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Exam 13: Monopolistic Competition and Oligopoly

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Question 91

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The conclusion that oligopoly is inefficient relative to the competitive ideal must be qualified because:

A) industry price leaders often select a price equal to marginal cost.
B) over time oligopolistic industries may promote more rapid product development and greater improvement of production techniques than if they were purely competitive.
C) increased output due to persuasive advertising may perfectly offset the restriction of output caused by monopoly power.
D) many oligopolists sell their products in monopolistically competitive or even purely competitive industries.

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Question 92

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Suppose firms in a collusive oligopoly decide to establish their prices at a level that discourages new rivals from entering the industry.This is called:

A) mutual interdependence.
B) pricing the demand curve.
C) limit pricing.
D) price leadership.

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Question 93

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Which of the following is not a basic characteristic of monopolistic competition?

If there are significant economies of scale in an industry,then:

In long-run equilibrium,both purely competitive and monopolistically competitive firms will:

In the short run,a profit-maximizing monopolistically competitive firm sets it price:

(Last Word) In the Internet search market:

Which of the following companies was not fined in 2011 for attempting to run an international cartel and fix prices?

Suppose that total sales in an industry in a particular year are $600 million and sales by the top four sellers are $200 million,$150 million,$100 million,and $50 million,respectively.We can conclude that:

Monopolistic competition resembles pure competition because:

Cartels are difficult to maintain in the long run because:

Prices are likely to be least flexible:

The monopolistic competition model assumes that:

Use your basic knowledge and your understanding of market structures to answer this question.Which of the following companies most closely approximates a monopolistic competitor?

Suppose that an industry is characterized by a few firms and price leadership.We would expect that:

Which of the following is correct for a monopolistically competitive firm in long-run equilibrium?

In which of the following market models do demand and marginal revenue diverge?

In the long run,the price charged by the monopolistically competitive firm attempting to maximize profits:

The Herfindahl index:

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 price will be: