quiz8 - QUIZ 8 VERSION 1 1) A monopolistically competitive...

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QUIZ 8 VERSION 1 1) A monopolistically competitive firm and a monopoly are similar because A) each firm has a large number of insignificant competitors. B) both firms will earn zero profits in the long run. C) both firms always operate at their point of minimum average total cost. D) both firms must behave strategically toward other firms in the industry. E) each firm sets price above marginal cost. 2) Unlike perfectly competitive and monopolistically competitive firms, oligopolists A) always make positive profits. B) always face only a small number of competing firms in their industry. C) earn zero profits in the long run. D) take account of the reactions of their competitors to their output decisions. E) operate where MR = MC . 3) Compared with perfect competition, monopolistic competition results in A) the same degree of variety of the good, but higher unit costs. B) a more efficient social outcome. C) a wider variety of the good produced at higher unit cost. D) fewer varieties of the good produced at higher unit costs. E) fewer varieties of the good produced at lower unit costs. 4) Long-run equilibrium for a monopolistically competitive industry results in A) price equal to MC at the minimum level of the firm's ATC curve. B) each firm's demand curve tangent to its ATC curve. C) each firm earning positive profits. D) the firm's demand curve cutting its MC curve at the minimum level of the ATC curve. E) each firm's MC curve intersecting MR at the minimum level of its ATC curve. 5) In long-run equilibrium a monopolistically competitive industry operates where A) P > AC. B) AC is increasing. C) AC > minimum average cost. D) MR > MC. E) AC = MC. 6) Oligopolists make decisions after taking into account the expected reaction of their competitors. Oligopolists are exhibiting A) collusive behaviour. B) cooperative behaviour. C) strategic behaviour. D) non-rational behaviour. E) non-strategic behaviour. 7) A Nash equilibrium A) is an example of a cooperative equilibrium. B) will in general produce the greatest welfare. C) where all players are better off than they would be with any other combination of strategies. D) is an unstable equilibrium. E) occurs where all players are maximizing their payoffs given the current behaviour of the other players.
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8) Characteristics of a monopolistic competitive market include A) a small number of firms in the industry. B) ease of entry and exit. C) difficult in exiting the industry. D) economic profits in the long run. E) a horizontal demand curve facing each individual firm. 9) Refer to Figure 1. In the long run a monopolistically competitive firm will A) produce Q C at Price P C . B) produce Q L at Price P L . C) produce the output where AC is at its minimum. D) produce Q
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This note was uploaded on 11/08/2011 for the course ECON 1B03 taught by Professor Hannahholmes during the Fall '08 term at McMaster University.

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quiz8 - QUIZ 8 VERSION 1 1) A monopolistically competitive...

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