Midterm ECN 201 Ch #10 – Flashcards
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______________________Occurs when circumstances have allowed several large firms to have all or most of the sales in an industry.
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An Oligopoly
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The branch of mathematics that analyzes situations in which players must make decisions and then receive payoffs most often used by economists is:
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Game theory
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I the CEO of I'MaBigBank is playing prisoner's dilemma then, from his perspective, the gains to be had from cooperation are:
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larger than the rewards from pursuing self-interest
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The perceived demand curve for a group of competing oligopoly firms will appear kinked as a result of their commitments to:
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Match price cuts, but not price increases
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Perfect competition and monopoly stand at ___________________ of the spectrum of competition.
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Opposite ends
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If a perfectly competitive market involves many fimrs selling identical products, then , in the face of such competition,
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each of these firms must act as a price-taker
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Shopping malls typically lease retail space to a larger number of clothing stores. When this group of retailers competes to sell similar but not identical products, they engage in what economists call________________
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monopolistic competition
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As the name monopolistic competition implies, a firm's decisions in this setting will in certain ways resemble _________________ and in other ways resemble__________________
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monopoly; perfect competition
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Since monopolistic competitors must must expect a process of market entry and exit like perfectly competitive firms
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They will be unable to earn higher-than -normal profits in the long run
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In the highly competitive setting in which oligopoly firms operate, which one of the following is considered to be the greatest temptation those oligopolists must face?
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A) to cooperate to generate and then divide up monopoly -like profits
B) to cooperate to mutually decide what price to charge
C) to cooperate to make decisions about what quantity to produce
D) to cooperate to act as a singe monopoly
all of the above
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In a monopolistic competitive industry, firms can try to differentiate their products by:
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Enhancing product's physical aspects
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Which of the following would be classified as a differentiated product produced by a monopolistic competitor?
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Channel No. 5
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Monopolistic competitors in the food industry will often include a recyclable symbol on packaging used for their product as a means to:
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differentiate their product
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The demand curve as perceived by a perfectly competitive firm is_________________
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flat
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If a perfectly competitive firm raises its price, the quantity demanded of its product:
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falls to zero
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If a monopoly or monopolistic competitor raises their prices, the quantity demanded
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Will decline
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If the monopolistic competitor raises its price, it ___________________ customers than a perfectly competitive firm, but ________________________ customers compared to the number that a monopoly that raised its prices would
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Will lose fewer; it will lose more
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The first step to be undertaken by a profit-maximizing monopolistic competitor wanting to decide what price to charge is to:
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select the profit maximizing quantity to produce
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If the firm is producing at a quantity of output where marginal revenue exceeds marginal cost, then,:
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The Firm should keep expanding production
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A monopolistically competitive firms may earn abnormally high profits in the:
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Short term, but the process of entry will drive those profits to zero in the long run.
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The long-term result of entry and exit in a perfectly competitive market is that all the firms end up selling at the price level determined by the lowest point on the
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Average cost curve
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In a perfectly competitive market, each firm produces at a quantity where price is set
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Equal to marginal cost, both in the short run and in the long run
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If oligopolists compete hard against each other:
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costs for all are driven up
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Which of the following would most likely create the setting for an oligopoly?
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Government grants Alex, Trent, and Alyse each a patent for their respective molybdenum based electric car batteries
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If oligopolistic firms banded together with the intention of acting like a monopoly, it would likely result in their being able to:
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charge a higher price in the short-run
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If one firm operating in an oligopoly raises its price and other firms do not do so,
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the egos of all the top executives will eventually lead to cooperation at that higher price
