question

A(n) ___________ is a market dominated by a few large producers of a homogeneous or differentiated product.

answer

oligopoly

question

A monopolistically competitive firm's demand curve is

answer

b) highly but not perfectly elastic

question

__________ __________ is a market characterized by having many sellers, differentiated products, and with ease of entry and exit from an industry.

answer

Monopolistic competition

question

Oligopolies have:

answer

c) fewer firms than monopolistic competition

question

The benefits to oligopolists from collusion are:

answer

a) It reduces price uncertainty c) It increases profits d) It possibly prohibits the entry of new rivals

question

Entry to and exit from monopolistically competitive industries is

answer

e) relative easy

question

_________ means illegal cooperation with rivals.

answer

Collusion

question

In the short run, monopolistically competitive firms maximize profits or minimize losses by producing the output level where

answer

e) marginal revenue equals marginal cost

question

Firms in monopolistic competition produce goods with:

answer

c) slightly varying physical characteristics d) varying degrees of customer service

question

The study of how people behave in strategic situations is called _________ _________.

answer

game theory

question

Multiple models are used to study oligopolies because oligopolies

answer

b) cannot estimate both their demand marginal revenue curves due to rivals' reactions. c) encompass a greater range and diversity of market situations.

question

Entry of new firms into monopolistically competitive industries is relatively easy because

answer

a) capital requirements are low

question

Three models used to study pricing and output by oligopolies are

answer

a) the kinked-demand curve model d) price leadership model e) collusive pricing model

question

The equality of price and minimum average total cost yields technical _________ efficiency; the equality of price and marginal cost yields _________ efficiency.

answer

productive; allocative

question

Two types of market models that closely approximate many markets in the real world are

answer

b) monopolistic competition and oligopoly

question

Which of the following is not a characteristic of oligopoly?

answer

e) Firms have no control over their price.

question

A type of implicit understanding used by oligopolists to coordinate prices without engaging in outright collusion is known as _______ _______.

answer

price leadership

question

When four or five auto parts stores serve a medium-sized town this can be considered a(n) ________.

answer

oligopoly

question

Oligopolistic behavior implies that oligopolists prefer competition

answer

a) through product development b) through advertising

question

When measuring industry concentration, the four-firm concentration ratio is the percentage ratio of total industry ________ (one word) for the four largest firms in an industry relative to total industry sales.

answer

sales

question

Firms in oligopolistic industries are "price makers" because

answer

a) they are few in number.

question

If a monopolistically competitive firm is producing where its marginal revenue is less than its marginal cost, then the firm

answer

c) should produce less output to increase profits or reduce losses

question

Which of the following are shortcoming of the kinked-demand analysis of oligopoly?

answer

b) During macroeconomic instability, oligopoly prices are not as rigid as the kinked-demand theory implies e) The kinked-demand curve explains price inflexibility

question

Which of the following are typical characteristics of monopolistic competition?

answer

a) Small market share b) Independent e) No collusion

question

Non-________ competition is competition illustrated through product differentiation and advertising.

answer

price

question

When firms is an oligopoly ________, their payoffs will be greater than if they did not.

answer

collude

question

By changing their advertising and __________ strategies, firms competing in an oligopoly can affect profits and influence the profits of rivals.

answer

pricing

question

In order to achieve greater _________ and market share, firms in the same industry may consider the merger of two or more companies.

answer

b) economies of scale

question

Firms in an oligopoly may produce

answer

e) either a homogeneous product or a differentiated product.

question

During macroeconomic instability, the lack of determination of price and price rigidity is best described by:

answer

d) the shortcomings of the kinked-demand curve of oligopolistic firms

question

Price leaders make price adjustments

answer

b) infrequently, due to the uncertainty in rivals' response to these price changes. c) by communicating impending price adjustments to the industry. e) by establishing a price that discourages new entrants into the industry.

question

Which of the following is not an example of how products can differ in terms of service?

answer

e) Some stores may charge different prices.

question

When plant and equipment are underused because firms are producing less than minimum-ATC output, this is known as having _________ _________ .

answer

a) productive inefficiency c) excess capacity

question

As a means of conveying information, advertising is a relatively

answer

e) low-cost way to get information to consumers

question

Which of the following helps differentiate one product from another product?

answer

a) Varying degrees of customer service. c) Different physical characteristics. d) More or less convenient locations.

question

Productive efficiency in monopolistically competitive markets does not occur in the long run because firms set the price

answer

c) on the demand curve where MR=MC to maximize economic profit, making output less than optimal from society's perspective.

question

It is reasonable to assume that the demand for a non-colluding oligopolist facing a kinked-demand curve is highly ________ above the going price.

answer

elastic

question

Which of the following is a measure of industry concentration that equals the sum of the squared percentage market shares of all firms in the industry?

answer

c) Herfindahl Index

question

Advertising may decrease economic efficiency if it:

answer

b) increases monopoly power.

question

Barriers to entry exist for monopolies as well as oligopolies in the form of all the following, except:

answer

b) diseconomies of scale.

question

What does a demand curve look like for an oligopolist?

answer

c) It could be a straight line or a kinked line.

question

When Mary tried to get an appointment with a local dentist she was told that the earliest the doctor could see her was in three weeks. This may have been due to a lack of ________.

answer

c) excess capacity

question

In a non-collusive oligopolistic industry, prices are generally stable for the following?

answer

b) Cost reasons d) Demand reasons

question

What are the negative effects if large oligopolists do not advertise?

answer

c) Customers might purchase less efficient products that cost more. d) Consumers would be unaware of important new products.

question

Entry into monopolistically competitive industries is

answer

c) easy compared to industries in an oligopoly.

question

Oligopolies are not desirable because they

answer

c) achieve neither productive efficiency nor allocative efficiency

question

When the ________ is stable, oligopoly prices tend to be stable.

answer

economy

question

Compared to monopolies, oligopolies

answer

d) give the appearance of increased competition

question

An ________ is present when the largest four firms is an industry control more than 40% or more of the market.

answer

oligopoly

question

Advertising can reduce efficiency by

answer

b) providing misleading information e) manipulating consumer preferences

question

Compared to the outcomes with collusion in the figure provided, if one firm cheats it can increase its payoff by

answer

d) $3

question

Suppose an industry has 10 firms and each has a 10% share of the market. This industry's Herfindahl index is _______.

answer

1000

question

The ability of monopolistically competitive firm to engage in __________ competition makes the market situation more complex because of differentiated product differences and advertising.

answer

nonprice

question

Which of the following best exemplifies a firm with excess capacity?

answer

d) A fast-food restaurant where customers never have to wait to place an order.

question

When members of an oligopoly react to price changes by a dominant firm, the ________ ________ model is most applicable.

answer

price leadership

question

The price at convenience stores for a bottle of soda is almost always higher than at supermarkets owing to the price customers are willing to pay to make their purchase at a more convenient ________.

answer

location

question

The Herfindahl index equals:

answer

b) the sum of the squared percentage market shares of all firms in an industry

Economics Chapter 13 Practice – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards