Tuesday, March 23, 2010

Monopoly, Monopolistic and Oligopoly

5) Monopolies, oligopolies, and monopolistic competitive industries all
A) earn positive profits in the long run.
B) have market power.
C) are completely unconstrained in their pricing.
D) raise price and quantity over what would occur in perfect competition in order to maximize their profits.
Answer:B

7)A monopoly is an industry with
A)a single firm in which the entry of new firms is blocked.
B)a small number of firms each large enough to impact the market price of its output.
C)many firms each able to differentiate their product.
D)many firms each too small to impact the market price of its output.
Answer:A

8)An oligopoly is an industry market structure with
A)a single firm in which the entry of new firms is blocked.
B)a small number of firms each large enough to impact the market price of its output.
C)many firms each able to differentiate their product.
D)many firms each too small to impact the market price.
Answer:B

9) Monopolistic competition is an industry market structure with
A) single firm in which the entry of new firms is blocked.
B) small number of firms each large enough to impact the market price of its output.
C) many firms each able to differentiate their products.
D) many firms each too small to impact the market price of its output.
Answer:C

13)When ________ substitutes exist, a monopolist has ________ power to raise price.
A) more; more
B) more; less
C) fewer; less
D) no; infinite
Answer:B

17)In a monopolistic industry there is(are)
A) many firms and free entry of new firms.
B) many firms and entry of new firms is blocked.
C) a single firm and free entry of new firms.
D) a single firm and entry of new firms is blocked.
Answer:D

Refer to the information provided in Figure 13.1 below to answer the question that follows.

18)Refer to Figure 13.1. The demand curve facing an individual producer of wheat is most likely represented by
A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.
Answer:B

19)Refer to Figure 13.1. The demand curve facing an electric company is most likely represented by
A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.
Answer:A

20)Refer to Figure 13.1. The demand curve facing Microsoft is most likely represented by
A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.
Answer:A

21)Refer to Figure 13.1. The demand curve for insulin is most likely represented by
A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.
Answer:C

22)Firms with market power must decide all of the following EXCEPT
A) how much to supply in each input market.
B) how much to produce.
C) how to produce it.
D) what price to charge for their output.
Answer:A

1) The music production industry is an example of a(n) ________ industry.
A) perfectly competitive
B) monopolistic
C) monopolistically competitive
D) oligopolistic
Answer:D

2)Of the four oligopolistic markets below, in which is there considerable price competition?
A)music production industry
B)stent industry
C)airline industry
D)high-definition DVD industry
Answer: A

3)In general, oligopolists compete
A)on price alone.
B)on many dimensions except for price.
C)on price, R&D, and marketing and advertising.
D)on quality alone.
Answer:C

4)To determine their optimal strategy, oligopolists must ________ to their strategy.
A)anticipate the reaction of their customers
B)anticipate the reaction of their rivals
C)anticipate the reaction of government
D)both (A) and (B) are correct.
Answer:D

6)A(n) ________ industry has a single, unique product and blocked entry.
A)perfectly competitive
B)monopolistically competitive
C)monopolistic
D)oligopolistic
Answer:C

7) A few firms each large enough to influence market price characterizes the ________ market structure.
A) perfect competition
B) monopolistic competition
C) oligopoly
D) monopoly
Answer:C

8) Which of the following is the best example of an oligopolistic industry?
A) grocery stores
B) automobiles
C) electric power
D) designer clothes
Answer:B

9)Products may be homogeneous or differentiated in the ________ market structure.
A)perfectly competitive
B)monopolistic
C)monopolistically competitive
D)oligopolistic
Answer:D

11)Oligopoly is difficult to analyze because
A) there is no price competition among oligopolistic firms.
B) of the complex interdependence that usually exists among oligopolistic firms.
C) price is NOT a decision variable for oligopolistic firms.
D) there is price competition among oligopolistic firms but no competition on product quality.
Answer:B

12) The four largest firms account for approximately 90% of U.S. beer sales. The U.S. beer industry would be best classified as a(n)
A) perfectly competitive industry.
B) monopolistically competitive industry.
C) oligopoly.
D) monopoly.
Answer:C

14)Oligopolistic firms are
A) able to influence price only if the oligopolist's products are standardized.
B) able to influence price only if the oligopolist's products are differentiated.
C) able to influence price regardless of whether or not the product is differentiated or standardized by virtue of their size.
D) unable to influence price regardless of whether or not the product is differentiated or standardized.
Answer:C

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