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Exam 11: The World of Imperfect Competition

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Question 81

Multiple Choice

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If a firm under monopolistic competition is producing a quantity that generates MC > MR, then the marginal decision rule tells us that profit:

A) can be increased by increasing production.
B) can be increased by decreasing production.
C) can be increased by decreasing the price.
D) is maximized only if MC = P.

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Question 82

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Price discrimination is when a firm charges:

A) the same price to all customers.
B) different prices for different goods to different customers.
C) different prices for the same goods to different customers.
D) None of the above are true.

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Question 83

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A restaurant:

In general, the higher the concentration ratio in an industry, the:

Monopolistic competition is characterized by a single firm producing a product that has no close substitutes.

A perfectly competitive industry will have a Herfindahl-Hirschman Index equal to about:

Due to the existence of a large number of similar, but not identical, substitutes in most communities, the market for chiropractors is best considered:

Monopolistic competition is an industry characterized by:

An analytical framework used in the analysis of strategic choices is:

If a firm wants to charge different customers different prices:

Use the following to answer question(s) : Monopoly Through Collusion -(Exhibit: Monopoly Through Collusion) For this question assume that the duopoly industry illustrated in the exhibit produces a perishable good.If each firm acted on the belief that it faced demand curve D₂ and acted without consideration of the other firm's behavior, the market price would likely end up being _______ and the combined economic profits of the firms would be _______ .

Use the following to answer question(s) : The Restaurant Model -(Exhibit: The Restaurant Market) The exhibit shows curves facing a typical restaurant in a community.Assume that the market is characterized by many firms, differentiated products, easy entry and easy exit.If the restaurant shown here is typical of others in the community, then in the long run, we would expect to observe:

A cartel is an example of secretive, informal collusive agreements.

Use the following for questions 43-51. Exhibit: Firms in Monopolistic Competition -(Exhibit: Firms in Monopolistic Competition) In Panel (a) , the profit-maximizing quantity of output is generated by the intersection at point:

Oligopoly is a market structure characterized by:

The HHI is a measure of concentration of industry.

The practice of charging different prices to different customers for the same good or service even though the cost of supplying those customers is the same is:

On the spectrum of market structures, monopolistic competition lies:

In monopolistic competition, consumers would be better off if output were expanded.

Use the following to answer question(s) : Monopoly Through Collusion -(Exhibit: Monopoly Through Collusion) The exhibit illustrates the situation in an industry that consists of two firms facing identical demand curves; the demand curve for each firm is D₁.If the firms collude and agree to share the market demand equally, then each firm will act as if its demand curve is given by: