Question 1

Which of the following characteristics of perfect competition does not apply in monopolistic competition?

Accepted Answer

A)  Free entry and exit
B)  Homogeneous products
C)  Numerous participants
D)  Perfect information

Question 2

The maximin criterion can be defined as which of the following?

Accepted Answer

A)  One seeks the maximum of the minimum payoffs to the various available strategies.
B)  One seeks the minimum of the maximum losses among the various available strategies.
C)  One seeks the maximum of the minimum losses to the various available strategies.
D)  One seeks the maximum of the maximum gains of the various available strategies.

Question 3

A monopolistically competitive firm

Accepted Answer

A)  tries to differentiate its product from competitors' products.
B)  faces a perfectly elastic demand curve for its product.
C)  has more monopoly power in the long run than does a perfectly competitive firm.
D)  is always a retail establishment.

Question 4

Oligopolistic firms never collude because they have almost no incentive to do so.

Accepted Answer

A) True 
 B)False

Question 5

Price leadership works only if there is a single, dominant firm in the oligopoly.

Accepted Answer

A) True 
 B)False

Question 6

The excess capacity theorem states that

Accepted Answer

A)  society is worse off with fewer monopolistic competitors.
B)  costs of production under monopolistic competition can be lowered by reducing the number of producers.
C)  lack of excess capacity leads to shortages during periods of unexpected growth in demand for goods produced by monopolistic competition.
D)  there is too much choice in our economy.

Question 7

A monopolistically competitive firm in the long run will

Accepted Answer

A)  have a demand curve tangent to its AC.
B)  have a demand curve below its AC.
C)  have a demand curve above its AC.
D)  operate where excessive profit can be achieved.

Question 8

When a monopolistically competitive firm's demand curve is tangent to it average cost curve,

Accepted Answer

A)  the firm earns zero economic profit.
B)  new firms do not enter the market.
C)  the market is in long run equilibrium.
D)  All of these responses are correct.

Question 9

According to the excess capacity theorem, if every firm under monopolistic competition expanded its output,

Accepted Answer

A)  cost per unit of output would rise.
B)  social benefits would increase.
C)  cost per unit of output would decrease.
D)  MC and AC would remain unchanged.

Question 10

An oligopoly firm with a differentiated product will generally earn the largest profits without advertising.

Accepted Answer

A) True 
 B)False

Question 11

The market structure that is associated with big business in developed economies is

Accepted Answer

A)  perfect competition.
B)  monopolistic competition.
C)  monopoly.
D)  oligopoly.

Question 12

If an oligopolistic manufacturer believes that he faces a kinked demand curve for his product, he thinks his competitors will ______ if he lowers his price and ____ if he raises his price.

Accepted Answer

A)  lower their prices; raise their prices
B)  lower their prices; not raise their prices
C)  not lower their prices; raise their prices
D)  not lower their prices; not raise their prices

Question 13

A common characteristic in oligopolistic markets is

Accepted Answer

A)  consideration of rivals' reactions.
B)  standardized products.
C)  high profits.
D)  unused capacity.

Question 14

In ____, each competing firm is determined to sell at a price that is lower than the prices of its rivals, often regardless of whether that price covers the pertinent cost.

Accepted Answer

A)  market skimming
B)  a monopoly
C)  a price war
D)  perfect competition

Exam 13: Between Competition and Monopoly

Price leadership works only if there is a single, dominant firm in the oligopoly.

Correct Answer
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The maximin criterion can be defined as which of the following?

Correct Answer
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When a monopolistically competitive firm's demand curve is tangent to it average cost curve,

Correct Answer
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Oligopolistic firms never collude because they have almost no incentive to do so.

Correct Answer
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In ____, each competing firm is determined to sell at a price that is lower than the prices of its rivals, often regardless of whether that price covers the pertinent cost.

Correct Answer
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The excess capacity theorem states that

Correct Answer
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A common characteristic in oligopolistic markets is

Correct Answer
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A monopolistically competitive firm in the long run will

Correct Answer
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A monopolistically competitive firm

Correct Answer
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Which of the following characteristics of perfect competition does not apply in monopolistic competition?

Correct Answer
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The market structure that is associated with big business in developed economies is

Correct Answer
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If an oligopolistic manufacturer believes that he faces a kinked demand curve for his product, he thinks his competitors will __ if he lowers his price and if he raises his price.

Correct Answer
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An oligopoly firm with a differentiated product will generally earn the largest profits without advertising.

Correct Answer
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According to the excess capacity theorem, if every firm under monopolistic competition expanded its output,

Correct Answer
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Exam 13: Between Competition and Monopoly

Price leadership works only if there is a single, dominant firm in the oligopoly.

Correct AnswerverifiedShow Answer

The maximin criterion can be defined as which of the following?

Correct AnswerverifiedShow Answer

When a monopolistically competitive firm's demand curve is tangent to it average cost curve,

Correct AnswerverifiedShow Answer

Oligopolistic firms never collude because they have almost no incentive to do so.

Correct AnswerverifiedShow Answer

In ____, each competing firm is determined to sell at a price that is lower than the prices of its rivals, often regardless of whether that price covers the pertinent cost.

Correct AnswerverifiedShow Answer

The excess capacity theorem states that

Correct AnswerverifiedShow Answer

A common characteristic in oligopolistic markets is

Correct AnswerverifiedShow Answer

A monopolistically competitive firm in the long run will

Correct AnswerverifiedShow Answer

A monopolistically competitive firm

Correct AnswerverifiedShow Answer

Which of the following characteristics of perfect competition does not apply in monopolistic competition?

Correct AnswerverifiedShow Answer

The market structure that is associated with big business in developed economies is

Correct AnswerverifiedShow Answer

If an oligopolistic manufacturer believes that he faces a kinked demand curve for his product, he thinks his competitors will ______ if he lowers his price and ____ if he raises his price.

Correct AnswerverifiedShow Answer

An oligopoly firm with a differentiated product will generally earn the largest profits without advertising.

Correct AnswerverifiedShow Answer

According to the excess capacity theorem, if every firm under monopolistic competition expanded its output,

Correct AnswerverifiedShow Answer

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If an oligopolistic manufacturer believes that he faces a kinked demand curve for his product, he thinks his competitors will __ if he lowers his price and if he raises his price.

Correct Answer
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Correct Answer
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Correct Answer
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