Question: Monopolistic competition is characterized by...

Answer: Large number of firms and low entry barriers.

Question: Monopolistic competition resembles pure competition because...

Answer: Barriers to entry are weak or almost nonexistent

Question: Non-price competition refers to...

Answer: advertising, product promotion, and changes in the real or perceived characteristics of a product.

Question: The demand curve of a monopolistically competitive producer is:

Answer: more elastic than that of a pure monopolist, but less elastic than that of a pure competitor.

Question: A monopolistically competitive firm's marginal revenue curve:

Answer: is downsloping and lies below the demand curve.

Question: Monopolistically competitive firms:

Answer: may realize either profits or losses in the short run but realize normal profits in the long run.

Question: #7 on homework

Answer: #7 on homework

Question: #8 on homework

Answer: #8 on homework

Question: #9 on homework

Answer: #9 on homework

Question: In which of these continuums of degrees of competition (highest to lowest) is oligopoly properly placed?

Answer: Pure competition, monopolistic competition, oligopoly, pure monopoly.

Question: Oligopoly

Answer: Few firms producing a differentiated or a homogeneous product

Question: Oligopolistic industries are characterized by:

Answer: a few dominant firms and substantial entry barriers.

Question: The automobile, household appliance, and automobile tire industries are all illustrations of:

Answer: differentiated oligopoly.

Question: Example of Oligopoly?

Answer: Automobile industry

Question: Demand and Marginal Revenue Curve Diverge in which markets?

Answer: Pure monopoly, oligopoly, and monopolistic competition.

Question: Oligopoly exists when small number of firms are...

Answer: Producing virtually identical products.

Question: Mutual interdependence means that each oligopolistic firm:

Answer: must consider the reactions of its rivals when it determines its price policy.

Question: If the four-firm concentration ratio for industry X is 80:

Answer: the four largest firms account for 80 percent of total sales.

Question: As a general rule, oligopoly exists when the four-firm concentration ratio:

Answer: Is 40 percent or more.

Question: Herfindahl index for pure monopolist...

Answer: 10000

Question: 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:

Answer: Greater market power in Y than X

Question: 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:

Answer: 2200

Question: OPEC example of?

Answer: International Cartel

Question: If the firms in an oligopolistic industry can establish an effective cartel, the resulting output and price will approximate those of:

Answer: Pure monopoly

Question: In United States, cartels are...

Answer: Violation of anti-trust laws.