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Unformatted text preview: CHAPTER 23 Monopolistic Competition and Oligopoly Topic Question numbers ___________________________________________________________________________________________________ 1. Monopolistic competition: definition; characteristics 1-17 2. Demand curve 18-24 3. Price-output behavior 25-78 4. Efficiency aspects 79-88 5. Oligopoly: definition; characteristics 89-112 6. Concentration ratio; Herfindahl Index 113-140 7. Game theory 141-156 8. Kinked-demand curve model 157-176 9. Collusion; cartels; price leadership 177-194 10. Advertising 195-200 11. Efficiency aspects 201-204 12. Review of four structures 205-226 Consider This 227-228 Last Word 229-233 True-False 234-258 ___________________________________________________________________________________________________ Multiple Choice Questions Monopolistic competition: definition; characteristics Econ: 445 LO: 23-1 Micro: 211 Topic: 1 Type: Definition 1. Monopolistic competition means: A) a market situation where competition is based entirely on product differentiation and advertising. B) a large number of firms producing a standardized or homogeneous product. C) many firms producing differentiated products. D) a few firms producing a standardized or homogeneous product. Ans: C Econ: 445 LO: 23-1 Micro: 211 Topic: 1 Type: Application of Concept 2. Monopolistic competition is characterized by a: A) few dominant firms and low entry barriers. B) large number of firms and substantial entry barriers. C) large number of firms and low entry barriers. D) few dominant firms and substantial entry barriers. Ans: C Econ: 446 LO: 23-1 Micro: 212 Topic: 1 Type: Application of Concept 3. Under monopolistic competition entry to the industry is: A) completely free of barriers. B) more difficult than under pure competition but not nearly as difficult as under pure monopoly. C) more difficult than under pure monopoly. D) blocked. Ans: B Econ: 446 LO: 23-1 Micro: 212 Topic: 1 Type: Application of Concept 4. Monopolistic competition resembles pure competition because: A) both industries emphasize nonprice competition. B) in both instances firms will operate at the minimum point on their long-run average total cost curves. C) both industries entail the production of differentiated products. D) barriers to entry are either weak or nonexistent. Ans: D Econ: 445-446 LO: 23-1 Micro: 211-212 Topic: 1 Type: Application of Concept 5. Which of the following is not a basic characteristic of monopolistic competition? A) the use of trademarks and brand names C) recognized mutual interdependence B) product differentiation D) a relatively large number of sellers Ans: B Econ: 446 LO: 23-1 Micro: 212 Topic: 1 Type: Definition 6. Nonprice competition refers to: A) competition between products of different industries, for example, competition between aluminum and steel in the manufacture of automobile parts....
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