Economics Chapter 9

which is a characteristic of monopolistic competition?

relatively easy entry

which would be characteristic of monopolistic competition?

relatively small market share for each firm

which industry would be the best example of an oligopoly?

steel

allocative and productive efficiency is achieved under the market structure of:

pure competition

which statement is true?

pure competition will result in a lower price and a higher output than monopolistic competition

the downward sloping demand curve of a monopolistic competitor:

reflects product differentiation

the long run equilibrium position of the monopolistically competitive firm is where average costs are:

decreasing

in long run equilibrium in a monopolistically competitive industry:

P>minimum AC

which constitutes an obstacle to collusion among oligopolists?

a large number of firms

an oligopolistic market is consistent with:

all of the above

OPEC provides an example of:

an international cartel

under oligopoly, a kinked demand curve would explain why firms:

avoid price wars

which industry would be considered to be monopolistically competitive?

breakfast cereals

When firms in an industry reach an agreement to fix prices, divide up market share, or otherwise restrict competition, they are practicing the strategy of:

collusion

Mutual interdependence means that each oligopolistic industry:

considers the reactions of its rivals when it determines its price policy

in the kinked demand model of a noncollusive oligopoly, if one firms decreases its price , the most likely reaction of the other firms will be to:

decrease their prices

the cigarrette industry in the united states would be an example of a:

differentiated oligopoly

which will make it easier for a cartel to operate effectively over time?

each member firm observes the pricing and output decisions of other firms in the cartel

Which set best describes the basic features of monopolistic competition?

easy entry, many firms, and differentiated products

in the short run, the monopolistically competitive firm will experience:

economic profits or losses , but in the long run only a normal profit

which factor has most contributed to the increased concentration in the U.S. beer industry?

economies of scale in production

the kinked demand model of oligopoly:

embodies the possibility that changes in unit costs will have no effect on equilibrium price and output

which would make an individual firms demand curve less elastic?

increased brand loyalty toward the firms product

a major difference between pure competition and monopolistic competition is that under pure competition:

individual firms have more elastic demand curves

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 with the information given

what is a potential negative effect of advertising?

it promotes monopoly power in industry

in a duopoly, if one firm increases its price , than the other firm can:

keep its price constant and thus increase its market share

the monopolisticcally competitive sellers demand curve will become more elastic the:

larger the number of competitors

an oligopolistic price leader increases the price of its product . if all other firms follow the leaders example, the price leader will:

maintain its new price

which would be most characteristic of an oligopoly?

mutual interdependence

in long run equilibrium , a monopolistically competitive firm achieves:

neither allocative efficiency nor productive efficiency

a feature of monopolistic competition is:

nonprice competition

which would be a qualification to the view that oligopoly is allocatively and productively inefficient?

oligopolies may purposely keep prices below short run profit maximizing levels to bolster barriers to entry

in which market model is there mutual independence?

oligopoly

a representative firm in monopolistic competition will tend to make economic profits:

or losses in the short run, but the firm will break even in the long run

demand and marginal revenue curves are downward sloping for monopolistically competitive firms because:

product differentiation allows each firm some degree of monopoly power

what are the payoffs in the typical duopoly game?

profits

which is an example of a differentiated oligopoly?

the beer industry

a characteristic of monopolistically competitive industries:

the entry and exit of firms causes the representative firm to break even in the long run

If oligopolistic firms facing similar cost and demand conditions successfully collude, price and output results in this industry will be most accurately predicted by which of the following models?

the pure monopoly model

Firms in an industry will not earn long-run economic profits if:

there is free entry and exit of firms in the industry