ECON 705 - Module 5 Exam Questions and Correct Answers Latest Update 2025 (Already Passed)
In monopolistic competition, because there is free entry and free exit in the industry, in the long run, a
firm makes - Answers zero economic profit.
Capacity output is the output at which ____________________ is a minimum. - Answers average total
cost
The monopolistically competitive industry produces an output at which price equals - Answers average
total cost but exceeds marginal cost
In the kinked demand curve model, _____________ is/are likely to change when there is a small change
in cost. - Answers neither price nor quantity
A model in which one firm acts like a monopoly and the other firms act like perfectly competitive firms is
the - Answers dominant firm oligopoly
In a game, a table that shows the consequences for every possible action by each player for every
possible action by each other player is called the - Answers payoff matrix
An agreement between two (or more) producers to restrict output, raise the price, and increase profits
is a - Answers collusive agreement
An equilibrium in which the players make and share the monopoly profit is a - Answers cooperative
equilbrium
A market in which firms can enter and leave so easily that firms in the market face competition from
potential entrants is called a - Answers contestable market
A strategy to set the price at the highest level that inflicts a loss on the entrants into an industry is called
- Answers limit pricing
In a Nash equilibrium: - Answers each player chooses a strategy which gives him the highest payoff,
given the strategies chosen by the other players.
If each player in a game has a strictly dominant strategy, then: - Answers there cannot be multiple
equilibria
In the prisoner's dilemma, the prisoners will not confess, if: - Answers the game is infinitely repeated
and the prisoners are very patient.
If each player in a game has a strictly dominant strategy, then: - Answers the equilibrium is unique.
In a prisoner's dilemma: considering both players together, the best outcome, or join profit-maximizing
outcome, is: - Answers when both players get the same profit
In monopolistic competition, because there is free entry and free exit in the industry, in the long run, a
firm makes - Answers zero economic profit.
Capacity output is the output at which ____________________ is a minimum. - Answers average total
cost
The monopolistically competitive industry produces an output at which price equals - Answers average
total cost but exceeds marginal cost
In the kinked demand curve model, _____________ is/are likely to change when there is a small change
in cost. - Answers neither price nor quantity
A model in which one firm acts like a monopoly and the other firms act like perfectly competitive firms is
the - Answers dominant firm oligopoly
In a game, a table that shows the consequences for every possible action by each player for every
possible action by each other player is called the - Answers payoff matrix
An agreement between two (or more) producers to restrict output, raise the price, and increase profits
is a - Answers collusive agreement
An equilibrium in which the players make and share the monopoly profit is a - Answers cooperative
equilbrium
A market in which firms can enter and leave so easily that firms in the market face competition from
potential entrants is called a - Answers contestable market
A strategy to set the price at the highest level that inflicts a loss on the entrants into an industry is called
- Answers limit pricing
In a Nash equilibrium: - Answers each player chooses a strategy which gives him the highest payoff,
given the strategies chosen by the other players.
If each player in a game has a strictly dominant strategy, then: - Answers there cannot be multiple
equilibria
In the prisoner's dilemma, the prisoners will not confess, if: - Answers the game is infinitely repeated
and the prisoners are very patient.
If each player in a game has a strictly dominant strategy, then: - Answers the equilibrium is unique.
In a prisoner's dilemma: considering both players together, the best outcome, or join profit-maximizing
outcome, is: - Answers when both players get the same profit
