Chapter 15: Monopolistic competition and Oligopoly
B
A market with many firms that sells goods and services that are close substitutes for one another is called: A. perfect competition B. monopolistic competition C. oligopoly D. monopoly
A
Branding: 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
D
If a firm in a monopolistically competitive market has a demand curve shifting to the right, it could be that: A. negative economic profits are being earned B. first are leaving the market C. the selling price is less than the average total cost of the firm D. all of these statements are true
A
If a firm's demand curve in a monopolistically competitive market is shifting left: A. competition is likely entering with similar products B. firms must be exiting the industry C. positive economic profits must be getting bigger D. none of these statements is true
B
If a monopolically competitive firm's demand curve is shifting left, it will stop shifting only when: A. firms stop leaving the industry B. firms stop entering the industry C. the firm raises its price D. the firm lowers its price
D
If a monopolistically competitive firm's demand curve is shifting left, it will stop shifting when: A. firms have to incentive to enter the market B. the price is equal to the firm's average total cost C. the firm is earning zero economic profit D. all of these are true
B
If firms in a monopolistically competitive market are earning negative economic profits, it is likely that: A. firms will enter the market B. firms will exit the market C. the firms in the market will shut down immediately D. the firms in the market will expand to try to capture lower costs per unit
short run
In the ___ a monopolistically competitive form is just like a monopoly and can earn profit
long run
In the _____ a monopolistically competitive firm earns zero profit as new firms with similar product enter, reducing demand.
A
In the long run, firms in a monopolistically competitive market operate: A. at less than capacity B. at lowest average total costs possible C. at capacity D. on an efficient scale
B
Offering goods that are similar to competitor's products but more attractive in some ways is called: A. product distinction B. product differentiation C. price-point pinning D. deceptive advertising
B
The more firms there are in a market, the : A. larger will be the price effect of one firm's output decision B. smaller will be the price effect of one firm's output decision C. more collusion is likely to happen D. none of these statements is true
B
The welfare loss associated with the outcome in a competitive oligopoly is: A. bigger than that of a monopoly B. smaller than that of a monopoly C. the same as that of a monopoly D. the same as that of colluding oligopolists
A
a duopoloy is: A. an oligopoly with two firms B. a strategy that befits both firms C. an agreement, explicit or implied, between two firms D. two firms agreeing to act like a joint monopolist
cartel
a group of firms acting in unison
A
a large difference between a monopolistically competitive firm and a monopoly is: A. the ability for competition to enter the market in the long run B. the ability for competition to enter the market in the short run B. only the monopolistically competitive firm is a price taker D. only the monopolist can set his price equal to demand
monopolistic competition
a market structure in which many firms sell products that are similar, but not identical
Oligopoly
a market structure in which only a dew sellers offer similar or identical products
D
a market that consists of only a few large firms is probably a: A. monopoly B. perfectly competitive market C. monopolistically competitive market D. Oligopoly
deadweight loss
a welfare loss caused by the transactions that didn't take place because of the market equilibrium was at a higher price and lower quantity that would be efficient
price effect
an additional unit of output raises the total quantity in the market and drives down the market price. the firm receives a lower price and therefore lower profit for each unit it sells
quantity effect
an additional unit of output sold at a price above marginal cost increases the firm's profit
duopoly
an oligopoly with two firms
A
competition between oligopolists drives: A. price and profits down to below the monopoly level B. price and profits down to the perfect competition level C. some firms out until the market becomes a monopoly D. collusion to happen frequently
product differentiation
creating of products that are similar to competitor's products but more attractive in some ways
collusion
the act of working together to make decisions about price and quantity
