Micro chap 13

If a cartel is unable to monitor its members and punish those firms that violate the agreement, then A) the member firms will each act as price setters. B) the cartel will prosper in the long run. C) the market will become a monopoly. D) the cartel will fail.

The cartel will fall

In monopolistically competitive markets A) price is greater than it would be in perfect competition. B) price is less than it would be in perfect monopoly. C) quantity is greater than it would be in perfect monopoly. D) All of the above.

All of the above

Mergers may result in A) anticompetitive behavior. B) more efficient production. C) fewer firms in a market. D) All of the above.

All of the above

Monopolistic competition and monopoly have all of the following in common EXCEPT A) P > MC. B) firms are price setters. C) barriers to entry. D) MR = MC.

Barriers to entry

Which of the following market structures have market power? A) oligopoly B) monopolistic competition C) perfect competition D) Both A and B.

Both oligopoly and monopolistic competition

The Organization of Petroleum Exporting Countries (OPEC) is an example of a(n) A) oil monopoly. B) cartel. C) competitive arrangement. D) monopolistically competitive arrangement.

Cartel

In a sense, a cartel is self-destructive because A) it reduces consumer surplus. B) it sets price above marginal cost. C) each cartel member has the incentive to cheat on the cartel. D) each cartel member earns economic profit.

Each cartel member has the incentive to chat on the cartel

A firm with a flat demand curve A) has no brand loyalty. B) has weak brand loyalty. C) has strong brand loyalty. D) isn't really worried about brand loyalty; flat demand curves guarantee zero profit.

Has no brand loyalty

Monopolistically competitive firms A) have market power because they can set price above marginal cost. B) have no market power because they earn zero economic profit. C) have no market power because of free entry. D) have no market power because price equals marginal cost.

Have market power because they can set price above marginal cost

Product differentiation A) is possibly welfare enhancing if new products match consumer preferences better. B) is welfare reducing even if new products match consumer preferences better. C) is welfare enhancing even if new products do not match consumer preferences better. D) is welfare reducing even if new products do not match consumer preferences better.

Is possibly welfare enhancing if new products match consumer preferences better

A cartel is a group of firms that attempts to A) maximize joint revenue. B) maximize joint profit. C) behave independently. D) increase consumer surplus.

Maximize joint profit

Regardless of market structure, all firms A) consider the actions of rivals. B) maximize profit by setting marginal revenue equal to marginal cost. C) produce a differentiated product. D) have the ability to set price.

Maximize profit by setting marginal revenue equal to marginal cost

Perfect competition and monopolistic competition are similar in that both market structures include A) price-taking behavior by firms. B) a homogeneous product. C) no barriers to entry. D) very few firms.

No barriers to entry

In the short run, a monopolistic competitor A) produces at minimum efficient scale. B) produces where P = AC. C) sets P = MC. D) sets MR = MC.

Set MR = MC

Which of the following market structures is (are) capable of earning positive economic profits in the long run? A) monopoly B) oligopoly C) monopolistic competition D) Both A and B

Both monopoly and oligopoly

In the long run, a monopolistically competitive firm A) earns zero economic profit. B) produces at minimum average cost. C) operates at full capacity. D) All of the above.

earns zero economic profit

Oligopoly differs from monopolistic competition in that an oligopoly includes A) product differentiation. B) barriers to entry. C) no barriers to entry. D) downward-sloping demand curves facing the firm.

Barriers to entry

Perfect competition and monopolistic competition are similar in that firms in both types of market structure will A) act as price takers. B) produce a level of output where price equals marginal cost. C) earn zero profit in the long run. D) act as price setters.

Earn zero profit in the long run

Monopolistic competition and perfect competition differ because A) only monopolistically competitive firms will set MR = MC. B) only perfectly competitive firms will set MR = MC. C) only monopolistic competition allows for entry of other firms in the long run. D) only competitive firms take the price as given.

Only competitive firms take the price given

Mergers are closely scrutinized by the government because A) they might allow the firms involved to dominate the market and act as a legalized cartel (monopoly). B) they always result in a more efficient market. C) the always result in lower joint profits of the firms involved. D) all mergers are undesirable.

They might allow the firms involved to dominate the market and act as a legalized cartel