Question 1

Oligopoly describes the ____________ and monopolistic competition describes the ______________.

Accepted Answer

A)  number of firms;variety of products
B)  variety of products;barriers to entry
C)  barriers to entry;number of firms
D)  variety of products;number of firmsE) A) and B)
F) All of the above

Question 2

If a firm in a monopolistically competitive market has a demand curve that is shifting to the right,it will only stop shifting when:

Accepted Answer

A)  the firm is earning zero economic profits.
B)  the firm's price is equal to its average total costs.
C)  other firms have no incentive to leave the market.
D)  All of these statements are true.E) A) and C)
F) A) and D)

Question 3

It is important to understand the market structure you are operating in because:

Accepted Answer

A)  that defines how much freedom you have to set prices.
B)  it will tell you how much attention to pay to your competitor's behavior.
C)  it is key to running a successful business.
D)  All of these statements are true.E) B) and C)
F) B) and D)

Question 4

When a market consists of many small firms,it:

Accepted Answer

A)  cannot be a monopoly.
B)  must be a perfectly competitive market.
C)  cannot be a monopolistically competitive market.
D)  can only be an oligopoly.E) A) and B)
F) A) and C)

Question 5

In the short run,monopolistically competitive firms behave like ________________,but in the long run,the outcome is similar to that of the ________________.

Accepted Answer

A)  monopolies;perfectly competitive firm
B)  perfectly competitive firm;monopoly
C)  monopoly;oligopoly
D)  oligopoly;perfectly competitive firmE) B) and D)
F) None of the above

Question 6

A cartel is:

Accepted Answer

A)  a number of firms who collude to make collective production decisions about quantities or prices.
B)  a duopoly with more than two firms.
C)  a firm that always has a dominant strategy.
D)  the "leader" of an industry,typically the firm with the largest market share.E) B) and C)
F) None of the above

Question 7

For the monopolistically competitive firm,the demand curve it faces will be steeper the:

Accepted Answer

A)  more easily the good can be substituted.
B)  less easily the good can be substituted.
C)  more complement goods are available.
D)  less complement goods are available.E) B) and D)
F) A) and C)

Question 8

Spending a lot on advertising is a credible signal because it:

Accepted Answer

A)  conveys the firm's confidence in the high quality of their product.
B)  persuades the consumer to perceive high quality of a product,even if it doesn't exist.
C)  conveys the firm's confidence in its ability to convince the consumer to buy.
D)  None of these explains why advertising can be a credible signal.E) A) and D)
F) All of the above

Question 9

In the short run,monopolistically competitive firms can maximize profits by:

Accepted Answer

A)  acting like a monopolist.
B)  acting like a perfectly competitive firm.
C)  playing strategic games like an oligopolist.
D)  None of these statements is true.E) B) and D)
F) B) and C)

Question 10

In the short run,product differentiation enables firms in monopolistically competitive markets to:

Accepted Answer

A)  produce a good for which there are exact substitutes.
B)  produce a good for which there are no close substitutes.
C)  act like price takers.
D)  act like monopolists.E) B) and D)
F) C) and D)

Question 11

If government were to regulate a monopolistically competitive market by setting a single price,a consequence would be:

Accepted Answer

A)  less product variety.
B)  higher prices.
C)  less output supplied to the market.
D)  All of these statements are true.E) C) and D)
F) A) and D)

Question 12

Innovation creates the opportunity to:

Accepted Answer

A)  earn positive economic profits.
B)  quickly exit industries.
C)  lose money spent on research and development.
D)  sustain zero economic profits in a single industry in the long run.E) A) and B)
F) A) and C)

Question 13

Large barriers to entry exist in which of the following market structures?

Accepted Answer

A)  Perfect competition only
B)  Perfect competition and monopolistic competition
C)  Oligopoly and monopoly
D)  Monopoly onlyE) B) and C)
F) C) and D)

Question 14

As long as firms currently in a monopolistically competitive market are earning profits:

Accepted Answer

A)  more firms will enter the market with products that are close substitutes.
B)  more firms will leave the market before the profits are competed away.
C)  the government will step in to regulate prices to ensure they stay competitive.
D)  there must be large barriers to entry.E) A) and B)
F) None of the above

Question 15

The outcome of a colluding oligopoly:

Accepted Answer

A)  is more efficient than that of a monopolist.
B)  is the same as that of a monopolist.
C)  is less efficient than that of a monopolist.
D)  is more efficient than that of a competitive oligopoly.E) C) and D)
F) A) and D)

Question 16

Monopolistically competitive firms can earn profits in the long run by:

Accepted Answer

A)  Continually innovating to differentiate their product.
B)  price discriminating.
C)  further minimizing their costs.
D)  Monopolistically competitive firms only earn zero profits in the long run.E) All of the above
F) A) and C)

Question 17

This prisoner's dilemma game shows the payoffs associated with two firms,A and B,in an oligopoly and their choices to either collude with one another or not. 
According to the matrix shown,the profit-maximizing outcome for the firms is:

Accepted Answer

A)  to act like a monopolist and both collude.
B)  to both compete.
C)  for Firm A to compete and Firm B to collude.
D)  for Firm B to compete and Firm A to collude.E) B) and C)
F) None of the above

Question 18

In the long run,a profit-maximizing monopolistically competitive firm sells at a price that is:

Accepted Answer

A)  equal to average total cost.
B)  higher than marginal cost.
C)  equal to average revenue.
D)  All of these statements are true.E) None of the above
F) All of the above

Question 19

The price effect is smaller when there are:

Accepted Answer

A)  more firms.
B)  less firms.
C)  more demand.
D)  less demand.E) B) and D)
F) A) and C)

Question 20

Most countries:

Accepted Answer

A)  have laws against firms making agreements about prices or quantities.
B)  protect cartels.
C)  protect oligopoly markets.
D)  force monopolists to become duopolists.E) None of the above
F) A) and B)

Exam 15: Monopolistic Competition and Oligopoly

It is important to understand the market structure you are operating in because:

Correct AnswerverifiedShow Answer

Large barriers to entry exist in which of the following market structures?

Correct AnswerverifiedShow Answer

When a market consists of many small firms,it:

Correct AnswerverifiedShow Answer

A cartel is:

Correct AnswerverifiedShow Answer

The price effect is smaller when there are:

Correct AnswerverifiedShow Answer

In the short run,monopolistically competitive firms behave like ________________,but in the long run,the outcome is similar to that of the ________________.

Correct AnswerverifiedShow Answer

The outcome of a colluding oligopoly:

Correct AnswerverifiedShow Answer

Most countries:

Correct AnswerverifiedShow Answer

In the long run,a profit-maximizing monopolistically competitive firm sells at a price that is:

Correct AnswerverifiedShow Answer

Oligopoly describes the ____________ and monopolistic competition describes the ______________.

Correct AnswerverifiedShow Answer

In the short run,monopolistically competitive firms can maximize profits by:

Correct AnswerverifiedShow Answer

In the short run,product differentiation enables firms in monopolistically competitive markets to:

Correct AnswerverifiedShow Answer

This prisoner's dilemma game shows the payoffs associated with two firms,A and B,in an oligopoly and their choices to either collude with one another or not. According to the matrix shown,the profit-maximizing outcome for the firms is:

Correct AnswerverifiedShow Answer

Spending a lot on advertising is a credible signal because it:

Correct AnswerverifiedShow Answer

If government were to regulate a monopolistically competitive market by setting a single price,a consequence would be:

Correct AnswerverifiedShow Answer

As long as firms currently in a monopolistically competitive market are earning profits:

Correct AnswerverifiedShow Answer

If a firm in a monopolistically competitive market has a demand curve that is shifting to the right,it will only stop shifting when:

Correct AnswerverifiedShow Answer

Innovation creates the opportunity to:

Correct AnswerverifiedShow Answer

For the monopolistically competitive firm,the demand curve it faces will be steeper the:

Correct AnswerverifiedShow Answer

Monopolistically competitive firms can earn profits in the long run by:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

In the short run,monopolistically competitive firms behave like ,but in the long run,the outcome is similar to that of the .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Oligopoly describes the and monopolistic competition describes the __.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified