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Exam 13: Monopolistic Competition and Oligopoly

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Question 71

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Which of the following is an illustration of differentiated oligopoly?

A) The aluminum industry.
B) The steel industry.
C) The soft drink industry.
D) Retail stores in large cities.

E) None of the above
F) B) and D)

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Question 72

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Mutual interdependence means that each oligopolistic firm:

A) faces a perfectly elastic demand for its product.
B) must consider the reactions of its rivals when it determines its price policy.
C) produces a product identical to those of its rivals.
D) produces a product similar but not identical to the products of its rivals.

E) None of the above
F) A) and B)

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Question 73

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A monopolistically competitive firm's marginal revenue curve:

Which of the following statements concerning a monopolistically competitive industry is correct?

Mutual interdependence means that oligopolistic producers rely primarily on price competition in determining their shares of the total market for their product.

An important similarity between a monopolistically competitive firm and a purely competitive firm is that:

Advertising can enhance economic efficiency when it:

Nonprice competition refers to:

Homogeneous oligopolists tend to advertise more than do differentiated oligopolists.

Monopolistic competition means:

Clear-cut mutual interdependence with respect to the price-output policies exists in:

Answer the question on the basis of the following demand and cost data for a specific firm: $\begin{array}{c}\underline{\text { Demand Data}}\quad\quad\quad\quad\quad\underline{\text { Cost Data}} \\\begin{array}{c}\text { (1) }\\\underline{\text { Price } }\\ \$ 11.00 \\9.99 \\9.00 \\8.00 \\7.10 \\6.00 \\5.15\end{array}\begin{array}{c}\text { (2) }\\\underline{\text { Price}}\\\$ 10.00 \\8.85\\8.00\\7.00\\6.10\\5.00\\4.15\end{array}\begin{array}{c}\text { (3) }\\\underline{\text { Quantity}}\\6 \\7 \\8 \\9 \\10 \\11 \\12\end{array}\begin{array}{c}\\\underline{\text { Output }} \\6 \\7 \\8 \\9 \\10 \\11 \\12 \end{array}\begin{array}{c}\text { Total}\\\underline{\text { Cost}} \\ \$ 61 \\62 \\64 \\67 \\72 \\79 \\86\end{array}\end{array}$ Refer to the data.If columns (1) and (3) of the demand data shown are this firm's demand schedule,the profit-maximizing level of output will be:

If an industry evolves from monopolistic competition to oligopoly,we would expect:

Game theory is best suited to analyze the pricing behavior of:

(Consider This) The story about three sellers of Native American arts and crafts best illustrates the idea of:

Concentration ratios measure the:

Answer the question on the basis of the following demand and cost data for a specific firm: $\begin{array}{c}\underline{\text { Demand Data}}\quad\quad\quad\quad\quad\underline{\text { Cost Data}} \\\begin{array}{c}\text { (1) }\\\underline{\text { Price } }\\ \$ 11.00 \\9.99 \\9.00 \\8.00 \\7.10 \\6.00 \\5.15\end{array}\begin{array}{c}\text { (2) }\\\underline{\text { Price}}\\\$ 10.00 \\8.85\\8.00\\7.00\\6.10\\5.00\\4.15\end{array}\begin{array}{c}\text { (3) }\\\underline{\text { Quantity}}\\6 \\7 \\8 \\9 \\10 \\11 \\12\end{array}\begin{array}{c}\\\underline{\text { Output }} \\6 \\7 \\8 \\9 \\10 \\11 \\12 \end{array}\begin{array}{c}\text { Total}\\\underline{\text { Cost}} \\ \$ 61 \\62 \\64 \\67 \\72 \\79 \\86\end{array}\end{array}$ Refer to the data.With the demand schedule shown by columns (2) and (3) ,in long-run equilibrium:

Monopolistic competition is characterized by a:

Answer the question on the basis of the following demand and cost data for a specific firm: $\begin{array}{c}\underline{\text { Demand Data}}\quad\quad\quad\quad\quad\underline{\text { Cost Data}} \\\begin{array}{c}\text { (1) }\\\underline{\text { Price } }\\ \$ 11.00 \\9.99 \\9.00 \\8.00 \\7.10 \\6.00 \\5.15\end{array}\begin{array}{c}\text { (2) }\\\underline{\text { Price}}\\\$ 10.00 \\8.85\\8.00\\7.00\\6.10\\5.00\\4.15\end{array}\begin{array}{c}\text { (3) }\\\underline{\text { Quantity}}\\6 \\7 \\8 \\9 \\10 \\11 \\12\end{array}\begin{array}{c}\\\underline{\text { Output }} \\6 \\7 \\8 \\9 \\10 \\11 \\12 \end{array}\begin{array}{c}\text { Total}\\\underline{\text { Cost}} \\ \$ 61 \\62 \\64 \\67 \\72 \\79 \\86\end{array}\end{array}$ Refer to the data.Suppose that entry into this industry changes this firm's demand schedule from columns (1) and (3) shown to columns (2) and (3) .We can conclude that this industry is:

The larger the number of firms and the less the degree of product differentiation,the greater will be the elasticity of a monopolistically competitive seller's demand curve.