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1、MULTIPLE CHOICESection 12.1easy1.For which of the following market structures is it assumed that there are barriers to entry?a. perfect competitionb. monopolistic competitionc. monopolyd. all of the abovee. (b) and (c) onlyeasy2.Use the following two statements about monopolistic competition to answ
2、er this question.I.In the long run, the price of the good will equal the minimum of the average cost.II.In the short run, firms may earn a profit.a. I and II are true.b. I is true, and II is false.c. I is false, and II is true.d. I and II are false.easy3.A market with few entry barriers and with man
3、y firms that sell differentiated products isa. purely competitive. b. a monopoly.c. monopolistically competitive.d. oligopolistic.easy4.The most important factor in determining the long-run profit potential in monopolistic competition isa. free entry and exit.b. the elasticity of the market demand c
4、urve.c. the elasticity of the firms demand curve.d. the reaction of rival firms to a change in price.easy5.Which of the following is NOT regarded as a source of inefficiency in monopolistic competition?a. the fact that price exceeds marginal cost.b. excess capacity.c. product diversity.d. the fact t
5、hat long-run average cost is not minimized.e. all of the above.easy6.Monopolistically competitive firms have monopoly power because theya. face downward sloping demand curves.b. are great in number.c. have freedom of entry.d. are free to advertise.easy7.A monopolistically competitive firm in short r
6、un equilibrium:a. will make negative profit (lose money).b. will make zero profit (break-even).c. will make positive profit.d. any of the above are possible.easy8.A monopolistically competitive firm in long run equilibrium:a. will make negative profit.b. will make zero profit.c. will make positive p
7、rofit.d. any of the above are possible.easy9.What happens to an incumbent firms demand curve in monopolistic competition as new firms enter?a. It shifts right.b. It shifts left.c. It becomes horizontal.d. New entrants will not affect an incumbent firms demand curve.easy10.Which of the following is t
8、rue of the output level produced by a firm in long run equilibrium in a monopolistically competitive industry?a. It produces at minimum average cost.b. It does not produce at minimum average cost, and average cost is increasing.c. It does not produce at minimum average cost, and average cost is decr
9、easing.d. Either (b) or (c) could be true. easy11.Which of the following is true in long run equilibrium for a firm in a monopolistic competitive industry?a. The demand curve is tangent to marginal cost curve.b. The demand curve is tangent to average cost curve.c. The marginal cost curve is tangent
10、to average cost curve.d. The demand curve is tangent to marginal revenue curve.easy12.Which of the following is true for both perfect and monopolistic competition?a. Firms produce a differentiated product.b. Firms face a downward sloping demand curve.c. Firms produce a homogeneous product.d. There i
11、s freedom of entry and exit in the long run.easy13.Which of the following is true for both perfectly competitive and monopolistically competitive firms in the long run?a. P=MC.b. MC=ATC.c. PMR.d. Profit equals zero.moderate14.Which of the following is true in long run equilibrium for a firm in monop
12、olistic competition?a. MC=ATC.b. MCATC.c. MCATC.d. Any of the above may be true.moderate15.Excess capacity in monopolistically competitive industries results because in equilibriuma. each firms output rate is too great to minimize average cost.b. each firms output rate is too small to minimize avera
13、ge cost.c. firms make positive economic profit.d. price equals marginal cost.Section 12.2easy16.The market structure in which strategic considerations are most important isa. monopolistic competition.b. oligopoly.c. pure competition.d. pure monopoly.easy17.In the Cournot duopoly model, each firm ass
14、umes thata. rivals will match price cuts but will not match price increases.b. rivals will match all reasonable price changes.c. the price of its rival is fixed.d. the output level of its rival is fixed.easy18.A situation in which each firm is doing the best it can, given what its rivals are doing i
15、s called aa. Nash equilibrium.b. Cooperative equilibrium.c. Stackelberg equilibrium.d. zero sum game.easy19.Which of the following can be thought of as a barrier to entry?a. scale economies.b. patents.c. strategic actions by incumbent firms.d. all of these.easy20.In the _, each firm treats the outpu
16、t of its competitor as fixed and then decides how much to produce.a. Cournot modelb. model of monopolistic competitionc. Stackelberg modeld. kinked-demand modele. none of the aboveeasy21.A _ shows how much a firm will produce as a function of how much it thinks its competitors will produce.a. contra
17、ct curveb. demand curvec. reaction curved. Nash equilibrium curvee. none of the aboveeasy22.Which of the following markets is most likely to be oligopolistic?a. the market for cornb. the market for aluminumc. the market for colasd. the market for ground coffeeseasy23.The market structure in which th
18、ere is interdependence among firms isa. monopolistic competition.b. oligopoly.c. perfect competition.d. monopoly.moderate24.In comparing the Cournot equilibrium with the competitive equilibrium,a. both profit and output level are higher in Cournot.b. both profit and output level are higher in the co
19、mpetitive equilibrium.c. profit is higher, and output level is lower in the competitive equilibrium.d. profit is higher, and output level is lower in Cournot.Scenario 1:Suppose mountain spring water can be produced at no cost and that the demand and marginal revenue curves for mountain spring water
20、are given as follows:Q = 6000 - 5P MR = 1200 - 0.4Qmoderate25.Refer to Scenario 1. What is the profit maximizing price of a monopolist? a. $400b. $600c. $800d. $900e. none of the abovemoderate26.Refer to Scenario 1. What will be the price in the long run if the industry is a Cournot duopoly?a. $400b
21、. $600c. $800d. $900e. Competition will drive the price to zero.difficult27.The Cournot equilibrium can be found by treating _ as a pair of simultaneous equations and by finding the combination of Q1 and Q2 that satisfy both equations.a. the reaction curves for firms 1 and 2b. the market supply curv
22、e and the market demand curvec. the contract curve and the market demand curved. the contract curve and the market supply curvee. the firms supply curve and the firms demand curveSection 12.3easy28.The oligopoly model that is most appropriate when one large firm usually takes the lead in setting pri
23、ce is the _ model.a. Cournot b. Stackelbergc. game theoryd. prisoners dilemmaeasy29.What is one difference between the Cournot and Stackelberg models?a. In Cournot, both firms make output decisions simultaneously, and in Stackelberg, one firm sets its output level first.b. In Stackelberg, both firms
24、 make output decisions simultaneously, and in Cournot, one firm sets its output level first.c. In Cournot, a firm has the opportunity to react to its rival.d. Profits are zero in Cournot and positive in Stackelberg.easy30.Which of the following is true in the Stackelberg model?a. The first firm prod
25、uces less than its rival.b. The first firm produces more than its rival.c. Both firms produce the same quantity.d. Both firms have a reaction curve.moderate31.In the Stackelberg model, there is an advantagea. to waiting until your competitor has committed herself to a particular output level before
26、deciding on your output level.b. to being the first competitor to commit to an output level.c. to the firm with a dominant strategy.d. to producing an output level which is identical to a monopolists output level.Section 12.4easy32.Which oligopoly model(s) have the same results as the competitive mo
27、del?a. Cournot.b. Bertrand.c. Stackelberg.d. Both Cournot and Stackelberg.easy33.In which oligopoly model(s) do firms earn zero profit?a. Cournot.b. Bertrand.c. Stackelberg.d. Oligopoly firms always earn positive economic profits.moderate34.In the _, one firm sets its output first, and then a second
28、 firm, after observing the first firms output, makes its output decision.a. Cournot modelb. model of monopolistic competitionc. Bertrand modeld. kinked-demand modele. none of the aboveeasy35.In the _, two duopolists compete by simultaneously selecting price.a. Cournot modelb. Nash modelc. Bertrand m
29、odeld. kinked-demand modele. none of the aboveeasy36.In the Bertrand model with homogeneous products,a. the firm that sets the lower price will capture all of the market.b. the Nash equilibrium is the competitive outcome.c. both firms set price equal to marginal cost.d. all of the above.e. the outco
30、me is inconclusive.moderate37.Relative to the Nash equilibrium in the Cournot model, the Nash equilibrium in the Bertrand model with homogeneous productsa. results in the same output but a higher price.b. results in the same output but a lower price.c. results in a larger output at a lower price.d.
31、results in a smaller output at a higher price.e. any of the above may result.moderate38.Which statement most nearly describes a Nash equilibrium applied to price competition?a. Two firms get together and set the price that maximizes joint profits.b. Each firm automatically moves to the purely compet
32、itive equilibrium because it knows the other firm will eventually move to that price anyway.c. Given the prices chosen by its competitors, no firm has an incentive to change their prices from the equilibrium level.d. One dominant firm sets the price, and the other firms take that price as if it were
33、 given by the market.Section 12.5moderate39.Two firms operating in the same market must choose between a collude price and a cheat price. Firm As profit is listed before the comma, Bs outcome after the comma.Firm BCheat PriceCollude PriceFirm ACheat Price18, 1830, 6 Collude Price6, 3024, 24 If each
34、firm tries to choose a price that is best for it, regardless of the other firms price, which of these statements is correct?a. Firm A should charge the collude price, Firm B should charge a cheat price.b. Firm A should charge a cheat price, Firm B should charge a collude price.c. Both firms should c
35、harge a collude price.d. Both firms should charge a cheat price.Section 12.6easy40.The oligopoly model that predicts that oligopoly prices will tend to be very rigid is the _ model.a. Cournotb. Stackelbergc. dominant firmd. kinked demandeasy41.In the kinked demand curve model, if one firm reduces it
36、s pricea. other firms will also reduce their price.b. other firms will compete on a non-price basis.c. other firms will raise their price.d. both (a) and (b) are correct. e. both (b) and (c) are correct.easy42.Suppose that three oligopolistic firms are currently charging $12 for their product. The t
37、hree firms are about the same size. Firm A decides to raise its price to $18, and announces to the press that it is doing so because higher prices are needed to restore economic vitality to the industry. Firms B and C go along with Firm A and raise their prices as well. This is an example ofa. price
38、 leadership.b. collusion.c. the dominant firm model.d. the Stackelberg model.e. none of the above.easy43.A market structure in which there is one large firm that has a major share of the market and many smaller firms supplying the remainder of the market is called:a. the Stackelberg Model.b. the kin
39、ked demand curve model.c. the dominant firm model.d. the Cournot model.e. the Bertrand model.easy44.In the dominant firm model, the smaller fringe firms behave like:a. competitive firms.b. Cournot firms.c. Stackelberg firms.d. Bertrand firms.e. monopolists.easy45.Under the kinked demand curve model,
40、 an increase in marginal cost will lead toa. an increase in output level and a decrease in price.b. a decrease in output level and an increase in price.c. a decrease in output level and no change in price.d. neither a change in output level nor a change in price.easy46.Which of the following is true
41、 about the demand curve facing the dominant firm?a. It equals market demand minus fringe firms supply curve.b. It is identical to market demand.c. It equals market demand minus demand facing the fringe firms.d. It is horizontal.moderate47.The kinked demand curve model is based on the assumption that
42、 each firma. considers its rivals output to be fixed.b. considers its rivals price to be fixed.c. believes rivals will match all price changes.d. believes rivals will never match price changes.e. none of the above.moderate48.In the dominant firm model, the fringe firmsa. are price takers.b. maximize
43、 profit by equating average revenue and average cost.c. determine their price and output before the dominant firm determines its price and output.d. all of the above.e. none of the above.Scenario 2:You are studying a market for which the kinked demand curve model applies. The kinked demand curve is
44、as follows:Q = 1200 - 5P for 0 = Q 150Q = 360 - P for 150 = QThe marginal cost is given as:MC = Qdifficult49.Refer to Scenario 2. What is the profit maximizing level of output?a. 171.43b. 120c. 150d. all of the abovee. none of the abovedifficult50.Refer to Scenario 2. What is the profit maximizing price?a. 205.72b. 240c. 210d. all of the abovee. none of the abovedifficult51.Refer to Scenario 2. Suppose that the marginal cost inc
