Question 1

A cartel is a group of sellers of a single product who have joined together in order to enjoy the advantages of perfect competition.

Accepted Answer

A) True 
 B)False

Question 2

The contestable market theory best applies to

Accepted Answer

A)  pure monopoly.
B)  oligopoly.
C)  monopolistic competition.
D)  perfect competition.

Question 3

Monopolies can misallocate resources by restricting output in an attempt to raise prices and profits.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is an example of tacit collusion?

Accepted Answer

A)  OPEC
B)  Copper cartel
C)  Price leadership
D)  Government franchise granted to a utility

Question 5

Figure 13-3 ​

Oligopolist A cuts price in an attempt to enlarge his share of the market. His competitors retaliate with identical price cuts. In this case, in Figure 13-3, oligopolist A will move from point A to which point?

Accepted Answer

A)  B
B)  C
C)  D
D)  E

Question 6

Repeated games can lead to tacit collusion.

Accepted Answer

A) True 
 B)False

Question 7

The apparent stickiness of the price of goods sold by oligopolists can be explained by the

Accepted Answer

A)  contestable markets model.
B)  sales maximization model.
C)  kinked demand curve model.
D)  entry deterrence model.

Question 8

All of the following are possible characteristics of oligopoly except

Accepted Answer

A)  free entry into the industry.
B)  significant economies of scale.
C)  interdependence among sellers.
D)  homogeneous product.

Question 9

Unlike the situation for a firm in perfect competition, positive economic profit exists for firms in monopolistic competition for both the short run and in the long run.

Accepted Answer

A) True 
 B)False

Question 10

Monopolistically competitive markets feature high barriers to entry.

Accepted Answer

A) True 
 B)False

Question 11

Figure 13-1 ​

In Figure 13-1, for a monopolistically competitive firm, long-run equilibrium can occur only at the quantity indicated by which point?

Accepted Answer

A)  A
B)  B
C)  C
D)  D

Question 12

A monopolistic competitor can expect to earn an economic profit in the long run.

Accepted Answer

A) True 
 B)False

Question 13

The analysis of oligopolistic behavior is difficult because

Accepted Answer

A)  there are few real-world examples of oligopolies for economists to study.
B)  oligopolists make decisions independently of each other.
C)  firms in oligopolistic industries react to each other's behavior in many ways.
D)  economists have paid little attention to the topic in recent years and so have not yet applied to it the techniques of modern economic theory.

Question 14

In Figure 13-3, according to economic theory, the kink in the demand curve will occur at point

Accepted Answer

A)  E.
B)  A.
C)  C.
D)  D.

Question 15

Sticky prices are a direct result of the kinked demand curve.

Accepted Answer

A) True 
 B)False

Question 16

In the long run, a monopolistically competitive firm produces at minimum average cost.

Accepted Answer

A) True 
 B)False

Question 17

Monopolistic competition is different from perfect competition in that every manufacturer

Accepted Answer

A)  has a small monopoly, and differentiates the product.
B)  takes the product quality as given, and chooses price.
C)  takes output level as given, but must choose price.
D)  differentiates product, but cannot advertise successfully.

Question 18

Game theory is based on the idea that each participant makes decisions based on how she believes the competition will react.

Accepted Answer

A) True 
 B)False

Question 19

Economic theory of market forms between pure monopoly and perfect competition was largely nonexistent until the work of

Accepted Answer

A)  Joan Robinson and Edward Chamberlin.
B)  Adam Smith and David Ricardo.
C)  Alfred Marshall and Francis Edgeworth.
D)  Wassily Leontief and Joseph Schumpeter.

Question 20

The demand curve for a monopolistic competitor is likely to be steeper than that of a monopolist.

Accepted Answer

A) True 
 B)False

Exam 13: Between Competition and Monopoly

Economic theory of market forms between pure monopoly and perfect competition was largely nonexistent until the work of

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In the long run, a monopolistically competitive firm produces at minimum average cost.

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A monopolistic competitor can expect to earn an economic profit in the long run.

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Sticky prices are a direct result of the kinked demand curve.

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The contestable market theory best applies to

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The demand curve for a monopolistic competitor is likely to be steeper than that of a monopolist.

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Figure 13-1 ​ In Figure 13-1, for a monopolistically competitive firm, long-run equilibrium can occur only at the quantity indicated by which point?

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A cartel is a group of sellers of a single product who have joined together in order to enjoy the advantages of perfect competition.

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The analysis of oligopolistic behavior is difficult because

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Figure 13-3 ​ Oligopolist A cuts price in an attempt to enlarge his share of the market. His competitors retaliate with identical price cuts. In this case, in Figure 13-3, oligopolist A will move from point A to which point?

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In Figure 13-3, according to economic theory, the kink in the demand curve will occur at point

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Monopolistic competition is different from perfect competition in that every manufacturer

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All of the following are possible characteristics of oligopoly except

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Game theory is based on the idea that each participant makes decisions based on how she believes the competition will react.

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The apparent stickiness of the price of goods sold by oligopolists can be explained by the

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Monopolies can misallocate resources by restricting output in an attempt to raise prices and profits.

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Which of the following is an example of tacit collusion?

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Repeated games can lead to tacit collusion.

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Unlike the situation for a firm in perfect competition, positive economic profit exists for firms in monopolistic competition for both the short run and in the long run.

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Monopolistically competitive markets feature high barriers to entry.

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Figure 13-1 In Figure 13-1, for a monopolistically competitive firm, long-run equilibrium can occur only at the quantity indicated by which point?

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Figure 13-3 Oligopolist A cuts price in an attempt to enlarge his share of the market. His competitors retaliate with identical price cuts. In this case, in Figure 13-3, oligopolist A will move from point A to which point?

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