Question 1

The graph shown displays the cost and revenue curves associated with a monopolistically competitive firm.  Producing Q2 and charging P2:

Accepted Answer

A)  represents the perfectly competitive outcome.
B)  is an efficient outcome.
C)  is an outcome that eliminates deadweight loss.
D)  All of these are true.E) B) and C)
F) C) and D)

Question 2

A group of firms who collude to make collective production decisions about quantities or prices is called:

Accepted Answer

A)  a cartel.
B)  a duopoly.
C)  market power.
D)  a joint monopoly.E) A) and B)
F) C) and D)

Question 3

A duopoly is:

Accepted Answer

A)  a strategy that benefits both firms.
B)  an agreement, explicit or implied, between two firms.
C)  an oligopoly with two firms.
D)  two firms who have agreed to act like a joint monopolist.E) None of the above
F) B) and D)

Question 4

What signal does a company give by spending a lot of money on advertising?

Accepted Answer

A)  Signals to consumers that the company sells high-quality products.
B)  Signals to other companies that it creates high-quality substitutes.
C)  Signals to consumers that the company is trying to keep up with competitors.
D)  Signals to consumers that the company sells low-quality products.E) None of the above
F) A) and D)

Question 5

If a government were to regulate a monopolistically competitive market by setting a single price, which of the following would result from that action?

Accepted Answer

A)  Less product variety
B)  Lower prices
C)  More output supplied to the market
D)  All of these are true.E) B) and D)
F) B) and C)

Question 6

Standardized products can appear:

Accepted Answer

A)  only in perfectly competitive markets.
B)  in perfectly competitive and monopolistically competitive markets.
C)  in monopolistically competitive and oligopolistic markets.
D)  in perfectly competitive and oligopolistic markets.E) B) and C)
F) All of the above

Question 7

Which of the following would cause a monopolistically competitive firm's demand curve to shift to the left?

Accepted Answer

A)  Competitors with similar products enter the market.
B)  Firms are exiting the industry.
C)  Economic profits are increasing.
D)  None of these would cause the demand curve to shift to the left.E) All of the above
F) A) and B)

Question 8

The goods or services that firms in an oligopoly sell: are never standardized. are similar enough to cause competition. are different enough to allow profits to be earned.

Accepted Answer

A)  I and III only
B)  II only
C)  II and III only
D)  I, II, and IIIE) C) and D)
F) B) and D)

Question 9

Suppose Coca-Cola controls 80 percent of the soda market and Pepsi controls 20 percent of the market. With this information, we can conclude that the soda market is:

Accepted Answer

A)  perfectly competitive.
B)  monopolistically competitive.
C)  an oligopoly.
D)  a monopoly.E) B) and C)
F) None of the above

Question 10

The prisoner's dilemma shown displays the payoffs associated with two firms: Firm A and Firm B. These firms are in an oligopoly and they can choose to either collude or compete.  What is the profit-maximizing outcome for these firms?

Accepted Answer

A)  They should both collude, acting like a monopolist.
B)  They should both compete.
C)  Firm A should compete and Firm B should collude.
D)  Firm B should compete and Firm A should collude.E) None of the above
F) A) and B)

Question 11

The graph shown displays the cost and revenue curves associated with a monopolistically competitive firm in the short run.   In the long run we can expect that:

Accepted Answer

A)  firms will enter the market.
B)  firms will exit the market.
C)  price will increase.
D)  profits will increase.E) A) and B)
F) B) and D)

Question 12

Why is it difficult to regulate a monopolistically competitive market?

Accepted Answer

A)  It is difficult to assess the costs involved with regulation.
B)  Regulation may stifle innovation, if firms can't earn economic profit.
C)  There are many firms, each with different costs for similar products.
D)  All of these are true.E) B) and C)
F) A) and D)

Question 13

The graph shown displays the cost and revenue curves associated with a monopolistically competitive firm.  What price will the firm charge?

Accepted Answer

A)  $3
B)  $8
C)  $12
D)  $13E) None of the above
F) A) and C)

Question 14

The long-run outcome of the monopolistically competitive firm:

Accepted Answer

A)  occurs where price equals marginal cost.
B)  maximizes total surplus.
C)  creates welfare loss.
D)  does not maximize profits.E) All of the above
F) A) and B)

Question 15

Two firms in an oligopolistic market, Firm A and Firm B, face the demand schedule shown.

If the two firms agree to act like a monopolist and split the market, they will each produce 150 units at a price of $50, creating a total of 300 units in the market. Which of the following statements is true?If they each produce 150 units, eachfirm will earn revenue of $7,500.If Firm A decides to increase production by 50 units under the assumption that Firm B will continue to produce 150 units, Firm A's revenue will be $8,000.If both Firm A and Firm B increase production by 50 units, they will each earn revenue of $6,000.

Accepted Answer

A)  I only
B)  II and III only
C)  I and III only
D)  I, II, and IIIE) A) and B)
F) A) and C)

Question 16

Which of the following is one of the defining characteristics of an oligopoly?

Accepted Answer

A)  One firm's behavior can affect the profits earned by other firms.
B)  All firms act independently to create a perfectly competitive outcome.
C)  All firms act independently to create a monopoly outcome.
D)  None of these are true.E) C) and D)
F) B) and D)

Question 17

The prisoner's dilemma shown displays the payoffs associated with two firms: Firm A and Firm B. These firms are in an oligopoly and they can choose to either collude or compete.  These two firms are likely to collude only if:

Accepted Answer

A)  this is a repeated game.
B)  this is a one-time game.
C)  the government regulates this market.
D)  they are the only two firms with dominant market share.E) None of the above
F) A) and B)

Question 18

The graph shown displays the cost and revenue curves associated with a monopolistically competitive firm.  This firm:

Accepted Answer

A)  will cause deadweight loss equal to area C.
B)  will earn profits equal to area B.
C)  should act like a monopolist in the short run.
D)  should leave the industry in the long run.E) C) and D)
F) A) and C)

Question 19

In the long run, firms in a monopolistically competitive market operate at:

Accepted Answer

A)  an efficient scale.
B)  a less-than-efficient scale.
C)  a more-than-efficient scale.
D)  Any of these could be true, depending on the individual firm.E) C) and D)
F) A) and B)

Question 20

Collusion is:

Accepted Answer

A)  buyers acting in unison against a company in an attempt to change its practices.
B)  the act of firms undercutting one another in competition until zero profits are earned.
C)  the act of firms working together to make decisions about price and quantity.
D)  None of these is true.E) A) and B)
F) All of the above

Exam 15: Monopolistic Competition and Oligopoly

Collusion is:

Correct Answer
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The long-run outcome of the monopolistically competitive firm:

Correct Answer
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The graph shown displays the cost and revenue curves associated with a monopolistically competitive firm in the short run. In the long run we can expect that:

Correct Answer
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The graph shown displays the cost and revenue curves associated with a monopolistically competitive firm. What price will the firm charge?

Correct Answer
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A group of firms who collude to make collective production decisions about quantities or prices is called:

Correct Answer
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A duopoly is:

Correct Answer
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The prisoner's dilemma shown displays the payoffs associated with two firms: Firm A and Firm B. These firms are in an oligopoly and they can choose to either collude or compete. What is the profit-maximizing outcome for these firms?

Correct Answer
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Which of the following is one of the defining characteristics of an oligopoly?

Correct Answer
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Which of the following would cause a monopolistically competitive firm's demand curve to shift to the left?

Correct Answer
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Why is it difficult to regulate a monopolistically competitive market?

Correct Answer
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If a government were to regulate a monopolistically competitive market by setting a single price, which of the following would result from that action?

Correct Answer
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The graph shown displays the cost and revenue curves associated with a monopolistically competitive firm. This firm:

Correct Answer
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The graph shown displays the cost and revenue curves associated with a monopolistically competitive firm. Producing Q2 and charging P2:

Correct Answer
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Correct Answer
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What signal does a company give by spending a lot of money on advertising?

Correct Answer
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The prisoner's dilemma shown displays the payoffs associated with two firms: Firm A and Firm B. These firms are in an oligopoly and they can choose to either collude or compete. These two firms are likely to collude only if:

Correct Answer
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In the long run, firms in a monopolistically competitive market operate at:

Correct Answer
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Standardized products can appear:

Correct Answer
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Suppose Coca-Cola controls 80 percent of the soda market and Pepsi controls 20 percent of the market. With this information, we can conclude that the soda market is:

Correct Answer
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The goods or services that firms in an oligopoly sell: are never standardized. are similar enough to cause competition. are different enough to allow profits to be earned.

Correct Answer
verified

Exam 15: Monopolistic Competition and Oligopoly

Collusion is:

Correct AnswerverifiedShow Answer

The long-run outcome of the monopolistically competitive firm:

Correct AnswerverifiedShow Answer

The graph shown displays the cost and revenue curves associated with a monopolistically competitive firm in the short run. In the long run we can expect that:

Correct AnswerverifiedShow Answer

The graph shown displays the cost and revenue curves associated with a monopolistically competitive firm. What price will the firm charge?

Correct AnswerverifiedShow Answer

A group of firms who collude to make collective production decisions about quantities or prices is called:

Correct AnswerverifiedShow Answer

A duopoly is:

Correct AnswerverifiedShow Answer

The prisoner's dilemma shown displays the payoffs associated with two firms: Firm A and Firm B. These firms are in an oligopoly and they can choose to either collude or compete. What is the profit-maximizing outcome for these firms?

Correct AnswerverifiedShow Answer

Which of the following is one of the defining characteristics of an oligopoly?

Correct AnswerverifiedShow Answer

Which of the following would cause a monopolistically competitive firm's demand curve to shift to the left?

Correct AnswerverifiedShow Answer

Why is it difficult to regulate a monopolistically competitive market?

Correct AnswerverifiedShow Answer

If a government were to regulate a monopolistically competitive market by setting a single price, which of the following would result from that action?

Correct AnswerverifiedShow Answer

The graph shown displays the cost and revenue curves associated with a monopolistically competitive firm. This firm:

Correct AnswerverifiedShow Answer

The graph shown displays the cost and revenue curves associated with a monopolistically competitive firm. Producing Q2 and charging P2:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What signal does a company give by spending a lot of money on advertising?

Correct AnswerverifiedShow Answer

The prisoner's dilemma shown displays the payoffs associated with two firms: Firm A and Firm B. These firms are in an oligopoly and they can choose to either collude or compete. These two firms are likely to collude only if:

Correct AnswerverifiedShow Answer

In the long run, firms in a monopolistically competitive market operate at:

Correct AnswerverifiedShow Answer

Standardized products can appear:

Correct AnswerverifiedShow Answer

Suppose Coca-Cola controls 80 percent of the soda market and Pepsi controls 20 percent of the market. With this information, we can conclude that the soda market is:

Correct AnswerverifiedShow Answer

The goods or services that firms in an oligopoly sell: are never standardized. are similar enough to cause competition. are different enough to allow profits to be earned.

Correct AnswerverifiedShow Answer

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