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Oligopolistic behavior implies that oligopolists prefer competition

through product development; through advertising

Advertising increases efficiency by

- lowering search costs for consumers - facilitating the introduction of new products

Which of the following best exemplifies a firm with excess capacity?

A fast food- restaurant where customers never have to wait to place an order

In the long run, a monopolistic competition fails to achieve which of the following?

Allocative efficiency, Productive efficiency

The benefit to oligopolist from collusions are:

It reduces price uncertainty; it possibly prohibits the entry of new rivals, it increases profit

What will happen to a monopolistically competitive firm in the long run?

It will only break even

Which of the following is true about the oligopolist if rivals match a price cut but ignore a price increase?

Its marginal revenue curve would consist of two segments

___ competition is a market characterized by having many sellers, differentiated products, and ease of entry and exit from an industry

Monopolistic

The benefits to oligopolists from collusion are:

a) It reduces price uncertainty c) It increases profits d) It possibly prohibits the entry of new rivals

Allocative efficiency is achieved in the short run when the equality of which of the following occurs?

P=MC

A type of implicit understanding used by oligopolists to coordinate prices without engaging in outright collusion is known as ___ ___.

Price Leadership

Which of the following is a model used to examine oligopolistic pricing?

The kinked-demand curve model

Oligopolies are comprised of ___.

a few large producers

Entry of new firms into monopolistically competitive industries is relative easy because

capital requirements are low

when firms in an oligopoly ___, their payoffs will be greater than if they did not.

collude

___ means illegal cooperation with rivals

collusion

The models used to study pricing and output by oligopolies are

collusive pricing model; price leadership model; the kinked-demand curve model

barriers to entry exist for monopolies as well as oligopolies in the form of all the following except

diseconomies of scale

The demand curve for a monopolistically competitive firm is

downward-sloping

It is reasonable to assume that the demand of a non-colluding oligopolist facing kinked demand curves is less ___ or even ___ below the going price.

elastic; inelastic

when plant and equipment are underused because firms are producing less than minimum ATC output, this is known as having

excess capacity ; productive inefficient

Firms often merge, forming oligopolies, in order to

gain greater control over market supply; become a large buyer of inputs, increase control over price

the study of how people behave in strategic situations is called ___ ___.

game theory

A monopolistically competitive firm's demand curve is

high but not perfectly elastic

Price leader make price adjustments:

infrequently, due to the uncertainty in rivals' response to these price changes; by communicating impending price adjustments to the industry; by establishing a price that discourages new entrant into the industry

In the short run, monopolistically competitive firm maximize profits or minimize losses by producing the output level where

marginal revenue equals marginal cost

Two types of market models that closely approximate many markets in the real world are

monopolistic competition and oligopoly

___ competition is competition illustrated through product differentiation and advertising

nonprice

A(n) ___ is a market dominated by a dew large producers of a homogenous or differentiated product

oligopoly

Monopolistic competitive firms do not achieve allocative efficiency because the ___.

price for a monopolistic competitive firm exceeds the marginal cost

Oligopolist often compete through product development and advertising indeed of price because

product development and advertising are relatively difficult to copy

Firms in monopolistic competition produce goods with___.

slightly varying physical characteristics; varying degree of customer service

Monopolistic competition normally consisted of 25 to 75 firms rather than hundreds of thousands and involves which of the following characteristics?

small market shares; no collusion; independent action

which of the following is not an example of product differentiation?

some stores may charge different prices

Firms in oligopolistic industries are "price makers" because

they are few in number


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