Question 1

Economists agree that, in general, a world with advertising is _______ than would be a world without advertising.

Accepted Answer

A)   more competitive
B)   less competitive
C)   more fair
D)   less fair

Question 2

In game theory, a strategy to respond to cheating by cheating is called a tit-for-tat strategy.

Accepted Answer

A) True 
 B)False

Question 3

In order to engage in price discrimination, a firm must be:

Accepted Answer

A)   a price setter.
B)   able to prevent resale by the customers charged a lower price.
C)   able to segment the market.
D)   All of the above are true.

Question 4

Firms will seek a price structure that offers customers with a _______ demand a ________ price and offers customers with a _______ demand a _______ price.

Accepted Answer

A)   less elastic; lower; more elastic; higher
B)   less elastic; higher; more elastic; lower
C)   lower; higher; higher; lower
D)   seasonal; lower; unchanging; higher

Question 5

When one firm responds to a rival's cheating by cheating and to a rival's cooperation by cooperating, that firm is practicing a:

Accepted Answer

A)   dormant strategy.
B)   trigger strategy.
C)   conclusive strategy.
D)   tit-for-tat strategy.

Question 6

In the long run, a monopolistically competitive firm earns zero economic profit because its demand curve is tangent to its average fixed cost curve.

Accepted Answer

A) True 
 B)False

Question 7

Monopolistic competition is an industry characterized by a:

Accepted Answer

A)   small number of firms producing identical products, with barriers to entry for firms.
B)   small number of firms producing similar products, with relatively easy entry for firms.
C)   large number of firms producing similar products, with relatively easy entry for firms.
D)   large number of firms producing identical products, with relatively easy entry for firms.

Question 8

A firm in monopolistic competition maximizes its profit by producing at the level at which:

Accepted Answer

A)   MC = ATC.
B)   MC = AR.
C)   MC = MR.
D)   MC = P.

Question 9

In game theory, a strategy to respond to cheating by cheating is called a trigger strategy.

Accepted Answer

A) True 
 B)False

Question 10

As in all other market structures, firms in monopolistic competition maximize profit by equating marginal cost to price.

Accepted Answer

A) True 
 B)False

Question 11

If the only two firms in an industry agree to fix the price at a given level, this is an example of:

Accepted Answer

A)   collusion.
B)   satisfying.
C)   price extortion.
D)   price leadership.

Question 12

Use the following for questions 22-31.
Exhibit: Profit Maximization in Monopolistic Competition
 
-(Exhibit: Profit Maximization in Monopolistic Competition)  In determining the price in monopolistic competition:

Accepted Answer

A)   the price to the firm is given by supply and demand for the industry.
B)   the firm is a price taker.
C)   the firm applies the marginal decision rule.
D)   A and B are true.

Question 13

Which of the following is (are)  true?

Accepted Answer

A)   According to the text, perfect competition is a goal toward which an economy should strive.
B)   Monopolistic competition results in excess capacity, since in the long run MR = MC to the left of the minimum of the ATC curve.
C)   One might characterize monopolistic competition as an industry, such as gasoline stations, which in the long run experiences economic profits.
D)   All of the above are true.

Question 14

An industry with more than one firm and in which at least one firm is a price setter is:

Accepted Answer

A)   perfect competition.
B)   imperfect competition.
C)   monopoly.
D)   perfect monopolistic.

Question 15

An industry characterized by many firms, producing similar but differentiated products, in a market with easy entry and exit is called:

Accepted Answer

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

Question 16

A strategy that is the same regardless of the action of the other player in a game is said to be a:

Accepted Answer

A)   competitive strategy.
B)   trigger strategy.
C)   dominant strategy.
D)   tit-for-tat strategy.

Question 17

A firm will adjust prices so that customers with more _______ demand pay ________ prices than those customers with _______ elastic demand.

Accepted Answer

A)   inelastic; lower; less
B)   elastic; lower; less
C)   elastic; the same; more
D)   A and B are true.

Question 18

OPEC is:

Accepted Answer

A)   the Organization of Petroleum Exporting Countries.
B)   an international cartel made up of 13 oil-producing countries.
C)   the cartel that was responsible for the large increases in crude oil prices in the 1970s.
D)   described by all of the above.

Question 19

The profit-maximizing rule MC = P is followed by firms under:

Accepted Answer

A)   monopolistic competition, but not perfect competition.
B)   perfect competition, but not monopolistic competition.
C)   both monopolistic competition and perfect competition.
D)   either monopolistic competition or perfect competition, depending on the costs of production.

Question 20

The practice of selling the same product at different prices in different markets, without corresponding differences in costs, is:

Accepted Answer

A)   price discrimination.
B)   privatizing.
C)   monopolizing.
D)   output prioritizing.

Exam 11: The World of Imperfect Competition

Use the following for questions 22-31. Exhibit: Profit Maximization in Monopolistic Competition -(Exhibit: Profit Maximization in Monopolistic Competition) In determining the price in monopolistic competition:

Correct AnswerverifiedShow Answer

Economists agree that, in general, a world with advertising is _______ than would be a world without advertising.

Correct AnswerverifiedShow Answer

In game theory, a strategy to respond to cheating by cheating is called a trigger strategy.

Correct AnswerverifiedShow Answer

A firm in monopolistic competition maximizes its profit by producing at the level at which:

Correct AnswerverifiedShow Answer

If the only two firms in an industry agree to fix the price at a given level, this is an example of:

Correct AnswerverifiedShow Answer

As in all other market structures, firms in monopolistic competition maximize profit by equating marginal cost to price.

Correct AnswerverifiedShow Answer

In game theory, a strategy to respond to cheating by cheating is called a tit-for-tat strategy.

Correct AnswerverifiedShow Answer

OPEC is:

Correct AnswerverifiedShow Answer

In order to engage in price discrimination, a firm must be:

Correct AnswerverifiedShow Answer

A strategy that is the same regardless of the action of the other player in a game is said to be a:

Correct AnswerverifiedShow Answer

An industry characterized by many firms, producing similar but differentiated products, in a market with easy entry and exit is called:

Correct AnswerverifiedShow Answer

The profit-maximizing rule MC = P is followed by firms under:

Correct AnswerverifiedShow Answer

A firm will adjust prices so that customers with more _______ demand pay ________ prices than those customers with _______ elastic demand.

Correct AnswerverifiedShow Answer

Which of the following is (are) true?

Correct AnswerverifiedShow Answer

An industry with more than one firm and in which at least one firm is a price setter is:

Correct AnswerverifiedShow Answer

Firms will seek a price structure that offers customers with a _______ demand a ________ price and offers customers with a _______ demand a _______ price.

Correct AnswerverifiedShow Answer

Monopolistic competition is an industry characterized by a:

Correct AnswerverifiedShow Answer

When one firm responds to a rival's cheating by cheating and to a rival's cooperation by cooperating, that firm is practicing a:

Correct AnswerverifiedShow Answer

In the long run, a monopolistically competitive firm earns zero economic profit because its demand curve is tangent to its average fixed cost curve.

Correct AnswerverifiedShow Answer

The practice of selling the same product at different prices in different markets, without corresponding differences in costs, is:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A firm will adjust prices so that customers with more _ demand pay prices than those customers with _ elastic demand.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Firms will seek a price structure that offers customers with a ___ demand a price and offers customers with a _ demand a _____ price.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified