(1) As a firm differentiates its product relative to its competitor's product

a.Its cost curves shift downward relative to those of its competitors

b.Is cost curves shift upward relative to those of its competitors

c.Its demand curve becomes more horizontal in P and Q space

d.Its demand curve becomes more negative in P and Q space

(2) In the classic Bertrand model of oligopoly (e.g., a duopoly with no capacity constraints, product differentiation or innovation), price for each firm will be set

a.at the monopoly price

b.above MC

c.at MC

d.below MC

(3) When is it desirable for society to allow a monopoly to operate?

a.When the monopolist is self-regulated.

b.When there are large cost savings from economies of scale

c.When governments tax monopoly profits and give them back to society.

d.It is never desirable for society to let a monopoly to operate.

(4) Market power results in more restricted output and higher price than would prevail in a perfectly competitive industry. However, some market power is desirable for society if

a.it encourages more labor investment

b.government can tax firms with market power

c.it encourages firms to innovate

d.it results in more homogeneous goods