a monopoly.

If they maximize their profits, what will their profits equal?

Accepted Answer

A)   $650
B)   $1,250
C)   $2,000
D)   $2,250

Question 19

In the competitive market for figure skate blades, manufacturers offer an array of products that are

Accepted Answer

A)   distinctly different in a particular way.
B)   distinctly similar in a particular way.
C)   virtually identical on the competition spectrum.
D)   at opposite ends of the competition spectrum.

Question 20

If oligopolists compete hard against each other,

Accepted Answer

A)   they end up acting very much like imperfect competitors.
B)   costs for all are driven up.
C)   zero profits result for all.
D)   they end up acting very much like monopolistic competitors.

Exam 10: Monopolistic Competition and Oligopoly

Oligopoly firms acting individually may seek to gain profits _______.

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Through the process of exit, monopolistically competitive firms remaining in the market

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As the name monopolistic competition implies, a firm's decisions in this setting will in certain ways resemble _______ and in other ways resemble _______.

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The demand curve as perceived by a perfectly competitive firm is _______.

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The following table shows the demand curve and cost information for a firm that is a monopoly. If they maximize their profits, what will their profits equal?

Correct AnswerverifiedShow Answer

The typical slope of the demand curve as perceived by a monopolistic competitor will

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Identify and briefly discuss the ways to conceive how advertising works in the framework of monopolistic competition.

Correct AnswerverifiedIn the framework of monopolistic competi...View AnswerShow Answer

Which of the following would most likely create the setting for an oligopoly?

Correct AnswerverifiedShow Answer

A monopolistic competitor has the following information about cost and demand. What will this firm's profits equal in the short run?

Correct AnswerverifiedShow Answer

In the highly competitive setting in which oligopoly firms operate, which of the following are considered to be typical temptations each may face?

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If one firm operating in an oligopoly raises its price and other firms do not do so,

Correct AnswerverifiedShow Answer

If oligopolistic firms banded together with the intention of acting like a monopoly, it would likely result in their being able to

Correct AnswerverifiedShow Answer

If each of two competing monopolists undertakes equal advertising efforts to attract consumers away from the other, the total result is

Correct AnswerverifiedShow Answer

If oligopolists compete hard against each other,

Correct AnswerverifiedShow Answer

If a monopolistic competitor raises its price, it _______ customers than a perfectly Competitive firm, but _______ that raised its prices would.

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A monopolistic competitor has the following information on cost and demand. What will the firm's profits equal in the long run?

Correct AnswerverifiedShow Answer

How can parties who find themselves in a prisoner's dilemma situation avoid the undesired outcome and cooperate with each other?

Correct AnswerverifiedShow Answer

In the competitive market for figure skate blades, manufacturers offer an array of products that are

Correct AnswerverifiedShow Answer

Which of the following is a question economists have struggled to address with only partial success?

Correct AnswerverifiedShow Answer

The single most common form of competition in the U.S. is

Correct AnswerverifiedShow Answer

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As the name monopolistic competition implies, a firm's decisions in this setting will in certain ways resemble _ and in other ways resemble _.

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In the framework of monopolistic competi...
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If a monopolistic competitor raises its price, it _ customers than a perfectly Competitive firm, but _ that raised its prices would.

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