Question 1

Figure 8.14
-If price were regulated to be equal to long-run marginal cost the firm in Figure 8.14 would be:

Accepted Answer

A)  making a zero economic profit.
B)  losing money.
C)  making a positive economic profit.
D)  breaking even.E) None of the above
F) A) and D)

Question 2

In Washington, D.C., there are many coffee shops, each offering nearly identical coffee but each shop located in a different place around the city. It is likely a coffee shop in Washington, D.C., operates in a:

Accepted Answer

A)  perfectly competitive market.
B)  monopolistically competitive market.
C)  monopoly market.
D)  oligopoly market.E) All of the above
F) B) and C)

Question 3

Figure 8.13
-Consider an unregulated monopoly in Figure 8.13. If a second firm enters the market, the demand curve facing the first firm will:

Accepted Answer

A)  shift to the right.
B)  shift to the left.
C)  remain the same.
D)  There is insufficient information.E) B) and C)
F) None of the above

Question 4

Which of the following characteristics of the monopolistically competitive and the perfectly competitive market will cause the firm to earn zero profits in the long run?

Accepted Answer

A)  no barriers to entry
B)  many buyers
C)  price taker
D)  homogeneous productE) A) and C)
F) None of the above

Question 5

Figure 8.4
-Figure 8.4 depicts demand and costs for a monopolistically competitive firm. If the firmʹs demand curve shifts to the left as more firms enter the market,

Accepted Answer

A)  the firmʹs average cost will be lower at the new profit maximizing output level.
B)  the firmʹs marginal cost will be higher at the new profit maximizing output level.
C)  the firmʹs marginal revenue will remain the same at the mew profit maximizing output level.
D)  the firmʹs marginal cost will remain the same at the new profit maximizing output level.E) A) and B)
F) B) and C)

Question 6

Figure 8.6
-Referring to Figure 8.6, how much economic profit does the monopolistically competitive firm earn in long-run equilibrium?

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> As illustrated on the graph, the firm e...

Question 7

The government allowed the merger between Interstate Bakeries and Continental Bakery.

Accepted Answer

A) True 
 B)False

Question 8

In general the entry-deterrence game will generate a market price:

Accepted Answer

A)  higher than the monopoly price.
B)  lower than the monopoly price but higher than the duopoly price.
C)  the same as the monopoly price.
D)  the same as the duopoly price.E) All of the above
F) B) and D)

Question 9

When a second firm enters a monopolistʹs market,

Accepted Answer

A)  the former monopolistʹs average cost decreases as its output level decreases.
B)  the demand curve the former monopolist faces shifts to the left.
C)  the market price rises as the average cost increases.
D)  none of the aboveE) B) and D)
F) A) and C)

Question 10

A trust is:

Accepted Answer

A)  an agreement among firms to charge the perfectly competitive price.
B)  a compact between industry and government.
C)  a creation of the Sherman Act.
D)  an arrangement between firms whereby decision making is controlled by a board of trustees.E) A) and D)
F) B) and C)

Question 11

A benefit to consumers of monopolistically competitive markets is that:

Accepted Answer

A)  consumers only have to choose from one product.
B)  consumers have a variety of products from which to choose.
C)  goods are sold at the lowest possible average cost of production.
D)  price is equal to marginal cost in equilibrium.E) B) and C)
F) B) and D)

Question 12

The Clayton Act of 1914:

Accepted Answer

A)  prohibited selling products at ʺunreasonably low pricesʺ with the intent of reducing competition.
B)  made it illegal to monopolize a market.
C)  repealed the Sherman Act.
D)  outlawed price discrimination for the purpose of reducing competition.E) B) and D)
F) All of the above

Question 13

Recall the Application about the British experience with private water companies in the nineteenth century to answer the following question(s) .
-Recall the Application. The British Experience with water privatization showed that the distribution of water is

Accepted Answer

A)  a natural monopoly.
B)  best left as a deregulated market.
C)  best set up as a trust.
D)  a classic example of price fixing.E) B) and C)
F) A) and B)

Question 14

Predatory pricing occurs when a monopolist charges a:

Accepted Answer

A)  price above average total cost.
B)  price above average variable cost.
C)  low price to drive out competition, then charges a high price.
D)  high price to drive out competition, then charges a low price.E) B) and C)
F) A) and B)

Question 15

Analysis of a proposed merger involves examining its effect only on a marketʹs concentration.

Accepted Answer

A) True 
 B)False

Question 16

In a contestable market the costs of entering and leaving the market are very:

Accepted Answer

A)  high.
B)  low.
C)  low, but firms have no incentive to enter or leave.
D)  high and firms have no incentive to leave.E) A) and C)
F) A) and B)

Question 17

Figure 8.11
-Refer to Figure 8.11. If Fredʹs profit in the top rectangle were 1,300 instead of 500 then the path of the game would be:

Accepted Answer

A)  Fred chooses a small quantity and Barney enters.
B)  Fred chooses a large quantity and Barney enters.
C)  Fred chooses a small quantity and Barney stays out.
D)  Fred chooses a large quantity and Barney stays out.E) B) and D)
F) All of the above

Question 18

Price fixing is illegal under the Sherman Act and subsequent legislation.

Accepted Answer

A) True 
 B)False

Question 19

Figure 8.14
-The natural monopoly in Figure 8.14 wants to produce:

Accepted Answer

A)  Q1.
B)  Q2.
C)  Q3.
D)  Q4.E) A) and C)
F) B) and D)

Question 20

The more product differentiation in the market, the _______ the firm specific demand curve. The less product differentiation in the market, the _______ the firm specific demand curve.

Accepted Answer

A)  steeper; flatter
B)  flatter; steeper
C)  more concave; more convex
D)  more convex; more concaveE) None of the above
F) B) and C)

Exam 8: Market Entry, Monopolistic Competition, and Oligopoly

A trust is:

Correct AnswerverifiedShow Answer

Figure 8.14 -The natural monopoly in Figure 8.14 wants to produce:

Correct AnswerverifiedShow Answer

Price fixing is illegal under the Sherman Act and subsequent legislation.

Correct AnswerverifiedShow Answer

Figure 8.11 -Refer to Figure 8.11. If Fredʹs profit in the top rectangle were 1,300 instead of 500 then the path of the game would be:

Correct AnswerverifiedShow Answer

Recall the Application about the British experience with private water companies in the nineteenth century to answer the following question(s) . -Recall the Application. The British Experience with water privatization showed that the distribution of water is

Correct AnswerverifiedShow Answer

When a second firm enters a monopolistʹs market,

Correct AnswerverifiedShow Answer

Predatory pricing occurs when a monopolist charges a:

Correct AnswerverifiedShow Answer

The more product differentiation in the market, the _______ the firm specific demand curve. The less product differentiation in the market, the _______ the firm specific demand curve.

Correct AnswerverifiedShow Answer

Figure 8.13 -Consider an unregulated monopoly in Figure 8.13. If a second firm enters the market, the demand curve facing the first firm will:

Correct AnswerverifiedShow Answer

In general the entry-deterrence game will generate a market price:

Correct AnswerverifiedShow Answer

In a contestable market the costs of entering and leaving the market are very:

Correct AnswerverifiedShow Answer

Figure 8.4 -Figure 8.4 depicts demand and costs for a monopolistically competitive firm. If the firmʹs demand curve shifts to the left as more firms enter the market,

Correct AnswerverifiedShow Answer

The Clayton Act of 1914:

Correct AnswerverifiedShow Answer

Figure 8.6 -Referring to Figure 8.6, how much economic profit does the monopolistically competitive firm earn in long-run equilibrium?

Correct Answerverified As illustrated on the graph, the firm e...View AnswerShow Answer

A benefit to consumers of monopolistically competitive markets is that:

Correct AnswerverifiedShow Answer

In Washington, D.C., there are many coffee shops, each offering nearly identical coffee but each shop located in a different place around the city. It is likely a coffee shop in Washington, D.C., operates in a:

Correct AnswerverifiedShow Answer

Which of the following characteristics of the monopolistically competitive and the perfectly competitive market will cause the firm to earn zero profits in the long run?

Correct AnswerverifiedShow Answer

Analysis of a proposed merger involves examining its effect only on a marketʹs concentration.

Correct AnswerverifiedShow Answer

The government allowed the merger between Interstate Bakeries and Continental Bakery.

Correct AnswerverifiedShow Answer

Figure 8.14 -If price were regulated to be equal to long-run marginal cost the firm in Figure 8.14 would be:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The more product differentiation in the market, the _ the firm specific demand curve. The less product differentiation in the market, the _ the firm specific demand curve.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
As illustrated on the graph, the firm e...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified