ECON 1201 Final Exam (Svalestad)
An oligopoly firm is similar to a monopolistically competitive firm in that
both firms have some market power
Collusion between two firms occurs when
firms explicitly or implicitly agree to adopt a uniform business strategy
An oligopolistic industry is characterized by all of the following except
firms operating independently of rivals' strategies
Patents, tariffs and quotas are all examples of
government-imposed barriers
A merger between Ford Motor Company and General Motors would be an example of a
horizontal merger
A characteristic found only in oligopolies is
interdependence of firms
A dominant strategy
is one that is the best for a firm, no matter what strategies other firms use.
In monopolistic competition there is/are
many sellers who each face a downward-sloping demand curve
The price of a seller's product in perfect competition is determined by
market demand and market supply
When a perfectly competitive firm finds that its market price is below its minimum average variable cost, it will sell
nothing at all; the firm shuts down
The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because
products are differentiated
Governments grant patents to encourage
research and development on new products.
One key characteristic of a monopolistically competitive market structure would be
sellers have incentive to advertise their products
The first important law regulating monopolies in the United States was
the Sherman Act, which was passed in 1890
A four-firm concentration ratio measures
the fraction of an industry's sales accounted for by the four largest firms.
A monopoly is characterized by all of the following except
there are only a few sellers each selling a unique product
Which of the following is not a characteristic of a monopolistically competitive market structure?
Each firm must react to action of other firms
Which of the following is a characteristic of an oligopolistic market structure?
Each firm sells a unique product
Which of the following characteristics is not common to both monopolistic competition and perfect competition?
Firms act to maximize profit
If, for a perfectly competitive firm, price exceeds the marginal cost of production, the firm should
Increase its output
Which of the following offers the best reason why restaurants are not considered to be perfectly competitive firms?
Restaurants do not sell identical products
Which antitrust law prohibited firms from buying the stock of competitors and from having directors served on the boards of competing firms>
The Clayton Act
Assume the market for organic produce sold at farmers' markets is perfectly competitive. All else equal, as more farmers choose to produce and sell organic produce at farmers' markets, what is likely to happen to the equilibrium price of the produce and profits of the organic farmers in the long run?
The equilibrium price is likely to decrease and profits are likely to decrease
Which of the following is not a characteristic of a perfectly competitive market structure?
There are restrictions on exit of firms
Which of the following is a characteristic of a monopoly?
There is only one seller in the market