Question 1

For an oligopoly,when the quantity effect outweighs the price effect,firms may have the incentive to:

Accepted Answer

A)   increase output.
B)   decrease output.
C)   not change the level of output.
D)   leave the industry.E) B) and C)
F) B) and D)

Question 2

This prisoner's dilemma game shows the payoffs associated with two firms,A and B,in an oligopoly and their choices to either collude with one another or not.  According to the matrix shown,the firms:

Accepted Answer

A)   both have a dominant strategy.
B)   both have an incentive to renege on collusion.
C)   both have an incentive to compete.
D)   All of these statements are true.E) A) and B)
F) All of the above

Question 3

When a single firm in an oligopoly market decides to increase output,that firm:

Accepted Answer

A)   feels the quantity effect, but other firms feel the price effect.
B)   feels both the quantity effect and price effect, but other firms only feel the price effect.
C)   feels the price effect, but other firms feel the quantity effect.
D)   feels the price effect, but other firms feel both the price and quantity effects.E) None of the above
F) A) and D)

Question 4

One of the defining characteristics of an oligopoly is that:

Accepted Answer

A)   the strategic interactions between a firm and its rivals have a major impact on its profits.
B)   no single firm has an impact on the market as a whole.
C)   there are only a few buyers in the market.
D)   there are no barriers to entry to the market.E) A) and B)
F) B) and D)

Question 5

These are the cost and revenue curves associated with a firm.  Assuming the firm in the graph shown is producing Q1 and charging P3,it is likely showing the cost and revenue curves of a monopolistically competitive firm that is:

Accepted Answer

A)  making positive economic profits.
B)  earning negative economic profits.
C)  in long-run equilibrium.
D)  All of these statements are true.E) A) and B)
F) A) and C)

Question 6

If a monopolistically competitive firm's demand curve is shifting left,it will stop shifting only when:

Accepted Answer

A)   firms stop leaving the industry.
B)   firms stop entering the industry.
C)   the firm raises its price.
D)   the firm lowers its price.E) C) and D)
F) None of the above

Question 7

The welfare loss created by monopolistically competitive markets:

Accepted Answer

A)   is a hotly debated topic among economists.
B)   is usually not a huge concern to governments.
C)   is a huge concern to governments.
D)   has a widely accepted form of measurement.E) All of the above
F) C) and D)

Question 8

A market with many firms that sell goods and services that are close substitutes for one another is called:

Accepted Answer

A)   perfect competition.
B)   monopolistic competition.
C)   oligopoly.
D)   monopoly.E) A) and C)
F) A) and D)

Question 9

Standardized products can appear:

Accepted Answer

A)   only in perfectly competitive markets.
B)   in perfectly competitive and monopolistically competitive markets.
C)   in monopolistically competitive and oligopoly markets.
D)   in perfectly competitive and oligopoly markets.E) C) and D)
F) A) and B)

Question 10

The welfare loss associated with the outcome in a colluding oligopoly is:

Accepted Answer

A)   smaller than that of a perfectly competitive outcome.
B)   smaller than that of a competitive oligopoly.
C)   the same as that of a perfectly competitive outcome.
D)   None of these statements is true.E) A) and C)
F) B) and C)

Question 11

Innovation creates the opportunity to:

Accepted Answer

A)   quickly exit industries.
B)   lose money spent on research and development.
C)   earn positive economic profits.
D)   sustain zero economic profits in a single industry in the long run.E) B) and D)
F) B) and C)

Question 12

Monopolistically competitive firms have an incentive to:

Accepted Answer

A)   create products that are easily substituted for the competition's products.
B)   create products that have a unique feature that makes it difficult to substitute.
C)   create products that are exactly like the competitor's products.
D)   None of these statements is true.E) A) and B)
F) A) and C)

Question 13

These are the cost and revenue curves associated with a firm.  If the firm in the given graph were to produce Q1 and charge P3,the area A would represent:

Accepted Answer

A)   consumer surplus.
B)   producer surplus.
C)   deadweight loss.
D)   profits.E) All of the above
F) A) and B)

Question 14

Branding:

Accepted Answer

A)   can be a barrier to entry.
B)   guarantees high-quality products.
C)   promises the differences in products are completely perceived and not real.
D)   All of these statements are true.E) B) and C)
F) A) and D)

Question 15

This prisoner's dilemma game shows the payoffs associated with two firms,A and B,in an oligopoly and their choices to either collude with one another or not.  According to the matrix shown,the outcome of the "game" will be:

Accepted Answer

A)   both firms will collude and act like a joint monopolist.
B)   both firms will compete.
C)   Firm A will compete and Firm B will collude.
D)   Firm B will compete and Firm A will collude.E) None of the above
F) B) and C)

Question 16

If a firm in a monopolistically competitive market has a demand curve that is shifting to the right,it will stop shifting when:

Accepted Answer

A)   the firm raises its price.
B)   the firm lowers its price.
C)   firms stop entering the market.
D)   firms stop leaving the market.E) All of the above
F) C) and D)

Question 17

The outcome of a colluding oligopoly:

Accepted Answer

A)   is more efficient than that of a monopolist.
B)   is the same as that of a monopolist.
C)   is less efficient than that of a monopolist.
D)   is more efficient than that of a competitive oligopoly.E) None of the above
F) A) and D)

Question 18

These are the cost and revenue curves associated with a firm.  Assuming the firm in the graph is producing Q1 and charging P3,it is likely showing the cost and revenue curves of a firm in:

Accepted Answer

A)   the short run, and firms will enter this market.
B)   the long run, and firms will enter this market.
C)   the short run, and firms will leave this market.
D)   the long run, and no firms will enter or exit.E) All of the above
F) C) and D)

Question 19

The price effect is smaller when there:

Accepted Answer

A)   are fewer firms.
B)   are more firms.
C)   is more demand.
D)   is less demand.E) B) and C)
F) None of the above

Question 20

These are the cost and revenue curves associated with a firm.  If the firm in the given graph were to produce Q2 and charge P2,then:

Accepted Answer

A)   economic profit would be negative.
B)   deadweight loss would be positive.
C)   producer surplus would be zero.
D)   profits would be maximized.E) B) and D)
F) B) and C)

Exam 15: Monopolistic Competition and Oligopoly

Innovation creates the opportunity to:

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These are the cost and revenue curves associated with a firm. If the firm in the given graph were to produce Q1 and charge P3,the area A would represent:

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The welfare loss associated with the outcome in a colluding oligopoly is:

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This prisoner's dilemma game shows the payoffs associated with two firms,A and B,in an oligopoly and their choices to either collude with one another or not. According to the matrix shown,the outcome of the "game" will be:

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One of the defining characteristics of an oligopoly is that:

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Monopolistically competitive firms have an incentive to:

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This prisoner's dilemma game shows the payoffs associated with two firms,A and B,in an oligopoly and their choices to either collude with one another or not. According to the matrix shown,the firms:

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Standardized products can appear:

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A market with many firms that sell goods and services that are close substitutes for one another is called:

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These are the cost and revenue curves associated with a firm. Assuming the firm in the graph shown is producing Q1 and charging P3,it is likely showing the cost and revenue curves of a monopolistically competitive firm that is:

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If a monopolistically competitive firm's demand curve is shifting left,it will stop shifting only when:

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These are the cost and revenue curves associated with a firm. If the firm in the given graph were to produce Q2 and charge P2,then:

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When a single firm in an oligopoly market decides to increase output,that firm:

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Branding:

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The welfare loss created by monopolistically competitive markets:

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For an oligopoly,when the quantity effect outweighs the price effect,firms may have the incentive to:

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These are the cost and revenue curves associated with a firm. Assuming the firm in the graph is producing Q1 and charging P3,it is likely showing the cost and revenue curves of a firm in:

Correct AnswerverifiedShow Answer

The outcome of a colluding oligopoly:

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If a firm in a monopolistically competitive market has a demand curve that is shifting to the right,it will stop shifting when:

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The price effect is smaller when there:

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