Question 1

If a monopolistically competitive firm's demand curve is shifting left,it will stop shifting when:

Accepted Answer

A)   firms are positive but not large economic profit.
B)   the firm is earning negative economic profit.
C)   the firm is earning zero economic profit.
D)   price falls to marginal cost.E) B) and D)
F) None of the above

Question 2

If a monopolistically competitive firm is earning profits in the short run:

Accepted Answer

A)   barriers to entry will allow the firm to enjoy them in the long run as well.
B)   it is acting like a perfectly competitive firm.
C)   other firms have an incentive to enter the market.
D)   it should leave the industry before it gets competed away.E) A) and C)
F) A) and B)

Question 3

The fewer the number of firms present in a market,the:

Accepted Answer

A)   more competition is likely to be present.
B)   less likely barriers to entry are present.
C)   more likely market power will exist.
D)   less like a monopoly it will behave.E) All of the above
F) B) and C)

Question 4

These are the cost and revenue curves associated with a firm.  Assuming the firm in the graph is producing Q1 and charging P3,it is likely showing the cost and revenue curves of a firm in:

Accepted Answer

A)   the long run, and economic profits are zero.
B)   the short run, and accounting profits are negative.
C)   the long run, and accounting profits are zero.
D)   the short run, and economic profits are positive.E) None of the above
F) A) and C)

Question 5

___________________ is about the number of firms,and ________________ is about the variety of products.

Accepted Answer

A)   Monopolistic competition; oligopoly
B)   Oligopoly; monopolistic competition
C)   Perfect competition; monopoly
D)   Monopoly; oligopolyE) All of the above
F) C) and D)

Question 6

These are the cost and revenue curves associated with a firm.  Assuming the firm in the graph shown is producing Q1 and charging P3,it is likely showing the cost and revenue curves of a monopolistically competitive firm that is:

Accepted Answer

A)   making positive economic profits.
B)   earning negative economic profits.
C)   in long-run equilibrium.
D)   All of these statements are true.E) A) and B)
F) All of the above

Question 7

One way for firms to analyze their choices in an oligopoly is by using:

Accepted Answer

A)   game theory.
B)   cost minimization theory.
C)   marginal revenue maximization strategy.
D)   None of these is an effective method for oligopolists.E) A) and B)
F) A) and C)

Question 8

Oligopoly is about the ____________ and monopolistic competition is about 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) None of the above
F) B) and C)

Question 9

If producers strongly object to banning advertising,it probably means that:

Accepted Answer

A)   they use it simply to inform customers.
B)   they see the ban as decreasing competition.
C)   they believe the ban will benefit them.
D)   they believe advertising persuades customers that products are more different than they really are. .E) None of the above
F) A) and B)

Question 10

Oligopoly describes a market with:

Accepted Answer

A)   many sellers.
B)   one seller.
C)   only a few sellers.
D)   few or many sellers, but only one buyer.E) A) and D)
F) A) and B)

Question 11

Advertising:

Accepted Answer

A)   is valuable because it provides free information about products and prices to consumers.
B)   is harmful because it creates a false sense of differentiation, driving prices up unnecessarily.
C)   Neither A nor B is true.
D)   Both A and B are true.E) B) and C)
F) A) and D)

Question 12

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) All of the above
F) A) and D)

Question 13

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 agreeing to act like a joint monopolist.E) A) and B)
F) All of the above

Question 14

Product differentiation refers to:

Accepted Answer

A)   firms who offer similar products to their competitors' products, but that are more attractive in some way.
B)   the process of creating a standardized product with a lower-cost method than the competitors' method.
C)   the process of informing the public of differences in products as a result of error.
D)   consumers who sort and group goods based on similar characteristics.E) None of the above
F) A) and B)

Question 15

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)   lower prices in those markets.
C)   more output supplied to the market.
D)   All of these statements are true.E) A) and B)
F) B) and D)

Question 16

The goods or services that firms in an oligopoly sell:

Accepted Answer

A)   are not close substitutes.
B)   are close substitutes.
C)   are standardized.
D)   are either standardized or close substitutes.E) None of the above
F) All of the above

Question 17

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

Accepted Answer

A)   act like a monopolist.
B)   sell a standardized good.
C)   collude with competing firms to set prices.
D)   act like perfectly competitive firms.E) A) and B)
F) A) and D)

Question 18

The more firms are present in a market,the:

Accepted Answer

A)   more competition is likely to be present.
B)   less competition is likely to be present.
C)   more like a monopoly it will behave.
D)   more collusion is likely to occur.E) None of the above
F) All of the above

Question 19

If firms in a monopolistically competitive market are earning negative economic profits,the demand curve of a single firm will likely:

Accepted Answer

A)   shift right, as other firms leave the industry.
B)   shift left, as other firms leave the industry.
C)   shift right, as other firms enter the industry.
D)   shift left, as other firms enter the industry.E) A) and B)
F) B) and C)

Question 20

These are the cost and revenue curves associated with a firm.  Assuming the firm in the graph is producing Q1 and charging P3,it is likely:

Accepted Answer

A)   in long-run equilibrium.
B)   an efficient outcome.
C)   not maximizing profits.
D)   operating at a loss.E) B) and C)
F) A) and D)

Exam 15: Monopolistic Competition and Oligopoly

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Oligopoly is about the ____________ and monopolistic competition is about the ______________.

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These are the cost and revenue curves associated with a firm. Assuming the firm in the graph shown is producing Q1 and charging P3,it is likely showing the cost and revenue curves of a monopolistically competitive firm that is:

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These are the cost and revenue curves associated with a firm. Assuming the firm in the graph is producing Q1 and charging P3,it is likely:

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Product differentiation refers to:

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If a monopolistically competitive firm's demand curve is shifting left,it will stop shifting when:

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These are the cost and revenue curves associated with a firm. Assuming the firm in the graph is producing Q1 and charging P3,it is likely showing the cost and revenue curves of a firm in:

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One way for firms to analyze their choices in an oligopoly is by using:

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The more firms are present in a market,the:

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Oligopoly describes a market with:

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

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The goods or services that firms in an oligopoly sell:

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The fewer the number of firms present in a market,the:

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

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If firms in a monopolistically competitive market are earning negative economic profits,the demand curve of a single firm will likely:

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If a monopolistically competitive firm is earning profits in the short run:

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___________________ is about the number of firms,and ________________ is about the variety of products.

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

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If producers strongly object to banning advertising,it probably means that:

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A duopoly is:

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Oligopoly is about the and monopolistic competition is about the __.

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___ is about the number of firms,and is about the variety of products.

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