Monopolistically competitive industries consist of:

a.many firms, each selling a slightly different product.

b.one firm selling one product.

c.many firms, all selling identical products.

d.one firm selling several products.

Which of the following is not a common characteristic of oligopolistic firms?

a.high barriers to entry

b.mutual interdependence

c.a large number of sellers

d.non-price competition

A situation in which economic actors interacting with one another each choose their best strategy, given the strategies the others have chosen is called a:

a.socially optimal solution

b.open market solution

c.competitive equilibrium

d.Nash equilibrium

The demand curve a monopolist uses in making an output decision is:

a.vertical as there are no close substitutes for its product.

b.positively sloped as it produces a highly differentiated product.

c.the same as the market demand curve.

d.the same as the demand curve facing a perfectly competitive firm.

A monopolistic firm is a:

a.price maker that faces the market supply curve.

b.price maker that faces the market demand curve.

c.price taker that faces the market supply curve.

d.price taker that faces the market demand curve

Interdependence among firms is characteristic of:

a.monopolistically competitive markets.

b.oligopoly markets.

c.monopoly markets.

d.perfectly competitive markets.

In equilibrium under monopolistic competition:

a.marginal revenue exceeds average revenue.

b.marginal revenue exceeds marginal cost.

c.marginal revenue is equal to marginal cost.

d.marginal revenue is less than marginal cost.

In long-run equilibrium, a monopolistically competitive firm will produce:

a.at its minimum average cost.

b.along the downward-sloping portion of its ATC curve.

c.along the upward-sloping portion of its ATC curve.

d.at full capacity.

If there are many firms participating in a market, the market is either:

a.all of the above are possible

b.an oligopoly or monopolistically competitive

c.perfectly competitive or monopolistically competitive

d.an oligopoly or perfectly competitive

Which of these is likely to be true of perfect competition but not of monopoly?

a.A firm can sell a good in the market only if the government grants a patent to the firm.

b.A firm can produce a good only if government licenses authorize it to produce the good.

c.A firm can face competition from new entrants into the market in the long run.

d.A firm can earn economic profit in the long run.

Which of the following is not potentially a barrier to entry into a product market?

a.government licensing of the product's producers

b.the absence of economies of scale in the product market

c.the control of a crucial input necessary to produce the product

d.patent protection on the design of the product

When free entry is one of the attributes of a market structure, economic profits are:

a.always positive.

b.generally negative for all firms.

c.generally zero in the short run.

d.generally driven to zero in long-run equilibrium.

A profit-maximizing firm in monopolistic competition should shut down in the short run if:

a.marginal revenue is less than price.

b.price is less than average fixed cost.

c.price is less than average variable cost.

d.price is more than average total cost.

An important characteristic of an oligopoly market structure is that:

a.the actions of one seller can have no impact on the profitability of other sellers because the market is so large

b.there are a large number of firms in the industry that produce identical products

c.products typically sell where price is equal to the marginal cost of production

d.the actions of one seller can have a large impact on the profitability of other sellers

Monopolistic competition is different from perfect competition because monopolistic competitors:

a.have high barriers to entry.

b.produce homogeneous products

c.produce differentiated products.

d.are price takers.

It is harder to explain the behavior of firms in an oligopoly than in other market structures because:

a.the firms act independently of each other in an oligopoly.

b.only homogeneous products are produced by firms in an oligopoly.

c.only differentiated products are produced by firms in an oligopoly.

d.firms base their decisions on what their rivals do.

Which of the following does a monopoly control that a perfectly competitive firm does not control?

a.Total production

b.Price

c.Production technology

d.Input usage

Illegal cartel agreements are:

a.difficult to maintain because each firm has a profit incentive to break the agreement

b.common in monopolistically competitive markets

c.not detrimental to total welfare as any loss of consumer surplus is offset by higher firm profits

d.more likely to occur when there are many firms as the potential profits are higher

In the short run, a monopolistically competitive firm is:

a.guaranteed to earn an economic loss.

b.likely to charge a price that is less than the average cost of production.

c.not guaranteed any economic profit.

d.likely to shut down.

Which of the following is inconsistent with a monopoly?

a.a downward-sloping demand curve

b.marginal revenue exceeds price

c.a U-shaped average total cost curve

d.a single seller

Which of the following prevents potential competitors from entering a monopolized market?a.Stable market demand

b.Product differentiation

c.Legal restrictions

d.Diseconomies of scale

Why does the government allow some markets to be monopolized by granting patents?

a.to ensure lower prices for consumers in the short run

b.to promote technological progress

c.to correct for negative externalities

d.to promote a more equal distribution of income

Collusion among firms to raise prices is rare in monopolistically competitive markets because:

a.there are too few firms.

b.there are too many firms.

c.products are homogeneous.

d.there is only one firm.

Graphically, the marginal revenue curve of a monopolist:

a.lies above the demand curve of a monopolist.

b.is the same as the demand curve of a monopolist.

c.lies below the demand curve of a monopolist.

d.is the same as the marginal cost curve of a monopolist.

Under which one of the following market structures are sellers most likely to consider the reaction of rival sellers when they set the price of their product?

a.monopolistic competition

b.pure monopoly

c.oligopoly

d.perfect competition

When new firms choose to enter monopolistically competitive markets:

a.they are guaranteed economic profits upon entry.

b.there must be little diversity of products in the market.

c.the demand curve faced by an established firm will shift to the right as a result.

d.some firms in the market must be making economic profits.

To increase their profits further, members of a cartel have an incentive to:

a.collude

b.lower production

c.limit membership

d.cheat

Firms in an oligopoly market can potentially earn economic profits.

a.in neither the short run nor the long run.

b.in the long run, but not the short run.

c.in the short run, but not the long run.

d.in both the short run and long run.

An oligopoly is characterized by:

a.a single firm and no barriers to entry.

b.a few firms, which have control over market price.

c.a large number of firms and no barriers to entry.

d.many firms and some barriers to entry.

Oligopoly markets are characterised by:

a.a conflict between cooperation and self-interest

b.the pursuit of self-interest by profit-maximising firms always maximising collective profits

c.a fall in collective profits if a cartel is organised

d.the universal existence of collusive agreements

If toothpaste manufacturers compete in a monopolistically competitive market, then:

a.firms are price takers.

b.firms try to differentiate their products from those of competitors.

c.firms maximize profits by choosing output where price equals marginal cost.

d.there are significant barriers to entering the toothpaste industry.

If the ice cream industry is monopolistically competitive, then:

a.the price of ice cream is less than marginal cost in equilibrium.

b.the price of ice cream equals marginal cost in equilibrium.

c.there are significant barriers to entering the ice cream business.

d.the price of ice cream equals average cost in long-run equilibrium

In an oligopoly, the demand curve facing an individual firm depends upon the:

a.shape of the firm's average total cost curve.

b.firm's supply curve.

c.shape of the firm's marginal cost curve.

d.behavior of competing firms

Once a cartel is formed, the market is in effect served by:

a.a monopoly

b.imperfect competition

c.monopolistic competition

d.an oligopoly

If the average total cost curve is always above the demand curve of a monopolist:

a.the monopolist must be producing inefficiently.

b.entry will occur, forcing the monopolist to reduce price and expand output.

c.the monopolist will earn an economic profit.

d.that monopolist will suffer economic losses.