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| 1 | |
Use the following diagram of a noncollusive oligopolist to answer the next question:
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Refer to the diagram. If this firm's rivals ignore a price increase but follow a price decrease, point E represents an equilibrium price and output provided the marginal cost of output Q is: |
| | A) | between b and a |
| | B) | between a and E |
| | C) | between b and E |
| | D) | less than E |
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| 2 | |
Suppose several firms in a purely competitive industry begin to experiment slightly with their product design, which allows them to modestly increase their prices. The industry would now more closely resemble: |
| | A) | pure monopoly |
| | B) | oligopoly |
| | C) | monopolistic competition |
| | D) | competitive monopoly |
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| 3 | |
In which market structure(s) will price exceed marginal revenue? |
| | A) | Differentiated oligopoly and monopoly only |
| | B) | Standardized oligopoly and pure competition only |
| | C) | Monopolistic competition and monopoly only |
| | D) | Monopolistic competition, oligopoly, and monopoly |
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| 4 | |
Consider the following information for a typical firm in a particular monopolistically competitive industry. Price = $50, MR = MC = $40, ATC = $45. From the information given, we can conclude that: |
| | A) | some firms will exit the industry and this firm's demand curve will shift to the right |
| | B) | some firms will enter the industry and this firm's demand curve will shift to the left |
| | C) | some firms will enter the industry and this firm's demand curve will shift to the right |
| | D) | the industry is in long-run equilibrium |
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| 5 | |
Which of the following market structure(s) achieves allocative efficiency? |
| | A) | pure competition only |
| | B) | pure competition and monopolistic competition only |
| | C) | pure competition and homogeneous oligopoly only |
| | D) | monopolistic competition and differentiated oligopoly only |
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| 6 | |
Suppose only three airlines service a particular route. One of the airlines typically signals its price intentions through a daily posting on its internet site, which the other two quickly match. This best describes: |
| | A) | cost-plus pricing |
| | B) | price leadership |
| | C) | a cartel |
| | D) | game theory |
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| 7 | |
If an oligopolist's demand curve is kinked at the going price: |
| | A) | The loss in revenue from reducing output by one unit exceeds the gain in revenue from expanding output by one unit |
| | B) | The gain in revenue from expanding output by one unit exceeds the loss in revenue from reducing output by one unit |
| | C) | total revenue will fall if price is changed in either direction |
| | D) | profits will rise if price is increased but fall if price is decreased |
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| 8 | |
Which of the following most closely approximates a monopolistic competitor? |
| | A) | Intel |
| | B) | a small dairy farm |
| | C) | United States Steel |
| | D) | Valley View Motel |
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| 9 | |
Use the following diagram to answer the next question.
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The monopolistically competitive firm illustrated in the diagram exhibits productive inefficiency because its: |
| | A) | output is not at the intersection of demand and marginal cost |
| | B) | output is not at the intersection of marginal cost and average total cost |
| | C) | price exceeds marginal revenue |
| | D) | price exceeds marginal cost |
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| 10 | |
Use the following diagrams to answer the next question.
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Refer to the diagrams. Zero long-run economic profits are most likely to occur in markets illustrated by: |
| | A) | Figure B only |
| | B) | Figures B and C |
| | C) | Figures C and D |
| | D) | Figures B and D |
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