Question

8. which of the following will likely occur when a firm exits a monpolistically competitive industry?

a) the marginal revenue curve will shift to the left

b) the perceived demand and marginal revenue curves will shift to the right

c)rhe percevied demand and marginal revenue curves will shift to the left

d) the perceived demand curve will shift to the left

9. because a monopolist and a monopolistic competitior both face wbward-sloping demand curves, one can conclude that a firm that is a monopolistic competitor need only consider its market demand when setting prices

true or false

10.when does a kinked demand curve occur?

a) when one firm in a duopoly cuts prices and forces the exit of the other firm

b) when competing oligopoly firms agree to increase proces ar the same tome and rate

c)when competing oligopoly firms commit to match price chrs but not price increases

d) when a natural monopoly raises its prices and provides an opportunity for market entry

11.which of the following is a common characteristic of oligopolies?

a) market quantity demanded only large enough to support one firm

b) formal agreement to product the same lutput at the same price

c) shared barriers to entry that limit the entry of other organizations

d) mutual interdependance regsrding price, output, and advertising

13.there are three diners in the town of grove hollow that all have a steady stream of customers on a daily basis. however, the likelihood of another diner opening up in the town js low, because three diners are all that the town can handle

true or false

14. if oligopolies compete hard against each other, which if the following will likely occur?

a) they will all experience zero profits

b)they will start acting like imperfect competitors

c) they will start acting like monopolistic competitors

d) the costs for all will be driven up

15.fill in the blank: a local coffee house, Joe Bean Coffee, recently lost seceral of its customers to the coffee house down the street. This is likely a result of Joe Bean Coffee believing that their corfee was the best in town and ______ its prices.

Answer 1

1> b) the perceived demand and marginal revenue curves will shift to the right

If a firm exits, then for the remaining firms they will face a higher demand since their products are almost identical. So, both the perceived demand and the MR curve will shift to the right.

2> True

In a monopolistic competition, they need to consider the demand they are facing only while pricing. For a monopoly, there is only one player, so they must consider their own demand of product.

3> c)when competing oligopoly firms commit to match price cuts but not price increases

When there is price cut by one firm, then other firm also cuts price to keep their market share but they do not when one of them increase it, so as a result, the elasticity is more as price increase.

4> d) mutual interdependance regarding price, output, and advertising

In an oligopoly, the price and quantity of one firm is dependent on the other's activity.