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Exam 6: Monopoly and Imperfect Competition

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Question 21

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Industrial concentration:

A) guarantees the continual introduction of technological innovation
B) promotes competition
C) sometimes limits innovation due to lack of competition
D) creates benefits to the consumer unmatched by other market structures
E) is uncommon in the Canadian economy

F) A) and B)
G) C) and D)

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Question 22

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A monopolistic competitor's marginal revenue curve:

A) is downward-sloping and coincides with the demand curve
B) coincides with the demand curve and is parallel to the horizontal axis
C) is downward-sloping and lies below the demand curve
D) does not exist because the business is a price-maker
E) is downward-sloping and lies above the demand curve

F) All of the above
G) A) and C)

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Question 23

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According to Thomas Schelling,military security for the United States in the era of the Cold War was best ensured by:

Which of the following Canadian markets has a four-firm concentration ratio of over 50 percent?

Product differentiation and advertising are profitable ventures only when:

-Equilibrium price is:

The table below shows annual profits received by two oligopolists, Alpha and Beta, depending on whether each company decides whether to live within the collusive agreement they have signed to charge a high price, or to cheat and charge a lower price. $\begin{array}{}& \text {beta's Strategies }\\ \text {AlPHA'sStrategies }&\begin{array}{|l|c|c|}\hline & \begin{array}{c}\text { Don't } \\\text { }\end{array} & \text { Cheat } \\\hline \text { Don'tCheat} & \begin{array}{c}\text { B: } \$ 5 \mathrm{~m} \\\text { A: } \$ 5 \mathrm{~m}\end{array} & \begin{array}{c}\text { B: } \$ 6 \mathrm{~m} \\\text { A } \$ 3 \mathrm{~m}\end{array} \\\hline & \begin{array}{c}\text { B: } \$ 3 \mathrm{~m}\end{array} & \text { B: } \$ 4 \mathrm{~m} \\ \text { Cheat } & \$ 6 \mathrm{~m} & \text { A: } \$ 4 \mathrm{~m} \\\hline\end{array}\\\end{array}$ -Under the 1986 Competition Act,the maximum fine for conspiracy (to restrain competition) is:

The table below shows the number of years of jail time that two burglars, Alf and Doug, will receive, depending on whether each decides to confess and implicate his partner, or to remain silent. $\begin{array}{}& \text {Doug's Strategies }\\ \text {Alf'sStrategies }&\begin{array} { |l|c|c| } \hline & \text { Confess } & \begin{array}{c}\text { Don't } \\\text { Confess }\end{array} \\\hline \text { Confess } & \begin{array}{c}\text { Doug: 4 } \\\text { A.f: } 4\end{array} & \begin{array}{c}\text { Doug: } 9 \\\text { A.f: 0 }\end{array} \\\hline \text { Don't } & \text { Doug: 0 } & \text { Doug: 1 } \\\text { Confess } & \text { Alf: } 9 & \text { A.f: 1 } \\\hline\end{array}\\\end{array}$ -Based on this table,if Alf confesses and Doug stays silent,then Alf:

-The supply curve of a perfectly competitive industry turned monopolist:

Suppose that total sales in an industry in a particular year are $600 million and sales by the top four sellers are $200 million,$150 million,$100 million and $50 million,respectively.We can conclude that:

Because a monopolist has no competitors due to entry barriers,it is able to:

A manufacturing firm is the sole seller of a specialized machine. The demand schedule for this product is shown in the table below. $\begin{array} { | c | c | c | c | c | c | c | c | } \hline \text { Price } & \$ 700000 & \$ 600000 & \$ 500000 & \$ 400000 & \$ 300000 & \$ 200000 & \$ 100000 \\\hline \begin{array} { c } \text { Quantity } \\\text { Demanded }\end{array} & 0 & 1 & 2 & 3 & 4 & 5 & 6 \\\hline\end{array}$ -A monopolist will maximize profits by producing that output at which marginal cost is equal to:

The table below shows the number of years of jail time that two burglars, Alf and Doug, will receive, depending on whether each decides to confess and implicate his partner, or to remain silent. $\begin{array}{}& \text {Doug's Strategies }\\ \text {Alf'sStrategies }&\begin{array} { |l|c|c| } \hline & \text { Confess } & \begin{array}{c}\text { Don't } \\\text { Confess }\end{array} \\\hline \text { Confess } & \begin{array}{c}\text { Doug: 4 } \\\text { A.f: } 4\end{array} & \begin{array}{c}\text { Doug: } 9 \\\text { A.f: 0 }\end{array} \\\hline \text { Don't } & \text { Doug: 0 } & \text { Doug: 1 } \\\text { Confess } & \text { Alf: } 9 & \text { A.f: 1 } \\\hline\end{array}\\\end{array}$ -Based on this table,if Doug and Alf both stay silent,then they:

A manufacturing firm is the sole seller of a specialized machine. The demand schedule for this product is shown in the table below. $\begin{array} { | c | c | c | c | c | c | c | c | } \hline \text { Price } & \$ 700000 & \$ 600000 & \$ 500000 & \$ 400000 & \$ 300000 & \$ 200000 & \$ 100000 \\\hline \begin{array} { c } \text { Quantity } \\\text { Demanded }\end{array} & 0 & 1 & 2 & 3 & 4 & 5 & 6 \\\hline\end{array}$ -In this market the firm is:

In equilibrium,which of the following conditions is common to both unregulated monopoly and perfect competition?

If an oligopolist is faced with a marginal revenue curve that has a gap in it,we may assume that:

If a kink exists in an oligopolist's demand curve:

The following are demand and cost data for a monopolist: $\begin{array} { | c | c | c | c | } \hline &{ \text { Demand Data } } & { \text { Cost Data } } \\\hline \text { Price } & \text { Quantity Demanded } & \text { Output } & \text { Total Cost } \\\hline \$ 5.50 & 3 & 3 & \$ 5.00 \\\hline 5.00 & 4 & 4 & 6.00 \\\hline 4.50 & 5 & 5 & 6.50 \\\hline 3.85 & 6 & 6 & 7.50 \\\hline 3.35 & 7 & 7 & 9.00 \\\hline 2.90 & 8 & 8 & 11.00 \\\hline 2.50 & 9 & 9 & 14.00 \\\hline\end{array}$ -Equilibrium price for the monopolist will be:

A manufacturing firm is the sole seller of a specialized machine. The demand schedule for this product is shown in the table below. $\begin{array} { | c | c | c | c | c | c | c | c | } \hline \text { Price } & \$ 700000 & \$ 600000 & \$ 500000 & \$ 400000 & \$ 300000 & \$ 200000 & \$ 100000 \\\hline \begin{array} { c } \text { Quantity } \\\text { Demanded }\end{array} & 0 & 1 & 2 & 3 & 4 & 5 & 6 \\\hline\end{array}$ -For this firm,the marginal revenue of the third machine is:

The table below shows the number of years of jail time that two burglars, Alf and Doug, will receive, depending on whether each decides to confess and implicate his partner, or to remain silent. $\begin{array}{}& \text {Doug's Strategies }\\ \text {Alf'sStrategies }&\begin{array} { |l|c|c| } \hline & \text { Confess } & \begin{array}{c}\text { Don't } \\\text { Confess }\end{array} \\\hline \text { Confess } & \begin{array}{c}\text { Doug: 4 } \\\text { A.f: } 4\end{array} & \begin{array}{c}\text { Doug: } 9 \\\text { A.f: 0 }\end{array} \\\hline \text { Don't } & \text { Doug: 0 } & \text { Doug: 1 } \\\text { Confess } & \text { Alf: } 9 & \text { A.f: 1 } \\\hline\end{array}\\\end{array}$ -If both prisoners are allowed to confer before being questioned and decide to cooperate,they: