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Microeconomics - Chapter 8 (ISBN-10: 1429218290)

Microeconomics - Chapter 8 (ISBN-10: 1429218290)

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Published by Brooke Mitchelle
These answers are ALL correct.

ISBN-10: 1429218290
ISBN-13: 9781429218290
These answers are ALL correct.

ISBN-10: 1429218290
ISBN-13: 9781429218290

More info:

Published by: Brooke Mitchelle on Jun 11, 2011
Copyright:Attribution Non-commercial

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02/24/2014

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 Page 1
 Name: __________________________ Date: _____________ 1.
 
A common example of monopolistic competition is the market for ________.A) orangesB) soft drinksC) automobilesD) nuclear power plants2.
 
An industry that consists of two firms is:A) a duopoly.B) a monopoly.C) a monopsony.D) monopolistic competition.3.
 
The two theoretical extremes of the market structure spectrum are occupied on one end by perfect competition andon the other end by:A) monopoly.B) duopoly.C) oligopoly.D) monopolistic competition.4.
 
A monopolistically competitive industry such as baked goods and a perfectly competitive industry like wheatfarming are alike in that:A) firms in both types of industries produce identical products.B) firms in both types of industries produce similar but not identical products.C) barriers to entry in both industries are large.D) there are many firms in each industry.5.
 
Market power in the United States was often gained in the latter part of the nineteenth century by:A) forming trusts.B) the growth of competition.C) international arrangements with Russian and Japanese firms.D) opening up more industries to international trade.6.
 
One of the earliest actions of antitrust policy was the breakup of:A) the Standard Oil Company.B) Bell Telephone.C) Microsoft.D) IBM.7.
 
Because of monopoly, consumers typically have:A) more choices.B) larger quantities.C) higher quality.D) higher prices.8.
 
Which of the following describes a feature shared by both monopolistic competition and perfect competition?A) small number of firms competing in the industryB) no barriers to entry or exit in the long runC) absolute market power D) standardized products
 
 Page 2
9.
 
In an oligopoly:A) there are many sellers.B) there are no barriers to entry.C) firms recognize their interdependence.D) total surplus is maximized.10.
 
Monopolistic competition is an industry characterized by:A) a product with no close substitutes.B) a horizontal demand curve.C) a large number of firms.D) barriers to entry and exit.11.
 
The airline industry often engages in Bertrand behavior. This means that firms often ________ prices until profits ________.A) raise; are maximizedB) lower; are maximizedC) lower; approach zeroD) raise; approach zero12.
 
Which of the following is
not 
a barrier to entry?A) control of an input essential for productionB) government-created barriers such as patentsC) a ban on certain kinds of advertisingD) the existence of significant economies of scale13.
 
If the only two firms in an industry openly agree to fix the price or output level, then this is an example of:A) cartel behavior.B) price leadership.C) perfect competition.D) tacit collusion.14.
 
If a monopolist is producing a quantity that generates
MC 
>
MR,
then profit:A) is maximized.B) is maximized only if 
MC 
=
 P.
 C) can be increased by increasing production.D) can be increased by decreasing production.15.
 
A demand curve that is downward-sloping will ensure that:A)
 P 
=
 ATC.
 B)
 P 
>
MR.
 C)
 P 
<
MC.
 D)
 P 
=
MC.
 16.
 
 Non-price competition is more prevalent in an oligopoly in which there is (are):A) a Nash equilibrium.B) complex products.C) tacit collusion.D) no product differentiations.17.
 
In monopolistic competition:A) firms advertise to increase demand for their product.B) entry of new firms shifts the demand curve for existing firms to the right.C) when some firms exit, the demand curve for the firms that remain in the industry shifts to the left.D) firms earn large economic profits in the long run.
 
 Page 3
18.
 
The owners of gas stations in Bigtown are trying to set up a cartel that will raise the price of gasoline. Which of thefollowing would indicate ìcheatingî?A) All Bigtown gas stations face the same costs.B) There are only a few gas stations in Bigtown.C) One firm decides to increase output beyond the agreed levels.D) The stations vary in terms of the services that they provide.Use the following to answer question 19:
 
Table: Demand for Wooden Stakes
19.
 
(Table: Demand for Wooden Stakes) The table shows the demand for wooden stakes in the town of Sunnyvale.Suppose the marginal cost of producing stakes is zero. The only two firms producing wooden stakes, Spike Inc. andBuffy Co., agree to produce only 50 stakes, with each firm producing only 25. What is Buffy's quantity effect if shecheats on the agreement and produces 30 stakes?A) $10B) $45C) $20D) $9

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