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Monopolistic competition is characterized by a: |
large number of firms and low entry barriers. |
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Monopolistic competition resembles pure competition because: |
barriers to entry are either weak or nonexistent. |
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Nonprice competition refers to: |
advertising, product promotion, and changes in the real or perceived characteristics of a product. |
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The demand curve of a monopolistically competitive producer is: |
more elastic than that of a pure monopolist, but less elastic than that of a pure competitor. |
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A monopolistically competitive firm’s marginal revenue curve: |
is downsloping and lies below the demand curve. |
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Monopolistically competitive firms: |
may realize either profits or losses in the short run but realize normal profits in the long run. |
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Refer to the diagrams, which pertain to monopolistically competitive firms. Short-run equilibrium entailing economic loss is shown by: |
diagram c only. |
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Refer to the diagrams, which pertain to monopolistically competitive firms. A short-run equilibrium entailing economic profits is shown by: |
diagram b only. |
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Refer to the diagrams, which pertain to monopolistically competitive firms. Long-run equilibrium is shown by: |
diagram a only. |
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In which of these continuums of degrees of competition (highest to lowest) is oligopoly properly placed? |
Pure competition, monopolistic competition, oligopoly, pure monopoly. |
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The term oligopoly indicates: |
a few firms producing either a differentiated or a homogeneous product. |
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Oligopolistic industries are characterized by: |
a few dominant firms and substantial entry barriers. |
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The automobile, household appliance, and automobile tire industries are all illustrations of: |
differentiated oligopoly |
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Which of the following is the best example of oligopoly? |
Automobile manufacturing. |
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In which of the following market models do demand and marginal revenue diverge? |
Pure monopoly, oligopoly, and monopolistic competition. |
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Homogeneous oligopoly exists where a small number of firms are: |
producing virtually identical products. |
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Mutual interdependence means that each oligopolistic firm: |
must consider the reactions of its rivals when it determines its price policy. |
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If the four-firm concentration ratio for industry X is 80: |
the four largest firms account for 80 percent of total sales. |
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As a general rule, oligopoly exists when the four-firm concentration ratio: |
is 40 percent or more. |
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The Herfindahl index for a pure monopolist is: |
10,000. |
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Industries X and Y both have four-firm concentration ratios of 65 percent, but the Herfindahl index for X is 1,500 while that for Y is 2,000. These data suggest: |
greater market power in Y than in X. |
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Assume six firms comprising an industry have market shares of 30, 30, 10, 10, 10, and 10 percent. The Herfindahl index for this industry is: |
2,200. |
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OPEC provides an example of: |
an international cartel. |
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If the firms in an oligopolistic industry can establish an effective cartel, the resulting output and price will approximate those of: |
a pure monopoly. |
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In the United States cartels are: |
in violation of the antitrust laws. |
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