--------multiple choice-----------

11. For a monopolistically competitive firm, at the profit-maximizing quantity of output,

a. price exceeds marginal cost.

b. marginal revenue exceeds marginal cost.

c. marginal cost exceeds average revenue.

d. price equals marginal revenue.

12. Advertising

a. provides information about products, including prices and seller locations.

b. has been proven to increase competition and reduce prices compared to

markets without advertising.

c. signals quality to consumers, because advertising is expensive.

d. All of the above are correct.

13. From societys standpoint, cooperation among oligopolists is

a. desirable, because it leads to less conflict among firms and a wider variety of products for consumers.

b. desirable, because it leads to an outcome closer to the competitive outcome than what would be observed in the absence of cooperation.

c. undesirable, because it leads to output levels that are too low and prices that are too high.

d. undesirable, because it leads to output levels that are too high and prices that are too high.

14. When firms are faced with making strategic choices to maximize profit, economists typically use

a. the theory of monopoly to model their behavior.

b. the theory of aggressive competition to model their behavior.

c. game theory to model their behavior.

d. cartel theory to model their behavior.

15. Which of the following is correct? When oligopolies collude

a. they make higher profits and consumers of the product are better off.

b. they make higher profits but consumers of the product are worse off.

c. they make lower profits and consumers of the product are better off.

d. they make lower profits and consumers of the product are worse off.