Refer to the following figure:

A perfectly competitive firm will make positive profits as long as the market price is...

Question 1 options:

	above $2.90
	above $4.75.
	above $3.25.
	above $0.

Question 2(1 point)

If a perfectly competitive firm has chosen the quantity which maximizes profits, which of the following statementsmustbe true?

Question 2 options:

	Price = average total cost in the short run.
	Price = average fixed cost in the short run.
	Price = average variable cost in the short run.
	Price = marginal cost in the short run.

Question 3(1 point)

"Dede makes pens in a perfectly competitive pen market. Her pens currently sell for $5.50/box. She currently sells 4500 units/month at a monthly total cost of $13,500. Dede can expect new pen companies to enter the pen market over time."

Is this statement true or false?

Question 3 options:

	True
	False

Question 4(1 point)

Refer to the following figure:

A perfectly competitive firm will choose to produce zero output if the market price is...

Question 4 options:

	below $2.90.
	below $4.75.
	below $3.25.
	below $4.80.

Question 5(1 point)

If a firm in a perfectly competitive industry is experiencing higher than normal profits, some firms will ____ the industry and the market price will ____ in the long run.

Question 5 options:

	leave; rise
	enter; fall
	leave; fall
	enter; rise

Question 6(1 point)

"Oliver makes flour in a competitive flour industry. Oliver is noticing that his inventory of unsold flour is rising. This suggests that Oliver's price is too high and he should consider lowering it."

Is this statement true or false?

Question 6 options:

	True
	False

Question 7(1 point)

Firm Z uses produces a game app for mobile phones (Game Z). There are app makers out there producing similar games to Game Z, but none are perfectly identical to Game Z. Given this information, what type of firm is Firm Z likely to be classified as?

Question 7 options:

	Perfectly competitive firm.
	Monopolistically competitive firm.
	Monopoly firm.

Question 8(1 point)

Monopolistically competitive firms have higher costs compared to monopolies and perfectly competitive firms because of...

Question 8 options:

	extra equipment and materials costs.
	the low level of output they must produce.
	extra branding and advertising costs.
	more elastic demand.

Question 9(1 point)

A market will tend to be more 'monopolistic' if ___.

Question 9 options:

	the good has too few complements
	the good has too many substitutes
	the good has very few substitutes
	the good has too many complements

Question 10(1 point)

In the long run, monopolistically competitive firms...

Question 10 options:

	earn negative profits because of free entry and exit.
	earn positive profits because of free entry and exit.
	earn zero profits because of free entry and exit.

Question 11(1 point)

A monopoly firm is a _____ and faces a _____ demand curve.

Question 11 options:

	price taker; downward sloping
	price maker; downward sloping
	price maker; horizontal
	price taker; horizontal

Question 12(1 point)

"The demand curve that a monopolistically competitive firm faces is very elastic." This statement is...

Question 12 options:

	true.
	false.

Question 13(1 point)

Suppose a market has a CR-4 of 77. We expect this market...

Question 13 options:

	is reasonably competitive.
	has a firm that functions as a monopolist.
	has a tight oligopoly where sellers exercise market power.
	has a loose oligopoly where sellers do not exercise market power.

Question 14(1 point)

Refer to the following table:

Firm	Market Share
Firm Co.	33%
Business Inc.	11%
Company Inc.	9%
Management Ltd.	14%
Shop Co.	8%
Retail & Partners	25%

According to the table, the CR-4 concentration ratio is...

Question 14 options:

	67
	83
	67
	74
	91

Question 15(1 point)

"Industry J has 4 firms. Firm A serves 20% of the market, Firm B serves 30% of the market, Firm C serves 25% of the market and Firm D serves the rest. The HHI in this industry is less than 2000."

Is this statement true or false?

Question 15 options:

	True
	False

Question 16(1 point)

"Industry K has 4 firms. Firm A serves 10% of the market, Firm B serves 40% of the market, Firm C serves 20% of the market and Firm D serves the rest. The HHI in this industry is greater than 2500."

Is this statement true or false?

Question 16 options:

	True
	False

Question 17(1 point)

Consider the following information for a simultaneous move game: Two discount stores (megastore and superstore) are interested in expanding their market share through advertising. The table below depicts the strategic outcomes (profits) of both stores with and without advertising.

		Superstore
		Advertise	Don't Advertise
Megastore	Advertise	$95, $80	$305, $55
Don't Advertise	$65, $285	$165, $115

If the stores could co-operate, what payouts would they receive?

Question 17 options:

	Megastore gets $165 and Superstore gets $115.
	Megastore gets $95 and Superstore gets $80.
	Megastore gets $65 and Superstore gets $285.
	Megastore gets $305 and Superstore gets $55.

Question 18(1 point)

Refer to the following payoff table for a simultaneousgame of advertising:

		Firm B
		Advertise	Don't Advertise
Firm A	Advertise	$20, $30	$50, $10
	Don't Advertise	$10, $40	$30, $40

Which of the following are Nash equilibria of this game. Select ALL that apply.

Question 18 options:

	Firm A willnot advertiseand firm Bwill not advertise.
	Firm A willadvertiseand firm B willadvertise.
	Firm A willnot advertiseand firm B willadvertise.
	This game has no Nash equilibria.
	Firm A willadvertiseand firm B willnot advertise.

Question 19(1 point)

Irene's Dairy is deciding whether or not to enter the market for ice cream, currently monopolized by Mattie's Ice-cream. IfIrene enters the market, Mattie's can either accommodate her and share his $10 million in profits equally with Irene or fight her and cause a $5 million loss for each in a price war. What would the outcome of this game be?

Question 19 options:

	Irene stays out of the market.
	Irene enters the market and earns $10 million in profits.
	Irene enters the market and earns $5 million in profits.
	Irene enters the market and makes a loss of $5 million.

Question 20(1 point)

Two ice cream trucks, Aand B, are playing a simultaneous pricing game. They either choose a low price or a high price. The payouts they get from different combinations of strategies (in $thousands) appears in the table below:

		B
		Low	High
A	Low	$3, $5	$4, $2
High	$4, $5	$4, $6

Which of the following is a Nash equilibrium ofthis game?

Question 20 options:

	Bothprice high.
	A prices high and B prices low.
	Both price low.
	A prices low and B prices high.

Question 21(1 point)

Consider the following information for a simultaneous move game: Two discount stores (megastore and superstore) are interested in expanding their market share through advertising. The table below depicts the strategic outcomes (profits) of both stores with and without advertising.

		Superstore
		Advertise	Don't Advertise
Megastore	Advertise	$95, $80	$305, $55
Don't Advertise	$65, $285	$165, $115

If both stores were playing their Nash equilibrium strategies, what payouts would they receive?

Question 21 options:

	Megastore gets $305 and Superstore gets $55.
	Megastore gets $165 and Superstore gets $115.
	Megastore gets $65 and Superstore gets $285.
	Megastore gets $95 and Superstore gets $80.

Question 22(1 point)

Refer to the following payoff table:

		Firm B
		Low Price	High Price
Firm A	Low Price	0, 0	50, -10
	High Price	-10, 50	25, 25

Suppose this is a repeated game where the firms adopt a trigger strategy. What would the trigger strategy look like?

Question 22 options:

	Charge a low priceuntil the opponentcharges a low price, then charge a high price.
	Charge high prices until the opponent charges a low price, then match.
	Charge a high price until the opponent charges a high price, then charge a low price.
	Charge low prices until the opponent charges a high price, and then match.

Question 23(1 point)

According to the Bertrand model, oligopoly firms that compete using prices should...

Question 23 options:

	make high profits.
	make low or no profits.

Question 24(1 point)

"Warranties are a way to make customer demand less elastic, allowing firms to charge a higher price."

Is this statement true or false?

Question 24 options:

	True
	False

Question 25(1 point)

Advertising and brand recognition act as...

Question 25 options:

	a screen to keep competitors from identifying the firm's price.
	a credible threat, forcing firms to keep their prices low.
	a dynamic competitive strategy, forcing competitors to compete with both the newest version and the older versions of a product.
	a start-up fee that new firms have to pay, keeping some out of the market.