ECON 201 Chapters 13-15

Monopolistic competition resembles pure competition because

barriers to entry are either weak or nonexistent

The kinked-demand curve of an oligopolist is based on the assumption that

competitors will follow a price cut but ignore a price increase

If profits are negative in a monopolistically competitive market, then:

firms will exit the market until economic profit returns to zero.

Under monopolistic competition, entry to the industry is

more difficult than under pure competition but not nearly as difficult as under pure monopoly.

The automobile, household appliance, and automobile tire industries are all illustrations of

differentiated oligopoly

In which of these continuums of degrees of competition (lowest to highest) is oligopoly properly placed?

Pure monopoly, oligopoly, monopolistic competition, pure competition

Which of the following is the best example of oligopoly?

automobile manufacturing

Monopolistic competition means:

many firms producing differentiated products.

Which term would be most closely associated with the "new and better goods and services and new and better ways of producing and distributing them?"

Technological Advance

The first commercial introduction of transparent tape is an example of

innovation

U.S. firms collectively devote the largest portion of their total R&D spending to

innovation and diffusion

The first working prototype of a microcomputer chip would be an example of

invention

Technological advance is a three-step process involving

invention, innovation, and diffusion

A Game theory

is the analysis of how people (or firms) behave in strategic situations

The very long run would be a period in which

technology changes and the firms can introduce new products

Use your basic knowledge and your understanding of market structures to answer this question. Which of the following companies most closely approximates a differentiated oligopolist in a highly concentrated industry?

Ford Motor Company

Broadly defined, technological advance

comprises new and improved goods and services and/or new and improved ways of producing or distributing them

A monopolistically competitive firm in the short run is producing where price is $3.00 and marginal cost is $1.50. To maximize profits:

it is unclear what the firm should do without knowing marginal revenue.

In a duopoly, if one firm increases its price, then the other firm can

keep its price constant and thus increase its market share

Monopolistic competition is characterized by a

large number of firms and low entry barriers.

The wide imitation and spread of an innovation is called

diffusion

In an oligopolistic market

products may be standardized or differentiated

The Herfindahl index is:

the sum of the squared percentage market shares of all firms in the industry.

In economists' models, technological advance occurs in

the very long run

In a monopolistically competitive market:

there is a relatively large number of sellers.

Suppose that Marlen Fisher has legal protection against anyone producing and selling a fishing lure specifically named "MarFish." This legal protection is most likely to be a

trademark

In which of these continuums of degrees of competition (highest to lowest) is monopolistic competition properly placed?

Pure competition, monopolistic competition, oligopoly, pure monopoly

Oligopolistic industries are characterized by

a few dominant firms and substantial entry barriers

The term oligopoly indicates

a few firms producing either a differentiated or a homogeneous product

Nonprice competition refers to:

advertising, product promotion, and changes in the real or perceived characteristics of a product.