Which characteristic does monopolistic competition NOT have in common with perfect competition? 

1-Products of individual firms are different.

2-Each firm has an insignificantly small market share.

3-Entry and exit are easy.

4-Individual firms earn normal profits in the long run.

Which of the following products is likely to be the MOST differentiated? 

1-cotton sold to a fabric maker

2-garments sold to a garment distributor

3-garments sold to a retail customer

4-fabric sold to a garment maker

If Rosco’s Tacos competes with eight other fast-food restaurants in the same neighborhood, and two of those rival firms exit the market, then: 

1-the market demand curve will shift to the left.

2-Rosco’s supply curve will shift to the right.

3-Rosco’s demand curve will shift to the right.

4-the market supply curve will shift to the right.

If firms in a monopolistically competitive industry are experiencing economic losses in the short run, some firms will _____ the industry, _____ demand until each firm earns a normal profit. 

1-exit; reducing

2-enter; increasing

3-exit; increasing

4-enter; reducing

Monopolistically competitive markets and perfectly competitive markets do NOT share which characteristic? 

1-ease of entry into the market

2-zero economic profits in the long run

3-many firms in the market

4-differentiated products

In an oligopoly, all the firms: 

1-take their competitors into account when they make pricing decisions.

2-face easy entry and exit from the market.

3-compete over advertising.

4-compete over price alone.

Before deciding on a pricing strategy, Worldwide Widgets consults with its market intelligence team to understand what discounts the Gargantuan Gizmo Company is offering. The model that BEST fits this industry is: 

1-monopolistic competition.

2-an oligopoly.

3-pure competition.

4-a monopoly.

Which action can help increase the stability of a cartel? 

1-increase the number of cartel members

2-increase product differentiation

3-increase government protection

4-decrease barriers to entry into the industry

If a cartel member is considering cheating in order to earn profits, it should:

1-decrease the price of the goods it sells at the quota quantity.

2-decrease the quantity it sells at the quota price.

3-increase the price of the goods it sells at the quota quantity.

4-increase the quantity it sells at the quota price.

The industrial structure of cartels is an example of a(n): 

1-asymmetric information game.

2-parlor game.

3-noncooperative game.

4-cooperative game.

A Nash equilibrium: 

1-involves a zero-sum game scenario.

2-assumes that some players are better equipped to strategize.

3-assumes that each player chooses his or her best strategy.

4-can be found only in positive-sum games.

Which game does NOT describe a Prisoner’s Dilemma outcome? 

1-competing electronics stores attempting to undercut each other’s prices

2-cartel members attempting to increase profits by cheating on their production quotas

3-rival department stores agreeing to accept each other’s coupons and advertised specials

4-a game of chicken in which one player backs down while the other player does not

The notion that individuals and firms are compelled to retaliate or punish others for engaging in noncooperative actions, but leaving the door open for future reconciliation, is BEST referred to as a(n): 

1-irrational strategy.

2-grim strategy.

3-tit-for-tat strategy.

4-trembling hand strategy.

If Nintendo lowers the price of its product by $10, Sony responds by lowering the price of its own product by $10 and chooses not to cooperate again. This is an example of what type of game strategy? 

1-grim trigger

2-tit-for-tat

3-predatory pricing

4-trembling hand trigger

If Nintendo lowers the price of its product by $10, Sony waits to see whether Nintendo’s price cut was a temporary mistake. This is an example of what type of game strategy? 

1-grim trigger

2-trembling hand trigger

3-tit-for-tat

4-predatory pricing

 

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