QUIZ 7

question

The restaurant, legal assistance, and clothing industries are each illustrations of

answer

Monopolistic competition

question

A significant difference between a monopolistically competitive firm and a purely competitive firm is that the

answer

Latter's demand curve is perfectly elastic

question

In the long run, the price charged by a monopolistically competitive firm seeking to maximize profit will

answer

Exceed MC but equal ATC

question

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

answer

P exceeds minimum ATC

question

Refer to the diagram. In short-run equilibrium, the monopolistically competitive firm shown will set its price

answer

Above ATC

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Refer to the diagrams, which pertain to monopolistically competitive firms. Short-run equilibrium entailing economic loss is shown by

answer

Diagram C only

question

Refer to the diagram for a monopolistically competitive firm. Long-run equilibrium output will be

answer

question

When a monopolistically competitive firm is in long-run equilibrium,

answer

Marginal revenue equals marginal cost and price equals average total cost

question

Refer to the diagram for a monopolistically competitive producer. The firm is

answer

Realizing a normal profit in the long run

question

Demand and marginal revenue curves are downward-sloping for monopolistically competitive firms because

answer

Product differentiation allows each firm some degree of monopoly power

question

Refer to the above graph for a representative firm in monopolistic competition in a constant-cost industry. This firm is

answer

In short run equilibrium but not long run equilibrium

question

In the long-run equilibrium of a monopolistically competitive industry,

answer

P > minimum ATC

question

In the long run, a monopolistically competitive firm

answer

Produces where P = ATC

question

The economic inefficiencies of monopolistic competition may be offset by the fact that

answer

Consumers have increased product variety

question

Which of the following statements is correct?

answer

There is a trade-off between product variety and allocative efficiency

question

At long-run equilibrium in monopolistic competition, there is

answer

Neither allocative nor productive efficiency

question

Monopolistic competition means

answer

Many firms producing differentiated products

question

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

answer

Recognized mutual interdependence

question

In the long run, economic theory predicts that a monopolistically competitive firm will

answer

Have excess production capacity

question

Refer to the payoff matrix. Suppose that Speedy Bike and Power Bike are the only two bicycle manufacturing firms serving the market. Both can choose large or small advertising budgets. Is there a Nash equilibrium solution to this game?

answer

Cell A represents a Nash equilibrium

question

Other things being equal, a firm in a cartel will most likely cheat on a price-fixing agreement by

answer

Secretly lowering price and increasing sales to a few customers

question

Advertising may be an efficiency-enhancing activity when it results in the following, except when it

answer

Makes buyers more brand-attached, making their demand less elastic

question

A unique feature of an oligopolistic industry is

answer

Mutual interdependence

question

In the payoff matrix shown,

answer

Both firms have a dominant strategy to price low

question

The term oligopoly indicates

answer

A few firms producing either a differentiated or a homogenous product

question

Homogeneous oligopoly exists where a small number of firms are

answer

Producing virtually identical products

question

Which statement concerning the kinked demand curve model of oligopoly is false?

answer

It assumes when one oligopolist raises the price, all others will follow

question

If an oligopoly is faced with a kinked-demand curve that is relatively elastic above and relatively inelastic below the going price, then it will

answer

Decrease total revenue by either increasing or decreasing price

question

If the firms in an oligopolistic industry can establish an effective cartel, the resulting output and price will approximate those of

answer

A pure monopoly

question

A natural monopoly's preemption of entry by other firms by exploiting its economies of scale is an example of

answer

First-mover advantage

question

The diagram portrays

answer

Non-collusive oligopoly

question

The mutual interdependence that characterizes oligopoly arises because

answer

Each firm in an oligopoly depends on its own pricing strategy and that of its rivals

question

Oligopoly is more difficult to analyze than other market models because

answer

Of mutual interdependence and the fact that oligopoly outcomes are less certain than in other market models

question

Differentiated oligopoly exists where a small number of firms are

answer

Producing goods that differ in terms of quality and design

question

A simultaneous game is said to exist when

answer

Firms choose their strategies at the same time as their rivals

question

In this payoff matrix,

answer

Both firms have a dominant strategy

question

Refer to the payoff matrix. Which cell represents the equilibrium outcome of this game?

answer

question

Refer to the payoff matrix. Bob's Burgers and Sam's Sandwiches are competing restaurants in a small town. Both are considering adding pizza to their line of products. If this is a one-time simultaneous game,

answer

Neither firm has a dominant strategy

1 of 38

question

The restaurant, legal assistance, and clothing industries are each illustrations of

answer

Monopolistic competition

question

A significant difference between a monopolistically competitive firm and a purely competitive firm is that the

answer

Latter's demand curve is perfectly elastic

question

In the long run, the price charged by a monopolistically competitive firm seeking to maximize profit will

answer

Exceed MC but equal ATC

question

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

answer

P exceeds minimum ATC

question

Refer to the diagram. In short-run equilibrium, the monopolistically competitive firm shown will set its price

answer

Above ATC

question

Refer to the diagrams, which pertain to monopolistically competitive firms. Short-run equilibrium entailing economic loss is shown by

answer

Diagram C only

question

Refer to the diagram for a monopolistically competitive firm. Long-run equilibrium output will be

answer

question

When a monopolistically competitive firm is in long-run equilibrium,

answer

Marginal revenue equals marginal cost and price equals average total cost

question

Refer to the diagram for a monopolistically competitive producer. The firm is

answer

Realizing a normal profit in the long run

question

Demand and marginal revenue curves are downward-sloping for monopolistically competitive firms because

answer

Product differentiation allows each firm some degree of monopoly power

question

Refer to the above graph for a representative firm in monopolistic competition in a constant-cost industry. This firm is

answer

In short run equilibrium but not long run equilibrium

question

In the long-run equilibrium of a monopolistically competitive industry,

answer

P > minimum ATC

question

In the long run, a monopolistically competitive firm

answer

Produces where P = ATC

question

The economic inefficiencies of monopolistic competition may be offset by the fact that

answer

Consumers have increased product variety

question

Which of the following statements is correct?

answer

There is a trade-off between product variety and allocative efficiency

question

At long-run equilibrium in monopolistic competition, there is

answer

Neither allocative nor productive efficiency

question

Monopolistic competition means

answer

Many firms producing differentiated products

question

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

answer

Recognized mutual interdependence

question

In the long run, economic theory predicts that a monopolistically competitive firm will

answer

Have excess production capacity

question

answer

Cell A represents a Nash equilibrium

question

Other things being equal, a firm in a cartel will most likely cheat on a price-fixing agreement by

answer

Secretly lowering price and increasing sales to a few customers

question

Advertising may be an efficiency-enhancing activity when it results in the following, except when it

answer

Makes buyers more brand-attached, making their demand less elastic

question

A unique feature of an oligopolistic industry is

answer

Mutual interdependence

question

In the payoff matrix shown,

answer

Both firms have a dominant strategy to price low

question

The term oligopoly indicates

answer

A few firms producing either a differentiated or a homogenous product

question

Homogeneous oligopoly exists where a small number of firms are

answer

Producing virtually identical products

question

Which statement concerning the kinked demand curve model of oligopoly is false?

answer

It assumes when one oligopolist raises the price, all others will follow

question

If an oligopoly is faced with a kinked-demand curve that is relatively elastic above and relatively inelastic below the going price, then it will

answer

Decrease total revenue by either increasing or decreasing price

question

If the firms in an oligopolistic industry can establish an effective cartel, the resulting output and price will approximate those of

answer

A pure monopoly

question

A natural monopoly's preemption of entry by other firms by exploiting its economies of scale is an example of

answer

First-mover advantage

question

The diagram portrays

answer

Non-collusive oligopoly

question

The mutual interdependence that characterizes oligopoly arises because

answer

Each firm in an oligopoly depends on its own pricing strategy and that of its rivals

question

Oligopoly is more difficult to analyze than other market models because

answer

Of mutual interdependence and the fact that oligopoly outcomes are less certain than in other market models

question

Differentiated oligopoly exists where a small number of firms are

answer

Producing goods that differ in terms of quality and design

question

A simultaneous game is said to exist when

answer

Firms choose their strategies at the same time as their rivals

question

In this payoff matrix,

answer

Both firms have a dominant strategy

question

Refer to the payoff matrix. Which cell represents the equilibrium outcome of this game?

answer

question

answer

Neither firm has a dominant strategy

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QUIZ 7

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