Unit 7 : Week 7 - Week 7 Quiz
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Time Remaining:1. If oligopolistic firms facing similar cost and demand conditions successfully collude, price and output results in this industry will be most accurately predicted by which of the following models? (Points : 2)
The kinked demand curve model of oligopoly
The price-leadership model of oligopoly
The pure monopoly model
The monopolistic competition model
2. A monopolistically competitive firm is producing at an output level in the short run where average total cost is $4.50, price is $4.00, marginal revenue is $2.50, and marginal cost is $2.50. This firm is operating: (Points : 2)
With a profit in the short run
With a loss in the short run
At the break-even level of output in the short run
At an efficient level of output in the short run
3. Which is not a form of product differentiation for the monopolistically competitive firm? (Points : 2)
Brand names and trademarks
Promotion and packaging
Location and accessibility
Standard hours and procedures
4. Use the figures below to answer the following question(s):
Refer to the above graphs. A short-run equilibrium that would produce profits for a monopolistically competitive firm would be represented by graph: (Points : 2)
A
B
C
D
5. Answer the next question(s) based on the following payoff matrix for a duopoly in which the numbers indicate the profit in millions of dollars for a high-price or a low-price strategy
Refer to the above payoff matrix. If both firms operate independently and do not collude, the most likely profit is: (Points : 2)
$175 million for firm A and $175 million for firm B
$250 million for firm A and $250 million for firm B
$200 million for firm A and $325 million for firm B
$325 million for firm A and $200 million for firm B
6. Demand and marginal revenue curves are downward sloping for monopolistically competitive firms because: (Points : 2)
There is free entry and exit
Product differentiation allows each firm some degree of monopoly power
There are a few large firms in the industry and they each act as a monopolist
Mutual interdependence among all firms in the industry leads to collusion
7. In monopolistic competition, a firm has a limited degree of "price-making" ability. This means that the firm will: (Points : 2)
Always earn an economic profit
Set price equal to marginal cost
Set price above marginal cost
Produce at minimum average total cost
8. The goal of product differentiation and advertising in monopolistic competition is to make: (Points : 2)
The firm allocatively efficient even if it is not productively efficient
The firm productively efficient even if it is not allocatively efficient
Price less of a factor and product differences more of a factor in consumer purchases
Price more of a factor and product differences less of a factor in consumer purchases
9. Assume that in a monopolistically competitive industry, firms are earning economic profit. This situation will: (Points : 2)
Reduce the excess capacity in the industry as firms expand production
Attract other firms to enter the industry because the barriers to entry are low
Cause firms to standardize their product to limit the degree of competition
Make the industry allocatively efficient as each firm seeks to maintain its profits
10. A unique feature of an oligopolistic industry is: (Points : 2)
Low barriers to entry
Standardized products
Diminishing marginal returns
Mutual interdependence
11. The kinked demand model of noncollusive oligopoly assumes that: (Points : 2)
Rivals will ignore price increases and match price cuts
Each firm is a least-cost producer of the product
Marginal revenue is greater than marginal cost at the kink
Demand is elastic throughout the range of production
12. A monopolistically competitive industry is like a purely competitive industry in that: (Points : 2)
Each industry produces a standardized product
Nonprice competition is a feature in both industries
Neither industry has significant barriers to entry
Firms in both industries face a horizontal demand curve
13. In the long run, a representative firm in a monopolistically competitive industry will typically: (Points : 2)
Have an elasticity of demand that will be less than it was in the short run
Have a larger number of competitors than it will in the short run
Produce a level of output at which marginal cost and price are equal
Earn a normal profit, but not an economic profit
14. In an oligopoly game, each player tries to: (Points : 2)
Maximize its own profits
Minimize the market shares of its opponents
Minimize the profits of its opponents
Maximize its own market share
15. The characteristic most closely associated with oligopoly is: (Points : 2)
Easy entry into the industry
A few large producers
Product standardization
No control over price
Time Remaining:
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