ECON 1201 Final Exam (Svalestad)

An oligopoly firm is similar to a monopolistically competitive firm in that

both firms have some market power

Collusion between two firms occurs when

firms explicitly or implicitly agree to adopt a uniform business strategy

An oligopolistic industry is characterized by all of the following except

firms operating independently of rivals' strategies

Patents, tariffs and quotas are all examples of

government-imposed barriers

A merger between Ford Motor Company and General Motors would be an example of a

horizontal merger

A characteristic found only in oligopolies is

interdependence of firms

A dominant strategy

is one that is the best for a firm, no matter what strategies other firms use.

In monopolistic competition there is/are

many sellers who each face a downward-sloping demand curve

The price of a seller's product in perfect competition is determined by

market demand and market supply

When a perfectly competitive firm finds that its market price is below its minimum average variable cost, it will sell

nothing at all; the firm shuts down

The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because

products are differentiated

Governments grant patents to encourage

research and development on new products.

One key characteristic of a monopolistically competitive market structure would be

sellers have incentive to advertise their products

The first important law regulating monopolies in the United States was

the Sherman Act, which was passed in 1890

A four-firm concentration ratio measures

the fraction of an industry's sales accounted for by the four largest firms.

A monopoly is characterized by all of the following except

there are only a few sellers each selling a unique product

Which of the following is not a characteristic of a monopolistically competitive market structure?

Each firm must react to action of other firms

Which of the following is a characteristic of an oligopolistic market structure?

Each firm sells a unique product

Which of the following characteristics is not common to both monopolistic competition and perfect competition?

Firms act to maximize profit

If, for a perfectly competitive firm, price exceeds the marginal cost of production, the firm should

Increase its output

Which of the following offers the best reason why restaurants are not considered to be perfectly competitive firms?

Restaurants do not sell identical products

Which antitrust law prohibited firms from buying the stock of competitors and from having directors served on the boards of competing firms>

The Clayton Act

Assume the market for organic produce sold at farmers' markets is perfectly competitive. All else equal, as more farmers choose to produce and sell organic produce at farmers' markets, what is likely to happen to the equilibrium price of the produce and profits of the organic farmers in the long run?

The equilibrium price is likely to decrease and profits are likely to decrease

Which of the following is not a characteristic of a perfectly competitive market structure?

There are restrictions on exit of firms

Which of the following is a characteristic of a monopoly?

There is only one seller in the market