Question 1

A monopolist's demand curve is P = 10 - 2Q.Thus,the MR is

Accepted Answer

A)  5 - 2Q.
B)  10 - Q.
C)  10 - 4Q.
D)  5 - Q.E) B) and D)
F) None of the above

Question 2

Manifold Manufacturing,a large producer of motorcycle parts,is accused of monopolizing the market for a particular motorcycle part.Why would its legal defense team be so interested in a statistical estimate that the price elasticity of demand for its motorcycle part was 0.62?

Accepted Answer

A monopolist would never maximize its pr...

Question 3

Under what market structure do we have strategic play?

Accepted Answer

A)  Perfect Competition
B)  Monopoly
C)  Monopolistic Competition
D)  OligopolyE) C) and D)
F) A) and C)

Question 4

There are four structural components to a perfectly competitive market.Which one of the four components is the most important to market operation and why?

Accepted Answer

The four structural components to a perf...

Question 5

The market environment heavily influences corporate decision-making ability.Discuss the differences in executive decisions concerning pricing,product design,and advertising between a company that exists in a perfectly competitive market and a company in a monopolistically competitive market.

Accepted Answer

In a perfectly competitive market,consum...

Question 6

Elmer's Glue has captured the market for school glue.It is preferred by both students and parents alike.It takes very little capitalization to enter the market,but nobody succeeds in doing so.The glue clearly needs no patents or secret formulas.This type of market is called a(n)

Accepted Answer

A)  pure or perfect competition.
B)  oligopoly.
C)  monopolistic competition.
D)  monopoly.E) None of the above
F) B) and C) C

Question 7

In a monopolistically competitive market,the advantage that a seller has over competitors or newcomers is

Accepted Answer

A)  the consumer preference for its brand.
B)  the high price elasticity of demand for its product.
C)  the high price elasticity of supply for its product.
D)  the licenses or patents it has received.E) A) and D)
F) B) and D)

Question 8

A new entrant can deter the brand advantage enjoyed by an existing firm by

Accepted Answer

A)  offering their product at a comparatively lower price.
B)  getting licenses and patents for their products.
C)  offering government certified products.
D)  investing in specific assets.E) All of the above
F) None of the above

Question 9

A necessary condition for market power to exist for a particular company in a market is that

Accepted Answer

A)  information must be understood by both buyers and sellers.
B)  effective barriers to entry must exist.
C)  the number of firms should be over 150.
D)  consumers perceive all products as homogeneous.E) A) and B)
F) None of the above

Question 10

Why would precommitment contracts,licenses,learning curve effects,and brand advantages protect an established corporation from new competitors?

Accepted Answer

Precommitment contracts,licens...

Question 11

While very few markets are "purely competitive" according to the strict economics definition,market analysts often use competition as

Accepted Answer

A)  the benchmark from which to judge other market settings.
B)  the standard of an inefficient market structure.
C)  an example of a market with poor entry and exit conditions.
D)  an example of a market with asymmetric information.E) None of the above
F) B) and D)

Question 12

If a competitive firm can sell its product at $1,600 per unit and the marginal cost of the firm is MC = 1,100 + 2Q,then the firm will produce

Accepted Answer

A)  1,084 units.
B)  250 units.
C)  160 units.
D)  1,100 units.E) All of the above
F) B) and C)

Question 13

Recently American Airlines started charging $15 for each checked baggage.Why did the company not charge $15 to $20 more per ticket and quietly avoid this publicity?

Accepted Answer

This is a very good example of strategic play at various levels.If the company increased the price,then consumers would switch to other airlines,and this loss in sales would have affected the company heavily.By charging a fee for checked baggage,the company technically shifts the onus on to the consumers.Consumers who have already planned their trips are not going to shift for a mere $15,and new consumers will have to weigh in all the costs and benefits from searching for lower ticket prices.This risky decision made by the company may pay off,since all companies have had to make adjustments in recent months due to cost-push inflation.Indeed,the publicity serves as strategic advertisement that other companies cannot vie with.

Question 14

An industry demand curve faced by firms in a duopoly is P = 69 - Q,where Q = Q1 + Q2.MC for each firm is 0.How many units should each firm produce? How much money will each firm make?

Accepted Answer

First the anticipated demand curves for ...

Question 15

As a source of market power,a precommitment contract is an example of a(n)

Accepted Answer

A)  newcomer advantage.
B)  incumbent advantage.
C)  incumbent reaction.
D)  newcomer reaction.E) None of the above
F) A) and C)

Question 16

If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal cost of MC = 1,100 + 2Q,then the firm will produce

Accepted Answer

A)  542 units.
B)  150 units.
C)  200 units.
D)  900 units.E) None of the above
F) A) and C)

Question 17

Currently,a monopolist's MR = $5 and its MC = $10 and it serves 10 consumers.An 11th consumer walks in.Should the company provide service to the additional customer?

Accepted Answer

A)  Yes,MC is equal to the number of customers,so it should provide service to the additional customer.
B)  Yes,MR 
C)  No,MR is less than the number of customers,so it should not provide service to the additional customer.
D)  No,MR < MC,so it should not provide service to the additional customer.E) A) and B)
F) B) and D)

Question 18

Explain why OPEC cannot always maintain a high price of oil by restricting production?

Accepted Answer

OPEC members face a prisoner's dilemma p...

Question 19

Duds is a new laundry detergent trying to break into the market.What might be its big problem?

Accepted Answer

A)  The cost it incurs in getting all its employees insured
B)  Entry costs in terms of getting shelf space in the retail stores
C)  Its employment policy
D)  Its outsourcing policyE) B) and C)
F) None of the above

Question 20

The shutdown condition-the point where the company finds it no longer viable to produce and sell a product-for a competitive firm,in the short run,is where price is

Accepted Answer

A)  less than marginal revenue.
B)  less than short-run average total cost.
C)  greater than marginal revenue.
D)  less than average variable cost.E) A) and B)
F) A) and C) D

Exam 6: Market Structure

A monopolist's demand curve is P = 10 - 2Q.Thus,the MR is

Correct Answer
verified

Manifold Manufacturing,a large producer of motorcycle parts,is accused of monopolizing the market for a particular motorcycle part.Why would its legal defense team be so interested in a statistical estimate that the price elasticity of demand for its motorcycle part was 0.62?

Correct Answer
verified
A monopolist would never maximize its pr...
View Answer

Under what market structure do we have strategic play?

Correct Answer
verified

There are four structural components to a perfectly competitive market.Which one of the four components is the most important to market operation and why?

Correct Answer
verified
The four structural components to a perf...
View Answer

The market environment heavily influences corporate decision-making ability.Discuss the differences in executive decisions concerning pricing,product design,and advertising between a company that exists in a perfectly competitive market and a company in a monopolistically competitive market.

Correct Answer
verified
In a perfectly competitive market,consum...
View Answer

Elmer's Glue has captured the market for school glue.It is preferred by both students and parents alike.It takes very little capitalization to enter the market,but nobody succeeds in doing so.The glue clearly needs no patents or secret formulas.This type of market is called a(n)

Correct Answer
verified
C

In a monopolistically competitive market,the advantage that a seller has over competitors or newcomers is

Correct Answer
verified

A new entrant can deter the brand advantage enjoyed by an existing firm by

Correct Answer
verified

A necessary condition for market power to exist for a particular company in a market is that

Correct Answer
verified

Why would precommitment contracts,licenses,learning curve effects,and brand advantages protect an established corporation from new competitors?

Correct Answer
verified
Precommitment contracts,licens...
View Answer

While very few markets are "purely competitive" according to the strict economics definition,market analysts often use competition as

Correct Answer
verified

If a competitive firm can sell its product at $1,600 per unit and the marginal cost of the firm is MC = 1,100 + 2Q,then the firm will produce

Correct Answer
verified

Recently American Airlines started charging $15 for each checked baggage.Why did the company not charge $15 to $20 more per ticket and quietly avoid this publicity?

An industry demand curve faced by firms in a duopoly is P = 69 - Q,where Q = Q₁ + Q₂.MC for each firm is 0.How many units should each firm produce? How much money will each firm make?

Correct Answer
verified
First the anticipated demand curves for ...
View Answer

As a source of market power,a precommitment contract is an example of a(n)

Correct Answer
verified

If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal cost of MC = 1,100 + 2Q,then the firm will produce

Correct Answer
verified

Currently,a monopolist's MR = $5 and its MC = $10 and it serves 10 consumers.An 11^th consumer walks in.Should the company provide service to the additional customer?

Correct Answer
verified

Explain why OPEC cannot always maintain a high price of oil by restricting production?

Correct Answer
verified
OPEC members face a prisoner's dilemma p...
View Answer

Duds is a new laundry detergent trying to break into the market.What might be its big problem?

Correct Answer
verified

The shutdown condition-the point where the company finds it no longer viable to produce and sell a product-for a competitive firm,in the short run,is where price is

Correct Answer
verified
D

Exam 6: Market Structure

A monopolist's demand curve is P = 10 - 2Q.Thus,the MR is

Correct AnswerverifiedShow Answer

Manifold Manufacturing,a large producer of motorcycle parts,is accused of monopolizing the market for a particular motorcycle part.Why would its legal defense team be so interested in a statistical estimate that the price elasticity of demand for its motorcycle part was 0.62?

Correct AnswerverifiedA monopolist would never maximize its pr...View AnswerShow Answer

Under what market structure do we have strategic play?

Correct AnswerverifiedShow Answer

There are four structural components to a perfectly competitive market.Which one of the four components is the most important to market operation and why?

Correct AnswerverifiedThe four structural components to a perf...View AnswerShow Answer

The market environment heavily influences corporate decision-making ability.Discuss the differences in executive decisions concerning pricing,product design,and advertising between a company that exists in a perfectly competitive market and a company in a monopolistically competitive market.

Correct AnswerverifiedIn a perfectly competitive market,consum...View AnswerShow Answer

Elmer's Glue has captured the market for school glue.It is preferred by both students and parents alike.It takes very little capitalization to enter the market,but nobody succeeds in doing so.The glue clearly needs no patents or secret formulas.This type of market is called a(n)

Correct AnswerverifiedC

In a monopolistically competitive market,the advantage that a seller has over competitors or newcomers is

Correct AnswerverifiedShow Answer

A new entrant can deter the brand advantage enjoyed by an existing firm by

Correct AnswerverifiedShow Answer

A necessary condition for market power to exist for a particular company in a market is that

Correct AnswerverifiedShow Answer

Why would precommitment contracts,licenses,learning curve effects,and brand advantages protect an established corporation from new competitors?

Correct AnswerverifiedPrecommitment contracts,licens...View AnswerShow Answer

While very few markets are "purely competitive" according to the strict economics definition,market analysts often use competition as

Correct AnswerverifiedShow Answer

If a competitive firm can sell its product at $1,600 per unit and the marginal cost of the firm is MC = 1,100 + 2Q,then the firm will produce

Correct AnswerverifiedShow Answer

Recently American Airlines started charging $15 for each checked baggage.Why did the company not charge $15 to $20 more per ticket and quietly avoid this publicity?

An industry demand curve faced by firms in a duopoly is P = 69 - Q,where Q = Q1 + Q2.MC for each firm is 0.How many units should each firm produce? How much money will each firm make?

Correct AnswerverifiedFirst the anticipated demand curves for ...View AnswerShow Answer

As a source of market power,a precommitment contract is an example of a(n)

Correct AnswerverifiedShow Answer

If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal cost of MC = 1,100 + 2Q,then the firm will produce

Correct AnswerverifiedShow Answer

Currently,a monopolist's MR = $5 and its MC = $10 and it serves 10 consumers.An 11th consumer walks in.Should the company provide service to the additional customer?

Correct AnswerverifiedShow Answer

Explain why OPEC cannot always maintain a high price of oil by restricting production?

Correct AnswerverifiedOPEC members face a prisoner's dilemma p...View AnswerShow Answer

Duds is a new laundry detergent trying to break into the market.What might be its big problem?

Correct AnswerverifiedShow Answer

The shutdown condition-the point where the company finds it no longer viable to produce and sell a product-for a competitive firm,in the short run,is where price is

Correct AnswerverifiedD

Correct Answer
verified

Correct Answer
verified
A monopolist would never maximize its pr...
View Answer

Correct Answer
verified

Correct Answer
verified
The four structural components to a perf...
View Answer

Correct Answer
verified
In a perfectly competitive market,consum...
View Answer

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Precommitment contracts,licens...
View Answer

Correct Answer
verified

Correct Answer
verified

An industry demand curve faced by firms in a duopoly is P = 69 - Q,where Q = Q₁ + Q₂.MC for each firm is 0.How many units should each firm produce? How much money will each firm make?

Correct Answer
verified
First the anticipated demand curves for ...
View Answer

Correct Answer
verified

Correct Answer
verified

Currently,a monopolist's MR = $5 and its MC = $10 and it serves 10 consumers.An 11^th consumer walks in.Should the company provide service to the additional customer?

Correct Answer
verified

Correct Answer
verified
OPEC members face a prisoner's dilemma p...
View Answer

Correct Answer
verified

Correct Answer
verified
D