Question 1

Which of the following is not an example of a government-imposed entry barrier?

Accepted Answer

A)   Patents
B)   Occupational licensing
C)   Barriers to international trade
D)   Antitrust legislation

Question 2

If firms in a monopolistically competitive industry are making profits in the short run,________.

Accepted Answer

A)   barriers to entry will be erected to keep out rivals
B)   some firms will ultimately exit the industry
C)   they will resort to advertising wars to help sustain these profits
D)   new firms will enter the market

Question 3

Which of the following is not an example of an oligopolistic market?

Accepted Answer

A)   The broadcasting industry
B)   Aircraft manufacture
C)   University bookstores
D)   Seafood restaurant chains

Question 4

In an oligopoly,minimum efficient scale is likely to occur at a level of output that is a large fraction of industry sales.

Accepted Answer

A) True 
 B)False

Question 5

If price exceeds average variable cost but is less than average total cost,a firm _____.

Accepted Answer

A)   should further differentiate its product
B)   should stay in business for a while longer until its fixed costs expire
C)   is making some profit but less than maximum profit
D)   should shut down

Question 6

Economies of scale can lead to an oligopolistic market structure because ________.

Accepted Answer

A)   if larger firms have lower costs, new small entrants will not be able to produce at the low costs achieved by the big established firms.
B)   if economies of scale are insignificant, only a few firms are able to produce at the low costs achieved by the big established firms.
C)   a few firms can force rivals to produce at low levels of output.
D)   a few firms can use high profits to keep out new entrants.

Question 7

When a monopolistically competitive firm cuts its price to increase its sales,it experiences a loss in revenue due to the income effect and a gain in revenue due to the substitution effect.

Accepted Answer

A) True 
 B)False

Question 8

If marginal revenue is negative,then the revenue lost from receiving a lower price on all the units that could have been sold at the original price is smaller than the additional revenue from selling 1 more unit of the good.

Accepted Answer

A) True 
 B)False

Question 9

A monopolistically competitive firm should lower its price if its marginal revenue exceeds its marginal cost.

Accepted Answer

A) True 
 B)False

Question 10

Explain why member firms of a cartel like OPEC have incentives to agree to a low cartel production level and then produce more than its quota.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

A low cartel production level results in...

Question 11

Why is a patent a government-imposed entry barrier?

Accepted Answer

A)   It allows a firm to achieve economies of scale.
B)   It is a key input owned by the firm that is granted the patent.
C)   It limits the quantity of a good that can be imported into a country.
D)   It gives a firm the exclusive right to a new product for a period of 20 years from the date the product is invented.

Question 12

What is a set of actions that a firm takes to achieve a goal?

Accepted Answer

A)   Business plan
B)   Business strategy
C)   Business prospectus
D)   Business goal

Question 13

Complete the following table.
 $\begin{array}{|c|c|c|c|c}
\hline\text { Energy Drinks } && \text { Total } & \text { Average }\
\text { Consumed per } & \text { Price }(P) & \text { Revenue } & \text { Revenue } & \text { Marginal }\
\text { Week } & \text { (dollars) } & (T R) & (A R) & \text { Revenue }(M R)\
\hline 0 & 6.00 & & & \
\hline 1 & 5.50 & & & \
\hline 2 & 5.00 & & & \
\hline 3 & 4.50 & & & \
\hline 4 & 4.00 & & & \
\hline 5 & 3.50 & & & \
\hline 6 & 3.00 & & & \
\hline 7 & 2.50 & & & \
\hline 8 & 2.00 & & & \
\hline
\end{array}$ __________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

\[\begin{array} { | c | c | c | c | c | ...

Question 14

If firms in a monopolistically competitive market are earning economic profits,which of the following scenarios best reflects the change a representative firm experiences as the market adjusts to its long-run equilibrium?

Accepted Answer

A)   Demand decreases and becomes less elastic.
B)   Demand decreases and becomes more elastic.
C)   Demand increases and becomes less elastic.
D)   Demand increases and becomes more elastic.

Question 15

Figure 9.14 
-Refer to Figure 9.14.If the diagram represents a typical firm in the market,what is likely to happen in the long run?

Accepted Answer

A)   Some firms will exit the market causing the demand to increase for firms remaining in the market.
B)   New firms will enter the market causing the demand to decrease for existing firms.
C)   Inefficient firms will exit the market and new cost-efficient firms will enter the market.
D)   Competition will be intensified as firms strive to make long-run profits.

Question 16

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

Accepted Answer

A)   There are many buyers and sellers.
B)   There are low barriers to entry.
C)   Average revenue is equal to price.
D)   The products sold by all firms are identical.

Question 17

Figure 9.15 0 but will break even if it increases its output to Q1. C)  The firm achieves productive efficiency by producing at Q0. D)  The firm is in long-run equilibrium and is breaking even." class="answers-bank-image d-inline" rel="preload" > Figure 9.15 illustrates a monopolistically competitive firm.
-Refer to Figure 9.15.Which of the following statements describes the firm depicted in the diagram?

Accepted Answer

A)   The firm is making no economic profit and will exit the industry.
B)   The firm is suffering an economic loss by producing at Q0 but will break even if it increases its output to Q1.
C)   The firm achieves productive efficiency by producing at Q0.
D)   The firm is in long-run equilibrium and is breaking even.

Question 18

Table 9.4
   Quantity  Sold  Price  (dollars )  Total  Revenue  (dollars)   Marginal  Revenue Total Cost  (dollars)   Marginal  Cost  Profit  (dollars)  0100⋯2⋯−21998281613372117462420552522642426\begin{array}{|c|c|c|c|c|c|c|}\hline \begin{array}{c}	ext { Quantity } \	ext { Sold }\end{array} & \begin{array}{c}	ext { Price } \	ext { (dollars ) }\end{array} & \begin{array}{c}	ext { Total } \	ext { Revenue } \	ext { (dollars)  }\end{array} & \begin{array}{c}	ext { Marginal } \	ext { Revenue }\end{array} & \begin{array}{c}	ext {Total}\	ext { Cost } \	ext { (dollars)  }\end{array} & \begin{array}{c}	ext { Marginal } \	ext { Cost }\end{array} & \begin{array}{c}	ext { Profit } \	ext { (dollars)  }\end{array} \\hline 0 & 10 & 0 & \cdots & 2 & \cdots & -2 \\hline 1 & 9 & 9 & & 8 & & \\hline 2 & 8 & 16 & & 13 & & \\hline 3 & 7 & 21 & & 17 & & \\hline 4 & 6 & 24 & & 20 & & \\hline 5 & 5 & 25 & & 22 & & \\hline 6 & 4 & 24 & & 26 & & \\hline\end{array} Quantity  Sold ​0123456​ Price  (dollars ) ​10987654​ Total  Revenue  (dollars)  ​091621242524​ Marginal  Revenue ​⋯​Total Cost  (dollars)  ​281317202226​ Marginal  Cost ​⋯​ Profit  (dollars)  ​−2​​ 
 Table 9.4 lists estimated revenues and costs (per week)  for plastic vials (100 vials per box)  for the Victoria Biological Supplies Company. Victoria sells plastic vials to university and private research laboratories.
-Refer to Table 9.4.Victoria's profit-maximising quantity sold (Q) and price (P) are _______.

Accepted Answer

A)   Q = 3; P = $7
B)   Q = 4; P = $6
C)   Q = 5; P = $5
D)   Q = 6; P = $4

Question 19

Which of the following is not a reason why government officials are willing to impose entry barriers?

Accepted Answer

A)   To raise revenue
B)   To encourage innovation which may improve the standard of living in the long run
C)   To increase economic efficiency
D)   To promote an equitable distribution of income

Question 20

How does an oligopolist differ from a perfect competitor?

Accepted Answer

A)   There is cut-throat competition in perfect competition but little competition in oligopoly because firms have significant market power.
B)   Firms in an oligopoly do not produce homogeneous products while firms in perfect competition do.
C)   The market demand curve for a perfectly competitive industry is perfectly elastic but it is downward sloping in an oligopolistic industry.
D)   There are no entry barriers in perfect competition but there are entry barriers in oligopoly.

Exam 9: Monopolistic Competition and Oligopoly

Correct Answer
verified
\[\begin{array} { | c | c | c | c | c | ...
View Answer

Which of the following is not a reason why government officials are willing to impose entry barriers?

Correct Answer
verified

Figure 9.15 Figure 9.15 illustrates a monopolistically competitive firm. -Refer to Figure 9.15.Which of the following statements describes the firm depicted in the diagram?

Correct Answer
verified

If price exceeds average variable cost but is less than average total cost,a firm _____.

Correct Answer
verified

If firms in a monopolistically competitive market are earning economic profits,which of the following scenarios best reflects the change a representative firm experiences as the market adjusts to its long-run equilibrium?

Correct Answer
verified

Economies of scale can lead to an oligopolistic market structure because ________.

Correct Answer
verified

Which of the following is not an example of an oligopolistic market?

Correct Answer
verified

Which of the following is not an example of a government-imposed entry barrier?

Correct Answer
verified

Figure 9.14 -Refer to Figure 9.14.If the diagram represents a typical firm in the market,what is likely to happen in the long run?

Correct Answer
verified

How does an oligopolist differ from a perfect competitor?

Correct Answer
verified

If marginal revenue is negative,then the revenue lost from receiving a lower price on all the units that could have been sold at the original price is smaller than the additional revenue from selling 1 more unit of the good.

Correct Answer
verified

Correct Answer
verified

Why is a patent a government-imposed entry barrier?

Correct Answer
verified

What is a set of actions that a firm takes to achieve a goal?

Correct Answer
verified

If firms in a monopolistically competitive industry are making profits in the short run,________.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified
A low cartel production level results in...
View Answer

In an oligopoly,minimum efficient scale is likely to occur at a level of output that is a large fraction of industry sales.

Correct Answer
verified

When a monopolistically competitive firm cuts its price to increase its sales,it experiences a loss in revenue due to the income effect and a gain in revenue due to the substitution effect.

Correct Answer
verified

A monopolistically competitive firm should lower its price if its marginal revenue exceeds its marginal cost.

Correct Answer
verified

Exam 9: Monopolistic Competition and Oligopoly

Correct Answerverified\[\begin{array} { | c | c | c | c | c | ...View AnswerShow Answer

Which of the following is not a reason why government officials are willing to impose entry barriers?

Correct AnswerverifiedShow Answer

Figure 9.15 Figure 9.15 illustrates a monopolistically competitive firm. -Refer to Figure 9.15.Which of the following statements describes the firm depicted in the diagram?

Correct AnswerverifiedShow Answer

If price exceeds average variable cost but is less than average total cost,a firm _____.

Correct AnswerverifiedShow Answer

If firms in a monopolistically competitive market are earning economic profits,which of the following scenarios best reflects the change a representative firm experiences as the market adjusts to its long-run equilibrium?

Correct AnswerverifiedShow Answer

Economies of scale can lead to an oligopolistic market structure because ________.

Correct AnswerverifiedShow Answer

Which of the following is not an example of an oligopolistic market?

Correct AnswerverifiedShow Answer

Which of the following is not an example of a government-imposed entry barrier?

Correct AnswerverifiedShow Answer

Figure 9.14 -Refer to Figure 9.14.If the diagram represents a typical firm in the market,what is likely to happen in the long run?

Correct AnswerverifiedShow Answer

How does an oligopolist differ from a perfect competitor?

Correct AnswerverifiedShow Answer

If marginal revenue is negative,then the revenue lost from receiving a lower price on all the units that could have been sold at the original price is smaller than the additional revenue from selling 1 more unit of the good.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Why is a patent a government-imposed entry barrier?

Correct AnswerverifiedShow Answer

What is a set of actions that a firm takes to achieve a goal?

Correct AnswerverifiedShow Answer

If firms in a monopolistically competitive industry are making profits in the short run,________.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA low cartel production level results in...View AnswerShow Answer

In an oligopoly,minimum efficient scale is likely to occur at a level of output that is a large fraction of industry sales.

Correct AnswerverifiedShow Answer

When a monopolistically competitive firm cuts its price to increase its sales,it experiences a loss in revenue due to the income effect and a gain in revenue due to the substitution effect.

Correct AnswerverifiedShow Answer

A monopolistically competitive firm should lower its price if its marginal revenue exceeds its marginal cost.

Correct AnswerverifiedShow Answer

Correct Answer
verified
\[\begin{array} { | c | c | c | c | c | ...
View 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
A low cartel production level results in...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified