Unit 4- AP
Microeconomics
, A monopolistically competitive firm's demand curve will be highly elastic if which of the
following exists? - CORRECT ANSWERS-A high degree of product substitutability
Collusion, price leadership, and price wars are usually observed in which of the
following market structures? - CORRECT ANSWERS-Oligopoly
Game theory is most commonly used for analyzing the pricing behavior of firms in which
market structure? - CORRECT ANSWERS-Oligopoly
All of the following characterize both perfectly competitive and monopolistically
competitive markets EXCEPT: - CORRECT ANSWERS-Firms can affect the selling
price of their product
Which of the following is a source of monopoly power? - CORRECT ANSWERS-
Barriers to entry
If the marginal cost curve of a monopolist shifts up, which of the following will occur to
the monopolist's price and output? - CORRECT ANSWERS-Price: Increase
Output: Decrease
E Soda and R Soda are the only two firms in the soft-drink industry. The companies
cannot cooperate. Each firm can follow a high-price strategy or a low-price strategy for
pricing its product. In the payoff matrix below, the first entry in each cell shows the
profits to E Soda and the second entry shows the profits to R Soda.
Given the information in the payoff matrix, it can be concluded that - CORRECT
ANSWERS-both firms will choose the low-price strategy
The following questions are based on the following matrix.
The payoff matrix below gives the profits associated with the strategic choices of two
firms in an oligopolistic industry. The first entry in each cell is the profit to Firm A and the
second to Firm B.
If each firm simultaneously chooses its pricing strategy without collusion, Firm A's and
Firm B's profits would be which of the following? - CORRECT ANSWERS-Firm A's
Profit $ 50
Firm B's Profit $ 50
For the firm shown in the graph above, which combination of output and price will
maximize its profit? - CORRECT ANSWERS-Output: Q1
Price: P4
A cartel is difficult to maintain for which of the following reasons? - CORRECT
ANSWERS-Individual cartel members are tempted to cheat on the agreement.
The table below shows the profits associated with the strategies of two oligopolistic
firms, Lock and Star, that must choose between a high price and a low price for their
Microeconomics
, A monopolistically competitive firm's demand curve will be highly elastic if which of the
following exists? - CORRECT ANSWERS-A high degree of product substitutability
Collusion, price leadership, and price wars are usually observed in which of the
following market structures? - CORRECT ANSWERS-Oligopoly
Game theory is most commonly used for analyzing the pricing behavior of firms in which
market structure? - CORRECT ANSWERS-Oligopoly
All of the following characterize both perfectly competitive and monopolistically
competitive markets EXCEPT: - CORRECT ANSWERS-Firms can affect the selling
price of their product
Which of the following is a source of monopoly power? - CORRECT ANSWERS-
Barriers to entry
If the marginal cost curve of a monopolist shifts up, which of the following will occur to
the monopolist's price and output? - CORRECT ANSWERS-Price: Increase
Output: Decrease
E Soda and R Soda are the only two firms in the soft-drink industry. The companies
cannot cooperate. Each firm can follow a high-price strategy or a low-price strategy for
pricing its product. In the payoff matrix below, the first entry in each cell shows the
profits to E Soda and the second entry shows the profits to R Soda.
Given the information in the payoff matrix, it can be concluded that - CORRECT
ANSWERS-both firms will choose the low-price strategy
The following questions are based on the following matrix.
The payoff matrix below gives the profits associated with the strategic choices of two
firms in an oligopolistic industry. The first entry in each cell is the profit to Firm A and the
second to Firm B.
If each firm simultaneously chooses its pricing strategy without collusion, Firm A's and
Firm B's profits would be which of the following? - CORRECT ANSWERS-Firm A's
Profit $ 50
Firm B's Profit $ 50
For the firm shown in the graph above, which combination of output and price will
maximize its profit? - CORRECT ANSWERS-Output: Q1
Price: P4
A cartel is difficult to maintain for which of the following reasons? - CORRECT
ANSWERS-Individual cartel members are tempted to cheat on the agreement.
The table below shows the profits associated with the strategies of two oligopolistic
firms, Lock and Star, that must choose between a high price and a low price for their
