Question 1

The kinked-demand curve model helps to explain price rigidity because:

Accepted Answer

A)   there is a gap in the marginal revenue curve within which changes in marginal cost will not affect output or price.
B)   demand is inelastic above and elastic below the going price.
C)   the model assumes firms are engaging in some form of collusion.
D)   the associated marginal revenue curve is perfectly elastic at the going price.E) B) and C)
F) A) and D)

Question 2

(Consider This) The prisoner's dilemma reveals that:

Accepted Answer

A)   collusive agreements will always fail.
B)   the price leadership model does not work.
C)   nonprice competition is more profitable than price competition.
D)   sometimes when individuals act independently in their own self-interest,everyone is worse off than if they had cooperated.E) B) and C)
F) A) and D)

Question 3

Zippy's and Tony's are rival pizza restaurants in a small town (together they form a local duopoly) .Zippy's management determines that if it increases its advertising expenditures,it will increase profits regardless of whether Tony's increases its advertising budget.Based on this information,we can conclude that:

Accepted Answer

A)   this is a one-time game.
B)   Zippy's has a dominant strategy in this advertising game.
C)   this advertising game will reach a Nash equilibrium.
D)   Zippy's has first-mover advantages in this advertising game.E) B) and D)
F) A) and C)

Question 4

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

Accepted Answer

A)   must be less than ATC.
B)   must be more than ATC.
C)   may be either equal to ATC,less than ATC,or more than ATC.
D)   must be equal to ATC.E) A) and B)
F) A) and C)

Question 5

The term oligopoly indicates:

Accepted Answer

A)   a one-firm industry.
B)   many producers of a differentiated product.
C)   a few firms producing either a differentiated or a homogeneous product.
D)   an industry whose four-firm concentration ratio is low.E) None of the above
F) A) and B)

Question 6

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

Accepted Answer

A)   countervailing power.
B)   homogeneous oligopoly.
C)   monopolistic competition.
D)   pure monopoly.E) A) and B)
F) B) and C)

Question 7

A breakdown in price leadership leading to successive rounds of price cuts is known as:

Accepted Answer

A)   limit pricing.
B)   a price war.
C)   informal pricing.
D)   price discrimination.E) None of the above
F) B) and D)

Question 8

If you sum the squares of the market shares of each firm in an industry (as measured by percent of industry sales) ,you are calculating the:

Accepted Answer

A)   four-firm concentration ratio.
B)   Herfindahl index.
C)   degree of collusion.
D)   Lerner index.E) C) and D)
F) B) and D)

Question 9

Which of the following is the best example of oligopoly?

Accepted Answer

A)   Women's dress manufacturing.
B)   Automobile manufacturing.
C)   Restaurants.
D)   Cotton farming.E) C) and D)
F) A) and B)

Question 10

Collusion among firms always involves formal agreements.

Accepted Answer

A) True 
 B)False

Question 11

If a product such as cement or bricks is costly to ship and,therefore,markets are very localized,the national concentration ratio for that industry:

Accepted Answer

A)   will be greater than 50 percent.
B)   may understate the degree of monopoly.
C)   may overstate the degree of monopoly.
D)   will yield an accurate impression of the degree of monopoly.E) A) and B)
F) B) and D)

Question 12

In an oligopolistic market:

Accepted Answer

A)   one firm is always dominant.
B)   products may be standardized or differentiated.
C)   the four largest firms account for 20 percent or less of total sales.
D)   the industry is monopolistically competitive.E) None of the above
F) A) and B)

Exam 13: Monopolistic Competition and Oligopoly

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

Correct Answer
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Correct Answer
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A breakdown in price leadership leading to successive rounds of price cuts is known as:

Correct Answer
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If you sum the squares of the market shares of each firm in an industry (as measured by percent of industry sales) ,you are calculating the:

Correct Answer
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Which of the following is the best example of oligopoly?

Correct Answer
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In the short run,the price charged by a monopolistically competitive firm attempting to maximize profits:

Correct Answer
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The term oligopoly indicates:

Correct Answer
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If a product such as cement or bricks is costly to ship and,therefore,markets are very localized,the national concentration ratio for that industry:

Correct Answer
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Collusion among firms always involves formal agreements.

Correct Answer
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In an oligopolistic market:

Correct Answer
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The kinked-demand curve model helps to explain price rigidity because:

Correct Answer
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(Consider This) The prisoner's dilemma reveals that:

Correct Answer
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Exam 13: Monopolistic Competition and Oligopoly

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A breakdown in price leadership leading to successive rounds of price cuts is known as:

Correct AnswerverifiedShow Answer

If you sum the squares of the market shares of each firm in an industry (as measured by percent of industry sales) ,you are calculating the:

Correct AnswerverifiedShow Answer

Which of the following is the best example of oligopoly?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The term oligopoly indicates:

Correct AnswerverifiedShow Answer

If a product such as cement or bricks is costly to ship and,therefore,markets are very localized,the national concentration ratio for that industry:

Correct AnswerverifiedShow Answer

Collusion among firms always involves formal agreements.

Correct AnswerverifiedShow Answer

In an oligopolistic market:

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The kinked-demand curve model helps to explain price rigidity because:

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(Consider This) The prisoner's dilemma reveals that:

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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