Question 1

Which of the following is true of a typical firm in a monopolistically competitive industry?

Accepted Answer

A)   Product differentiation allows a successful firm to emerge as a market leader in the industry.
B)   All firms have identical cost structures.
C)   The more successful firms have an incentive to merge in order to exert greater market power.
D)   Each firm acts independently.E) A) and B)
F) A) and C)

Question 2

Figure 9.4 0aQa B)  0P1bQa C)  P0abP1 D)  P1bdP3" class="answers-bank-image d-inline" rel="preload" > Figure 9.4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 9.4.The area that represents the total variable cost of production is

Accepted Answer

A)   0P0aQa
B)   0P1bQa
C)   P0abP1
D)   P1bdP3E) None of the above
F) C) and D)

Question 3

A Nash equilibrium is ______.

Accepted Answer

A)   reached when an oligopoly's market demand and supply intersect
B)   reached when each player chooses the best strategy for himself and for the group
C)   reached when each player chooses the best strategy for himself, given the other strategies chosen by the other players in the group
D)   an equilibrium comprising non-dominant strategies onlyE) C) and D)
F) B) and D)

Question 4

In the long run,if the demand curve of a monopolistically competitive firm is tangent to its average total cost curve,then _______.

Accepted Answer

A)   the firm would break even
B)   the firm would shut down temporarily
C)   the firm would earn enough revenue to cover its variable costs, but not its fixed costs
D)   the firm would earn an economic profitE) A) and B)
F) A) and C)

Question 5

The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called _______.

Accepted Answer

A)   Nash equilibrium
B)   the prisoner's dilemma
C)   game theory
D)   dominant strategy equilibriumE) B) and D)
F) B) and C)

Question 6

Which of the following is not a barrier to entry?

Accepted Answer

A)   An inelastic demand curve
B)   Economies of scale
C)   Ownership of a key input
D)   A patentE) A) and C)
F) B) and C)

Question 7

Figure 9.8  Figure 9.8 shows cost and demand curves for a monopolistically competitive producer of iced tea.
-Refer to Figure 9.8.The firm's profit-maximising price is ______.

Accepted Answer

A)   $12
B)   $13
C)   $14
D)   $16E) B) and C)
F) A) and C)

Question 8

Consumers in monopolistically competitive markets face a trade-off between paying prices greater than marginal costs and purchasing products that are more closely suited to their tastes.

Accepted Answer

A) True 
 B)False

Question 9

In monopolistic competition,if a firm produces a highly desirable product relative to its competitors,the firm will be able to raise its price without losing any customers.

Accepted Answer

A) True 
 B)False

Question 10

In which type of industry is interdependence most common?

Accepted Answer

A)   Monopolistically competitive industries
B)   Monopolistic industries
C)   Monopolistically competitive and oligopolistic industries
D)   Oligopolistic industriesE) A) and C)
F) A) and D)

Question 11

An equilibrium in a game in which players pursue their own self-interest is called ________.

Accepted Answer

A)   a Nash equilibrium
B)   a cooperative equilibrium
C)   a non-cooperative equilibrium
D)   a prisoner's dilemmaE) A) and B)
F) A) and C)

Question 12

Which of the following statements is true about monopolistically competitive firms?

Accepted Answer

A)   Unlike perfectly competitive firms, monopolistically competitive firms are able to raise their prices without losing all of their customers.
B)   Like perfectly competitive firms, monopolistically competitive firms are not able to raise prices without losing all of their customers because they face competition from firms selling similar products.
C)   Like perfectly competitive firms, monopolistically competitive firms maximise their profits by settling price equal to marginal cost.
D)   Unlike perfectly competitive firms, monopolistically competitive firms face perfectly inelastic demand curves.E) None of the above
F) A) and B)

Question 13

For a monopolistically competitive firm,marginal revenue _______.

Accepted Answer

A)   equals the price
B)   is greater than the price
C)   is less than the price
D)   and price are unrelatedE) A) and D)
F) A) and C)

Question 14

Table 9.5
   Quantity  Price  (dollars)   Total Cost  (dollars)  11814216203142641232510386844\begin{array} { | c | c | c | } \hline 	ext { Quantity } & \begin{array} { c } 	ext { Price } \	ext { (dollars)  }\end{array} & \begin{array} { c } 	ext { Total Cost } \	ext { (dollars)  }\end{array} \\hline 1 & 18 & 14 \\hline 2 & 16 & 20 \\hline 3 & 14 & 26 \\hline 4 & 12 & 32 \\hline 5 & 10 & 38 \\hline 6 & 8 & 44 \\hline\end{array} Quantity 123456​ Price  (dollars)  ​18161412108​ Total Cost  (dollars)  ​142026323844​​  Table 9.5 shows the demand and cost data facing a monopolistically competitive producer of canvas bags.
-Refer to Table 9.5.The firm's profit-maximising or loss-minimising price and quantity are ________.

Accepted Answer

A)   price = $10; quantity = 5
B)   price = $12; quantity = 4
C)   The firm should shut down temporarily
D)   This cannot be determined from the information given. E) A) and C)
F) C) and D)

Question 15

What is a dominant strategy?

Accepted Answer

A)   An equilibrium where each firm chooses the best strategy, given the strategies of other firms
B)   A strategy chosen by two firms that decide to charge the same price or otherwise not to compete
C)   A strategy that is obviously the best for each firm that is a party to a business decision
D)   A strategy that is the best for a firm no matter what strategies other firms useE) None of the above
F) B) and C)

Question 16

Long-run equilibrium in a monopolistically competitive market is similar to long-run equilibrium in a perfectly competitive market in that in both markets,firms ____________.

Accepted Answer

A)   produce at the minimum point of their average total cost curves
B)   produce where price equals marginal cost
C)   break even
D)   produce where price equals marginal revenueE) A) and D)
F) B) and C)

Question 17

Which of the following is important in determining the extent of competition in an industry?

Accepted Answer

A)   The minimum level of short-run average total costs of production
B)   The minimum efficient scale of production relative to market demand
C)   Whether or not the industry product is differentiated or standardised
D)   The level of market demand for the industry's productE) A) and B)
F) A) and C)

Question 18

In what way does long-run equilibrium under monopolistic competition differ from long-run equilibrium under perfect competition?

Accepted Answer

A)   Firms in perfect competition achieve productive and allocative efficiency while firms in monopolistic competition achieve neither allocative nor productive efficiency.
B)   The only difference is that in a monopolistically competitive market there are many brands to choose from while in a perfectly competitive market there is one standard product.
C)   Firms in perfect competition achieve productive efficiency while firms in monopolistic competition achieve allocative efficiency.
D)   Firms in perfect competition achieve allocative efficiency while firms in monopolistic competition achieve brand efficiency.E) All of the above
F) B) and C)

Question 19

Assume that price exceeds average variable cost over the relevant range of demand.If a monopolistically competitive firm is producing at an output where marginal revenue is $111.11 and marginal cost is $118,then to maximise profits the firm should increase its output.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following would not occur as a result of a monopolistically competitive firm suffering a short-run economic loss?

Accepted Answer

A)   The firm could exit the industry in the long run.
B)   If the firm does not exit the industry in the long run, its demand curve will shift to the left.
C)   If the firm does not exit the industry in the long run, its demand curve will shift to the right.
D)   If the firm remains in the industry in the long run, it will break even.E) B) and C)
F) A) and C)

Exam 9: Monopolistic Competition and Oligopoly

An equilibrium in a game in which players pursue their own self-interest is called ________.

Correct Answer
verified

In what way does long-run equilibrium under monopolistic competition differ from long-run equilibrium under perfect competition?

Correct Answer
verified

Long-run equilibrium in a monopolistically competitive market is similar to long-run equilibrium in a perfectly competitive market in that in both markets,firms ____________.

Correct Answer
verified

In the long run,if the demand curve of a monopolistically competitive firm is tangent to its average total cost curve,then _______.

Correct Answer
verified

What is a dominant strategy?

Correct Answer
verified

Which of the following is true of a typical firm in a monopolistically competitive industry?

Correct Answer
verified

Consumers in monopolistically competitive markets face a trade-off between paying prices greater than marginal costs and purchasing products that are more closely suited to their tastes.

Correct Answer
verified

The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called _______.

Correct Answer
verified

Correct Answer
verified

Which of the following would not occur as a result of a monopolistically competitive firm suffering a short-run economic loss?

Correct Answer
verified

Which of the following is important in determining the extent of competition in an industry?

Correct Answer
verified

For a monopolistically competitive firm,marginal revenue _______.

Correct Answer
verified

Figure 9.8 Figure 9.8 shows cost and demand curves for a monopolistically competitive producer of iced tea. -Refer to Figure 9.8.The firm's profit-maximising price is ______.

Correct Answer
verified

Which of the following is not a barrier to entry?

Correct Answer
verified

In monopolistic competition,if a firm produces a highly desirable product relative to its competitors,the firm will be able to raise its price without losing any customers.

Correct Answer
verified

Assume that price exceeds average variable cost over the relevant range of demand.If a monopolistically competitive firm is producing at an output where marginal revenue is $111.11 and marginal cost is $118,then to maximise profits the firm should increase its output.

Correct Answer
verified

A Nash equilibrium is ______.

Correct Answer
verified

In which type of industry is interdependence most common?

Correct Answer
verified

Which of the following statements is true about monopolistically competitive firms?

Correct Answer
verified

Figure 9.4 Figure 9.4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 9.4.The area that represents the total variable cost of production is

Correct Answer
verified

Exam 9: Monopolistic Competition and Oligopoly

An equilibrium in a game in which players pursue their own self-interest is called ________.

Correct AnswerverifiedShow Answer

In what way does long-run equilibrium under monopolistic competition differ from long-run equilibrium under perfect competition?

Correct AnswerverifiedShow Answer

Long-run equilibrium in a monopolistically competitive market is similar to long-run equilibrium in a perfectly competitive market in that in both markets,firms ____________.

Correct AnswerverifiedShow Answer

In the long run,if the demand curve of a monopolistically competitive firm is tangent to its average total cost curve,then _______.

Correct AnswerverifiedShow Answer

What is a dominant strategy?

Correct AnswerverifiedShow Answer

Which of the following is true of a typical firm in a monopolistically competitive industry?

Correct AnswerverifiedShow Answer

Consumers in monopolistically competitive markets face a trade-off between paying prices greater than marginal costs and purchasing products that are more closely suited to their tastes.

Correct AnswerverifiedShow Answer

The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called _______.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following would not occur as a result of a monopolistically competitive firm suffering a short-run economic loss?

Correct AnswerverifiedShow Answer

Which of the following is important in determining the extent of competition in an industry?

Correct AnswerverifiedShow Answer

For a monopolistically competitive firm,marginal revenue _______.

Correct AnswerverifiedShow Answer

Figure 9.8 Figure 9.8 shows cost and demand curves for a monopolistically competitive producer of iced tea. -Refer to Figure 9.8.The firm's profit-maximising price is ______.

Correct AnswerverifiedShow Answer

Which of the following is not a barrier to entry?

Correct AnswerverifiedShow Answer

In monopolistic competition,if a firm produces a highly desirable product relative to its competitors,the firm will be able to raise its price without losing any customers.

Correct AnswerverifiedShow Answer

Assume that price exceeds average variable cost over the relevant range of demand.If a monopolistically competitive firm is producing at an output where marginal revenue is $111.11 and marginal cost is $118,then to maximise profits the firm should increase its output.

Correct AnswerverifiedShow Answer

A Nash equilibrium is ______.

Correct AnswerverifiedShow Answer

In which type of industry is interdependence most common?

Correct AnswerverifiedShow Answer

Which of the following statements is true about monopolistically competitive firms?

Correct AnswerverifiedShow Answer

Figure 9.4 Figure 9.4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 9.4.The area that represents the total variable cost of production is

Correct AnswerverifiedShow Answer

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