Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download chapter13practice
Document related concepts
Transcript
Chapter 13 Practice Questions Malla/Davidson 2005 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In monopolistic competition, there are 1) _______ A) few firms making an identical product. B) few firms making a differentiated product. C) many firms making an identical product. D) many firms making a differentiated product. 2) Monopolistic competition differs from monopoly because in monopolistic competition 2) _______ A) there are many firms. B) firms are free to enter and exit. C) there are close substitutes for each firm's product. D) All of the above are differences between monopoly and monopolistically competitive firms. 3) Firms in monopolistic competition compete on the basis of I. product quality II. marketing 3) _______ A) II only B) neither I nor II C) both I and II D) I only 4) Which of the following goods is best described as being sold in a monopolistically competitive market? 4) _______ A) automobiles B) wheat C) postage stamps D) fast food 5) Brand names are an example of 5) _______ A) product differentiation. B) illegal barriers to entry. C) economies of scale. D) oligopoly. 6) The above figure shows the demand and cost curves for a firm in ________ in the ________. 6) _______ A) perfect competition; short run B) monopolistic competition; short run C) perfect competition; long run D) monopolistic competition; long run 7) The above figure shows the demand and cost curves for a firm in monopolistic competition. The firm maximizes its profit by 7) _______ A) producing 8 units at a price of $5 each. B) producing 12 units at a price of $10 each. C) producing 4 units at a price of $20 each. D) producing 8 units at a price of $15 each. 8) The above figure shows the demand and cost curves for a firm in monopolistic competition. The firm earns total revenue of 8) _______ A) $160. B) $120. C) $40. D) $0. 9) The above figure shows the demand and cost curves for a firm in monopolistic competition. The firm earns the maximum profit when the marginal cost of last item produced equals 9) _______ A) $10. B) $5. C) $15. D) $20. 10) The above figure shows the demand and cost curves for a firm in monopolistic competition. The graph represents the firm's situation in 10) ______ A) either the short run or the long run. B) only the long run. C) neither the short run nor the long run. D) only the short run. 11) The above figure shows the demand and cost curves for a firm in monopolistic competition. In the figure, the firm earns an economic profit of 11) ______ A) $40. B) $20. C) $0. D) $120. 12) The above figure shows the demand and cost curves for a firm. The figure shows a 12) ______ A) monopolistically competitive firm in the short run. B) perfectly competitive firm earning zero profit. C) perfectly competitive firm in the short run. D) monopolistically competitive firm in the long run. 13) The above figure shows the demand and cost curves for a firm in monopolistic competition. In the long run, the demand for this firm's product will 13) ______ A) become less elastic as firms exit the industry. B) decrease as other firms enter the industry. C) decrease as product differences disappear. D) become less elastic as other firms enter the industry. 14) Which of the following is FALSE regarding the long run for a firm in monopolistic competition? 14) ______ A) Price equals average total cost. B) Marginal cost equals average total cost. C) Price exceeds marginal cost. D) The firm's economic profit equals zero. 15) In the long run, a firm in monopolistic competition produces an output at which 15) ______ A) price equals marginal cost but exceeds average total cost. B) price equals average total cost but is less than marginal cost. C) price equals average total cost but exceeds marginal cost. D) price equals both marginal cost and average total cost. 16) In the long run, monopolistically competitive firms are ________ to perfectly competitive firms because ________. 16) ______ A) not similar; monopolistically competitive firms can earn an economic profit and perfectly competitive firms cannot. B) not similar; monopolistically competitive firms set P = MC to maximize profits. C) similar; both firms earn zero economic profit. D) similar; both firms produce at the minimum ATC. 17) In a monopolistically competitive industry, 17) ______ A) firms can earn an economic profit in the long run because of product differentiation. B) firms can earn an economic profit in the long run because of barriers to entry. C) if firms are earning an economic profit, new firms enter the industry. D) economic profit always equal zero. 18) The above figure shows the demand and cost curves for a firm in monopolistic competition in the long run. The firm maximizes its profit by 18) ______ A) producing 16 units and charging a price of $10. B) producing 4 units and charging a price of $15. C) producing 8 units and charging a price of $5. D) None of the above answers are correct. 19) The above figure shows the demand and cost curves for a monopolistically competitive firm in the long run. The firm maximizes its profit by 19) ______ A) producing 20 units and charging a price of $25. B) producing 16 units and charging a price of $10. C) producing 8 units and charging a price of $5. D) producing 8 units and charging a price of $15. 20) The above figure shows the demand and cost curves for a monopolistically competitive firm in the long run. The maximum economic profit this firm can earn equal equals 20) ______ A) $0. B) $120. C) $160. D) $80. 21) The above figure shows the demand and cost curves for a monopolistically competitive firm in the long run. The firm has excess capacity of 21) ______ A) $10. B) 16 units. C) 8 units. D) 4 units. 22) A firm's capacity output is the output at which 22) ______ A) average total cost is at a minimum. B) marginal revenue is at a maximum. C) marginal cost is at a minimum. D) marginal cost equals marginal revenue. 23) In monopolistic competition, excess capacity results from 23) ______ A) the mobility of firms into and out of the industry. B) product differentiation. C) imperfect information about price. D) the presence of a large number of buyers. 24) An oligopoly is a market structure in which there are 24) ______ A) many sellers selling a differentiated product. B) only a few buyers but many sellers. C) a few products sold by many sellers. D) only a few sellers selling either an identical or differentiated product. 25) A dominant firm oligopoly arises when one firm produces a large part of the industry's output and has 25) ______ A) a flat marginal cost curve. B) a substantial cost advantage over its competitors. C) constant returns to scale. D) no fixed costs. 26) In a dominant firm oligopoly, the demand for the dominant firm's output is 26) ______ A) the excess supply left over from the smaller firms. B) the excess demand left over from the smaller firms. C) whatever amount the dominant firm wishes to produce. D) its marginal revenue. 27) The above figure shows the market demand curve for a product and the supply curve for the many smaller competitive firms in a dominant firm oligopoly. The demand curve for the dominant firm's output will 27) ______ A) intersect the horizontal axis at 300 units but not be vertical. B) intersect the vertical axis at $150. C) be horizontal at $150. D) be vertical at 300 units. 28) The above figure shows the market demand curve for a product and the supply curve for the many smaller competitive firms in a dominant firm oligopoly. Which of the following statements is true? 28) ______ A) The dominant firm will maximize its profits by setting its price below $150. B) The dominant firm will charge a price less than $150 only if it is not a profit maximizer. C) The dominant firm will charge a price in excess of $150. D) The dominant firm will set its price equal to $150. 29) Which of the following statements is true regarding a dominant firm oligopoly? 29) ______ A) The dominant firm behaves like a monopolist, but the other firms do not. B) The dominant firm cannot act as a profit maximizer. C) The price is equal to the dominant firm's marginal cost. D) The competitive firms cannot maximize profits. Player A Player B 30) The table above shows the payoff matrix for a prisoners' dilemma game. The Nash equilibrium is that 30) ______ A) prisoner A confesses, while prisoner B does not confess. B) both prisoners confess. C) both prisoners do not confess. D) prisoner A does not confess, while prisoner B confesses. 31) The table above shows the payoff matrix for a prisoners' dilemma. In the Nash equilibrium, 31) ______ A) both prisoners get 10 years in jail. B) both prisoners get 1 year in jail. C) both prisoners get 3 years in jail. D) both prisoners get 2 years in jail. 32) The problem for the prisoners in the prisoners' dilemma game in the above table is that 32) ______ A) neither prisoner has a workable strategy. B) there is no equilibrium outcome. C) the Nash equilibrium is not the best outcome. D) ALL of the above 33) If firms in a duopoly can successfully collude, 33) ______ A) each firm can earn an economic profit. B) the firms achieve a cooperative equilibrium. C) the industry, that is, both firms taken together, can earn the maximum economic profit. D) All of the above answers are true. 34) Cartels are typically subject to cheating by their members because 34) ______ A) barriers to entry do not exist for these firms so that new entrants will join. B) a firm can increase its profits by cutting its price if other firms stick to the agreement. C) the Competition Bureau will punish any cartel agreement before the cartel has had a chance to operate. D) product differentiation allows the cartel firms to cheat. 35) The collusive agreement between two duopolists is similar to the prisoners' dilemma because in both games 35) ______ A) the Nash equilibrium is not the best outcome for the players. B) each player's strategy depends on what the other player does. C) the best outcome is always achieved. D) all of the above 36) A major criticism of oligopolies is that 37) ______ A) cartels are unstable. B) price wars usually break out. C) successful collusion leads to a monopoly-like outcome. D) advertising hardly ever occurs.
