Question 1

All of the following are possible characteristics of oligopoly except

Accepted Answer

A)  free entry into the industry.
B)  significant economies of scale.
C)  interdependence among sellers.
D)  homogeneous product.E) All of the above
F) A) and B)

Question 2

A cartel is a group of sellers of a single product who have joined together in order to enjoy the advantages of perfect competition.

Accepted Answer

A) True 
 B)False

Question 3

The demand curve for a monopolistic competitor is likely to be steeper than that of a monopolist.

Accepted Answer

A) True 
 B)False

Question 4

In an oligopoly market, the firms would earn the highest profit if they

Accepted Answer

A)  chose to produce an output equal to the perfectly competitive output level.
B)  chose to produce the output equal to the monopoly output level.
C)  chose to ignore the implications of game theory.
D)  chose to ignore the actions of rival firms.E) A) and B)
F) A) and C)

Question 5

If two firms form a successful cartel, then the output that the two produce in total will

Accepted Answer

A)  be equal to the output in perfect competition.
B)  be equal to the output of a monopoly market.
C)  be greater than the output without the cartel.
D)  be the same as if the market had many firms.E) B) and D)
F) A) and D)

Question 6

Economists would describe cartels as

Accepted Answer

A)  the opposite of ignoring interdependence.
B)  a collusive arrangement.
C)  an undesirable form of market organization that may charge a monopoly price.
D)  All of the responses are correct.E) All of the above
F) C) and D)

Question 7

Game theory is not useful for analyzing perfectly competitive markets.

Accepted Answer

A) True 
 B)False

Question 8

A profit-maximizing, monopolistically competitive car wash washes 40 cars per day, and its total cost $200 and currently makes an economic profit of $280.In the long run, everything else equal, the

Accepted Answer

A)  car wash will charge more than $12 per wash.
B)  car wash will wash more than 50 cars per day.
C)  car wash will need to hire new workers to wash more cars.
D)  car wash will wash less than 40 cars per day.E) A) and D)
F) B) and C)

Question 9

A common characteristic in oligopolistic markets is

Accepted Answer

A)  consideration of rivals' reactions.
B)  standardized products.
C)  high profits.
D)  unused capacity.E) B) and C)
F) None of the above

Question 10

The kinked demand curve model is based on the assumption that rival firms will match a price cut but ignore a price increase.

Accepted Answer

A) True 
 B)False

Question 11

Suppose that we learn that hotels in Los Angeles generally operate with an average vacancy rate of 15 percent (in other words, 85 percent of the hotel rooms are filled with guests) .Given this information about excess capacity, we would judge this market to be

Accepted Answer

A)  an oligopoly.
B)  a perfectly competitive market.
C)  a monopolistically competitive market.
D)  a monopoly.E) A) and B)
F) B) and D)

Question 12

In the long run, a monopolistically competitive firm earns small economic profits.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

An oligopolist who sets the price for the industry is a price leader.

Accepted Answer

A) True 
 B)False

Question 15

Jimmy's java shop operates in a monopolistically competitive market.Jimmy's current output is where average costs are minimized.If this is the case, we would expect Jimmy to

Accepted Answer

A)  increase output and lower price.
B)  decrease output and Jimmy's average costs would increase.
C)  continue production at the current level as Jimmy's is operating at his best outcome.
D)  increase output and Jimmy's average costs would decrease.E) All of the above
F) B) and D)

Question 16

A dominant strategy is one that gives a player in a game a bigger payoff than the other player receives.

Accepted Answer

A) True 
 B)False

Question 17

Monopolistically competitive markets feature heterogeneous products.

Accepted Answer

A) True 
 B)False

Question 18

If a player in a game has a dominant strategy, her choice will depend upon the strategy that another player has chosen.

Accepted Answer

A) True 
 B)False

Question 19

If a firm decides to ignore the reactions of its rivals to its policies, the appropriate model to analyze its behavior is

Accepted Answer

A)  game theory.
B)  perfect competition.
C)  monopoly.
D)  cartels.E) B) and C)
F) A) and D)

Question 20

Suppose that a firm in monopolistically competitive market is producing 30 units of output.At this level of production, the firm charges $50 per unit.Its marginal cost is $24 and marginal revenue is $24, and average cost is $20 per unit.Given this information, in the long run you would expect

Accepted Answer

A)  firms to exit the market.
B)  price to increase.
C)  firms to enter the market.
D)  firms to maintain their current output and price.E) C) and D)
F) A) and B)

Exam 13: Between Competition and Monopoly

All of the following are possible characteristics of oligopoly except

Correct AnswerverifiedShow Answer

Economists would describe cartels as

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The kinked demand curve model is based on the assumption that rival firms will match a price cut but ignore a price increase.

Correct AnswerverifiedShow Answer

If a firm decides to ignore the reactions of its rivals to its policies, the appropriate model to analyze its behavior is

Correct AnswerverifiedShow Answer

A common characteristic in oligopolistic markets is

Correct AnswerverifiedShow Answer

If two firms form a successful cartel, then the output that the two produce in total will

Correct AnswerverifiedShow Answer

A cartel is a group of sellers of a single product who have joined together in order to enjoy the advantages of perfect competition.

Correct AnswerverifiedShow Answer

A profit-maximizing, monopolistically competitive car wash washes 40 cars per day, and its total cost $200 and currently makes an economic profit of $280.In the long run, everything else equal, the

Correct AnswerverifiedShow Answer

If a player in a game has a dominant strategy, her choice will depend upon the strategy that another player has chosen.

Correct AnswerverifiedShow Answer

The demand curve for a monopolistic competitor is likely to be steeper than that of a monopolist.

Correct AnswerverifiedShow Answer

An oligopolist who sets the price for the industry is a price leader.

Correct AnswerverifiedShow Answer

Suppose that we learn that hotels in Los Angeles generally operate with an average vacancy rate of 15 percent (in other words, 85 percent of the hotel rooms are filled with guests) .Given this information about excess capacity, we would judge this market to be

Correct AnswerverifiedShow Answer

A dominant strategy is one that gives a player in a game a bigger payoff than the other player receives.

Correct AnswerverifiedShow Answer

In an oligopoly market, the firms would earn the highest profit if they

Correct AnswerverifiedShow Answer

Jimmy's java shop operates in a monopolistically competitive market.Jimmy's current output is where average costs are minimized.If this is the case, we would expect Jimmy to

Correct AnswerverifiedShow Answer

Suppose that a firm in monopolistically competitive market is producing 30 units of output.At this level of production, the firm charges $50 per unit.Its marginal cost is $24 and marginal revenue is $24, and average cost is $20 per unit.Given this information, in the long run you would expect

Correct AnswerverifiedShow Answer

Game theory is not useful for analyzing perfectly competitive markets.

Correct AnswerverifiedShow Answer

In the long run, a monopolistically competitive firm earns small economic profits.

Correct AnswerverifiedShow Answer

Monopolistically competitive markets feature heterogeneous products.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified