ch 13 and 14 multiple choice
If some firms leave a monopolistically competitive industry, the demand curves of the remaining firms will Select one or more: a. be unaffected. b. shift to the left. c. become more elastic. d. shift to the right.
d
Advertising can impede economic efficiency when it Select one or more: a. increases entry barriers. b. reduces brand loyalty. c. enables firms to achieve substantial economies of scale. d. increases consumer awareness of substitute products.
a
The kinked-demand curve of an oligopolist is based on the assumption that Select one or more: a. competitors will follow a price cut but ignore a price increase. b. competitors will match both price cuts and price increases. c. competitors will ignore a price cut but follow a price increase. d. there is no product differentiation.
a
Three major means of collusion by oligopolists are Select one or more: a. cartels, informal understandings, and price leadership. b. market sharing, mutual interdependence, and product differentiation. c. cartels, kinked-demand pricing, and product differentiation. d. informal understandings, P = MC pricing, and mutual interdependence.
a
Which of the following factors tends to foster the development of an oligopoly? Select one or more: a. economies of scale b. foreign competition c. antitrust legislation d. low barriers to entry
a
Demand and marginal revenue curves are downward-sloping for monopolistically competitive firms because Select one or more: a. each firm has to take the market price as given. b. product differentiation allows each firm some degree of monopoly power. c. there are a few large firms in the industry and they each act as a monopolist. d. mutual interdependence among all firms in the industry leads to collusion.
b
Interindustry competition means that Select one or more: a. in oligopolistic industries, a few large firms compete with one another in bidding down product price. b. in some markets, the producers of a particular product might face competition from products produced by other industries. c. firms that sell a product at one stage of production are faced with firms that buy the product at the next stage of production. d. in most industries, there are usually a number of firms producing identical products.
b
Other things equal, if more firms enter a monopolistically competitive industry, Select one or more: a. the demand curves facing existing firms would shift to the right. b. the demand curves facing existing firms would shift to the left. c.the demand curves facing existing firms would become less elastic. d. losses would necessarily occur.
b
Suppose that total sales in an industry in a particular year are $600 million and sales by the top four sellers are $200 million, $150 million, $100 million, and $50 million, respectively. We can conclude that Select one or more: a. price leadership exists in this industry. b. the concentration ratio is more than 80 percent. c. this industry is a differentiated oligopoly. d. the firms in this industry face a kinked demand curve.
b
A monopolistically competitive firm's marginal revenue curve Select one or more: a. is downsloping and coincides with the demand curve. b. coincides with the demand curve and is parallel to the horizontal axis. c. is downsloping and lies below the demand curve. d. does not exist because the firm is a "price maker."
c
A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from Select one or more: a. the likelihood of collusion. b.high entry barriers. c. product differentiation. d. mutual interdependence in decision making.
c
Advertising can enhance economic efficiency when it Select one or more: a. increases brand loyalty. b. raises entry barriers. c. increases consumer awareness of substitute products. d. boosts average total cost.
c
Concentration ratios measure the Select one or more: a. geographic distribution of the largest corporations in each industry. b. degree to which a particular firm accounts for sales in a given metropolitan area. c. percentage of total industry sales accounted for by the largest firms in the industry. d. dependence of an industry on its resource suppliers.
c
Dequam likes product variety, while Natasha is most concerned about paying the lowest price possible for a good. This suggests that Select one or more: a. Dequam cares more about allocative efficiency, while Natasha cares more about productive efficiency. b. Dequam cares more about productive efficiency, while Natasha cares more about allocative efficiency. c. Dequam prefers monopolistically competitive industries, while Natasha prefers purely competitive industries. d. Dequam prefers purely competitive industries, while Natasha prefers monopolistically competitive industries.
c
In the short run, a profit-maximizing monopolistically competitive firm sets it price Select one or more: a.equal to marginal revenue. b. equal to marginal cost. c. above marginal cost. d. below marginal cost.
c
Oligopoly is more difficult to analyze than other market models because Select one or more: a. the number of firms is so large that market behavior cannot be accurately predicted. b. the marginal cost and marginal revenue curves of an oligopolist play no part in the determination of equilibrium price and quantity. c. of mutual interdependence and the fact that oligopoly outcomes are less certain than in other market models. d. unlike the firms of other market models, it cannot be assumed that oligopolists are profit maximizers.
c
The monopolistically competitive seller maximizes profit by producing at the point where Select one or more: a. total revenue is at a maximum. b. average costs are at a minimum. c. marginal revenue equals marginal cost. d. price equals marginal revenue.
c
The monopolistically competitive seller's demand curve will become more elastic the Select one or more: a. more significant the barriers to entering the industry. b. greater the degree of product differentiation. c.larger the number of competitors. d. smaller the number of competitors.
c
The mutual interdependence that characterizes oligopoly arises because Select one: a. the products of various firms are homogeneous. b. the products of various firms are differentiated. c. each firm in an oligopoly depends on its own pricing strategy and that of its rivals. d. the demand curves of firms are kinked at the prevailing price.
c
Which of the following industries is an illustration of homogeneous oligopoly? Select one or more: a. household laundry products b.personal computers c. aluminum d. the auto industry
c
Which of the following is an illustration of differentiated oligopoly? Select one or more: a. the aluminum industry b. the steel industry c. the soft drink industry d. retail stores in large cities
c
In the long run, the price charged by the monopolistically competitive firm attempting to maximize profits Select one or more: a. must be less than ATC. b. must be more than ATC. c. may be either equal to ATC, less than ATC, or more than ATC. d. will be equal to ATC.
d
Monopolistically competitive firms are similar to monopolies in that they have Select one or more: a. high barriers to entry in their industry. b. close substitutes for their products. c. inelastic demand for their products. d. marginal revenues that are less than price.
d