Deck 16: Monopolistic Competition.

Question 1

Which of the following is a characteristic of monopolistic competition?

A) ownership of a key resource by a single firm
B) free entry
C) identical product
D) patents

Answer 1

B

Question 2

The two types of imperfectly competitive markets are

A) markets with differentiated products and monopoly.
B) markets with differentiated products and oligopoly.
C) oligopoly and monopoly.
D) monopolistic competition and oligopoly.

Answer 2

D

Question 3

An oligopoly is a market in which

A) there are only a few sellers, each offering a product similar or identical to the products offered by other firms in the market.
B) firms are price takers.
C) the actions of one seller in the market have no impact on the other sellers' profits.
D) there are many price-taking firms, each offering a product similar or identical to the products offered by other firms in the market.

Answer 3

A

Question 4

One characteristic of an oligopoly market structure is:

A) firms in the industry are typically characterized by very diverse product lines.
B) firms in the industry have some degree of market power.
C) products typically sell at a price equal to their marginal cost of production.
D) the actions of one seller have no impact on the profitability of other sellers.

Question 5

Firms in industries that have competitors but do not face so much competition that they are price takers are operating in either a(n)

A) oligopoly or perfectly competitive market.
B) oligopoly or monopoly market.
C) oligopoly or monopolistically competitive market.
D) monopoly or monopolistically competitive market.

Question 6

A monopolistically competitive market has characteristics that are similar to

A) a monopoly only.
B) a competitive firm only.
C) both a monopoly and a competitive firm.
D) neither a monopoly nor a competitive firm.

Question 7

Imperfectly competitive firms are characterized by

A) horizontal demand curves.
B) standardized products.
C) a large number of small firms.
D) price making ability.

Question 8

The commercial jetliner industry consisting of Boeing and Airbus would best be described as a (an)

A) perfectly competitive market.
B) monopolistically competitive market.
C) oligopoly.
D) monopoly.

Question 9

Which of the following pairs illustrates the two extreme examples of market structures?

A) competition and oligopoly
B) competition and monopoly
C) monopoly and monopolistic competition
D) oligopoly and monopolistic competition

Question 10

Which of the following statements is not correct?

A) Monopolistic competition is different from monopoly because monopolistic competition is characterized by free entry, whereas monopoly is characterized by barriers to entry.
B) Both monopolistic competition and oligopoly fall in between the more extreme market structures of competition and monopoly.
C) Monopolistic competition is different from oligopoly because each seller in monopolistic competition is small relative to the market, whereas each seller can affect the actions of other sellers in an oligopoly.
D) Both monopolistic competition and perfect competition are characterized by product differentiation.

Question 11

A typical firm in the US economy would be classified as

A) perfectly competitive.
B) imperfectly competitive.
C) a duopolist.
D) an oligopolist.

Question 12

An oligopoly

A) has a concentration ratio of less than 50 percent.
B) is a price taker.
C) is a type of imperfectly competitive market.
D) has many firms rather than just one firm or a few firms.

Question 13

Which of the following statements is not correct?

A) Monopolistic competition is similar to monopoly because in each market structure the firm can charge a price above marginal costs.
B) Monopolistic competition is similar to perfect competition because both market structures are characterized by free entry.
C) Monopolistic competition is similar to oligopoly because both market structures are characterized by barriers to entry.
D) Monopolistic competition is similar to perfect competition because both market structures are characterized by many sellers.

Question 14

The typical firm in the US economy

A) has some degree of market power.
B) sells its product for a price that is equal to the marginal cost of producing the last unit.
C) is perfectly competitive.
D) is a monopoly.

Question 15

The general term for market structures that fall somewhere between monopoly and perfect competition is

A) incomplete markets.
B) imperfectly competitive markets.
C) oligopoly markets.
D) monopolistically competitive markets.

Question 16

In a market that is characterized by imperfect competition,

A) firms are price takers.
B) there are always a large number of firms.
C) there are at least a few firms that compete with one another.
D) the actions of one firm in the market never have any impact on the other firms' profits.

Question 17

The two types of imperfectly competitive markets are

A) monopoly and monopolistic competition.
B) monopoly and oligopoly.
C) monopolistic competition and oligopoly.
D) monopolistic competition and cartels.

Question 18

Monopolistic competition is a type of

A) oligopoly.
B) market structure.
C) price discrimination.
D) advertising strategy.

Question 19

A market structure with only a few sellers,each offering similar or identical products,is known as

A) oligopoly.
B) monopoly.
C) monopolistic competition.
D) perfect competition.

Question 20

The market for novels is

A) perfectly competitive.
B) a monopoly.
C) monopolistically competitive.
D) an oligopoly.

Question 21

A concentration ratio

A) measures the percentage of total output supplied by the four largest firms in the industry.
B) reflects the level of competition in an industry.
C) is related to the control that each firm has over price.
D) All of the above are correct.

Question 22

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.

Refer to Table 16-1.What is the concentration ratio in Industry X?

A) 6%
B) 44%
C) 90%
D) 99%

Question 23

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.

Refer to Table 16-1.What is the concentration ratio in Industry W?

A) 26%
B) 58%
C) 72%
D) 82%

Question 24

A concentration ratio

A) measures the percentage of total sales of the top firm in the industry.
B) reflects the level of competition in an industry.
C) is inversely related to the price charged by the top firm in the industry.
D) All of the above are correct.

Question 25

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.

Refer to Table 16-2.What is the concentration ratio for Industry B?

A) about 12%
B) about 32%
C) about 39%
D) about 51%

Question 26

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.

Refer to Table 16-1.Which industry is the most competitive?

A) Industry W
B) Industry X
C) Industry Y
D) Industry Z

Question 27

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.

Refer to Table 16-2.Which industry is the least competitive?

A) Industry A
B) Industry B
C) Industry C
D) Industry D

Question 28

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.

Refer to Table 16-2.Which industry has the highest concentration ratio?

A) Industry A
B) Industry B
C) Industry C
D) Industry D

Question 29

The higher the concentration ratio,the

A) more control an individual firm has to set prices.
B) more competitive the industry.
C) less competitive the industry.
D) Both a and c are correct.

Question 30

The lower the concentration ratio,the

A) more control an individual firm has to set prices.
B) more competitive the industry.
C) less competitive the industry.
D) Both a and c are correct.

Question 31

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.

Refer to Table 16-1.What is the concentration ratio in Industry Z?

A) 36%
B) 51%
C) 62%
D) 67%

Question 32

Crude oil is primarily supplied to the world market by a few Middle Eastern countries.Such a market is an example of a(n)
(i)imperfectly competitive market.
(ii)monopoly market.
(iii)oligopoly market.

A) (i) and (ii) only
B) (ii) and (iii) only
C) (i) and (iii) only
D) (iii) only

Question 33

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.

Refer to Table 16-1.Which industry is the least competitive?

A) Industry W
B) Industry X
C) Industry Y
D) Industry Z

Question 34

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.

Refer to Table 16-1.Which industry has the highest concentration ratio?

A) Industry W
B) Industry X
C) Industry Y
D) Industry Z

Question 35

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.

Refer to Table 16-2.What is the concentration ratio for Industry A?

A) about 71%
B) about 81%
C) about 88%
D) 100%

Question 36

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.

Refer to Table 16-1.Which industry has the lowest concentration ratio?

A) Industry W
B) Industry X
C) Industry Y
D) Industry Z

Question 37

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.

Refer to Table 16-1.What is the concentration ratio in Industry Y?

A) 29%
B) 39%
C) 44%
D) 58%

Question 38

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.

Refer to Table 16-2.What is the concentration ratio for Industry D?

A) about 13%
B) about 35%
C) about 45%
D) about 63%

Question 39

Which of the following industries has the highest concentration ratio?

A) wheat
B) novels
C) cigarettes
D) dog food

Question 40

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.

Refer to Table 16-2.What is the concentration ratio for Industry C?

A) about 23%
B) about 34%
C) about 43%
D) about 52%

Question 41

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.

Refer to Table 16-2.Which industry is the most competitive?

A) Industry A
B) Industry B
C) Industry C
D) Industry D

Question 42

Examples of monopolistically competitive markets include the markets for

A) restaurants and furniture.
B) wheat and corn.
C) postage stamps and wooden pencils.
D) All of the above are correct.

Question 43

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries.

Refer to Table 16-3.What is the concentration ratio for Industry B?

A) approximately 46%
B) approximately 54%
C) approximately 57%
D) approximately 61%

Question 44

One way in which monopolistic competition differs from oligopoly is that

A) there are no barriers to entry in oligopolies.
B) in oligopoly markets there are only a few sellers.
C) all firms in an oligopoly eventually earn zero economic profits.
D) strategic interactions between firms are rare in oligopolies.

Question 45

One key difference between an oligopoly market and a competitive market is that oligopolistic firms

A) are price takers while competitive firms are not.
B) can affect the profit of other firms in the market by the choices they make while firms in competitive markets do not affect each other by the choices they make.
C) sell completely unrelated products while competitive firms do not.
D) sell their product at a price equal to marginal cost while competitive firms do not.

Question 46

Which of the following goods are not likely to be sold in monopolistically competitive markets?

A) jeans
B) books
C) tap water
D) clocks

Question 47

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries.

Refer to Table 16-3.What is the concentration ratio for Industry A?

A) approximately 52%
B) approximately 58%
C) approximately 66%
D) approximately 72%

Question 48

Which of the following is an example of a monopolistically competitive industry?

A) computer operating systems
B) tennis balls
C) movies
D) cable television

Question 49

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries.

Refer to Table 16-3.Which industry has the lowest concentration ratio?

A) Industry A
B) Industry B
C) Industry C
D) Industry D

Question 50

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries.

Refer to Table 16-3.Based on the concentration ratio,which industry is the least competitive?

A) Industry A
B) Industry B
C) Industry C
D) Industry D

Question 51

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.

Refer to Table 16-2.Which industry has the lowest concentration ratio?

A) Industry A
B) Industry B
C) Industry C
D) Industry D

Question 52

Which of the following goods are likely to be sold in a monopolistically competitive market?

A) sweaters
B) cola
C) corn
D) postage stamps

Question 53

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries.

Refer to Table 16-3.What is the concentration ratio for Industry C?

A) approximately 44%
B) approximately 48%
C) approximately 53%
D) approximately 56%

Question 54

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries.

Refer to Table 16-3.Based on the concentration ratio,which industry is the most competitive?

A) Industry A
B) Industry B
C) Industry C
D) Industry D

Question 55

Which of the following is an example of a monopolistically competitive industry?

A) breakfast cereals
B) cigarettes
C) restaurants in New York City
D) milk

Question 56

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries.

Refer to Table 16-3.Which industry has the highest concentration ratio?

A) Industry A
B) Industry B
C) Industry C
D) Industry D

Question 57

Which of the following markets is not likely characterized by a monopolistically competitive market?

A) piano lessons
B) corn
C) cookies
D) clothing

Question 58

A monopolistically competitive industry is characterized by

A) many firms selling products that are similar but not identical.
B) many firms selling identical products.
C) a few firms selling products that are similar but not identical.
D) a few firms selling highly different products.

Question 59

A monopolistically competitive industry is characterized by

A) many firms, differentiated products, and barriers to entry.
B) many firms, differentiated products, and free entry.
C) a few firms, identical products, and free entry.
D) a few firms, differentiated products, and barriers to entry.

Question 60

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries.

Refer to Table 16-3.What is the concentration ratio for Industry D?

A) approximately 48%
B) approximately 54%
C) approximately 60%
D) approximately 66%

Question 61

If firms in a particular market similar or sell identical products,then the market is
(i)perfectly competitive.
(ii)monopolistically competitive.
(iii)an oligopoly.

A) (i) or (ii) only
B) (ii) or (iii) only
C) (i) or (iii) only
D) (i) only

Question 62

Monopolistic competition is characterized by which of the following attributes?
(i)free entry
(ii)product differentiation
(iii)many sellers

A) (i) and (iii) only
B) (i) and (ii) only
C) (ii) and (iii) only
D) (i), (ii), and (iii)

Question 63

Monopolistically competitive markets differ from perfectly competitive markets due to
(i)the number of sellers.
(ii)the barriers to entry.
(iii)the product differentiation among the sellers.

A) (i) only
B) (iii) only
C) (i) and (iii) only
D) (ii) and (iii) only

Question 64

If there are many firms participating in a market,the market is either

A) an oligopoly or monopolistically competitive.
B) perfectly competitive or monopolistically competitive.
C) an oligopoly or perfectly competitive.
D) an oligopoly or a cartel.

Question 65

A market structure in which there are many firms selling products that are similar but not identical is known as

A) oligopoly.
B) monopoly.
C) monopolistic competition.
D) perfect competition.

Question 66

Which of the following statements is correct?

A) Monopolistic competition is similar to monopoly because both market structures are characterized by patents.
B) Monopolistic competition is similar to perfect competition because both market structures are characterized by each seller being small compared to the market.
C) Monopolistic competition is similar to oligopoly because both market structures are characterized by free entry.
D) Monopolistic competition is similar to perfect competition because both market structures are characterized by excess capacity.

Question 67

Of the following market structures,which are considered imperfectly competitive? I.
Perfect competition
II)
Monopoly
III)
Monopolistic competition
IV)
Oligopoly

A) III only
B) II and III
C) III and IV
D) II, III, and IV

Question 68

Which of the following statements is not correct?

A) Novels are likely to be produced in a monopolistically competitive industry.
B) Cable television is likely to be produced in a monopoly industry.
C) Milk is likely to be produced in a monopolistically competitive industry.
D) Cigarettes are likely to be produced in an oligopoly industry.

Question 69

In both perfect competition and monopolistic competition,each firm

A) has some monopoly power.
B) sells a product that is at least slightly different from those of other firms.
C) faces a downward-sloping demand curve.
D) has many competitors.

Question 70

Which of the following conditions distinguishes monopolistic competition from perfect competition?

A) the number of sellers in the market
B) the freedom of entry and exit by firms in the market
C) the size of firms in the market
D) product differentiation

Question 71

Select the type of market that is described by the following attributes: many firms,differentiated products,and free entry.

A) natural monopoly
B) perfectly competition
C) monopolistic competition
D) monopoly

Question 72

When an industry has many firms,the industry is

A) an oligopoly if the firms sell differentiated products, but it is monopolistically competitive if the firms sell identical products.
B) an oligopoly if the firms sell differentiated products, but it is perfectly competitive if the firms sell identical products.
C) monopolistically competitive if the firms sell differentiated products, but it is perfectly competitive if the firms sell identical products.
D) perfectly competitive if the firms sell differentiated products, but it is monopolistically competitive if the firms sell identical products.

Question 73

A monopolistically competitive market

A) has some features of monopoly and some features of competition.
B) has one large, dominant firm and many other smaller firms.
C) is difficult to enter.
D) occurs whenever firms earn zero economic profit.

Question 74

Monopolistic competition differs from perfect competition because in monopolistically competitive markets

A) there are barriers to entry.
B) all firms can eventually earn economic profits.
C) each of the sellers offers a somewhat different product.
D) strategic interactions between firms are important.

Question 75

Which of the following statements is correct?

A) Cigarettes are likely to be produced in a monopolistically competitive industry.
B) Novels are likely to be produced in a monopoly industry.
C) Movies are likely to be produced in a monopolistically competitive industry.
D) Milk is likely to be produced in an oligopoly industry.

Question 76

A similarity between monopoly and monopolistic competition is that in both market structures

A) strategic interactions among sellers are important.
B) there are a small number of sellers.
C) sellers are price makers rather than price takers.
D) there are only a few buyers but many sellers.

Question 77

In a monopolistically competitive market,

A) there are only a few sellers.
B) each firm takes the price of its product as given.
C) firms can enter or exit the market without restrictions.
D) each firm produces a product that is essentially identical to the products of other firms in the market.

Question 78

Which of the following is not a characteristic of monopolistic competition?

A) a large number of sellers
B) firms are price takers
C) free entry into the market
D) a differentiated product

Question 79

A monopolistically competitive market

A) is imperfectly competitive, and all imperfectly competitive markets are monopolistically competitive.
B) is imperfectly competitive, but not all imperfectly competitive markets are monopolistically competitive.
C) is imperfectly competitive, whereas an oligopolistic market is not imperfectly competitive.
D) is not imperfectly competitive.

Question 80

In which of the following market structures is(are)there a large number of sellers?
(i)monopolistic competition
(ii)perfect competition
(iii)oligopoly

A) (i) and (ii) only
B) (ii) and (iii) only
C) (ii) only
D) (i), (ii), and (iii)