Economics: Principles, Problems, and Policies

Campbell R. McConnell, Stanley L. Brue, Sean M. Flynn

Chapter 13

Monopolistic Competition and Oligopoly - all with Video Answers

Educators

Chapter Questions

Problem 1

There are 10 firms in an industry, and each firm has a market share of 10 percent. The industry's Herfindahl index is:
a. 10
b. 100
c. 1,000
d. 10,000

Jesse Leija

Jesse Leija

Numerade Educator

Problem 1

There are 10 firms in an industry, and each firm has a market share of 10 percent. The industry's Herfindahl index is: $L O 13.1$
a. 10 .
b. 100 .
c. 1,000 .
d. 10,000 .

Jesse Leija

Numerade Educator

Problem 2

In the small town of Geneva, there are 5 firms that make watches. The firms' respective output levels are 30 watches per year, 20 watches per year, 20 watches per year, 20 watches per year, and 10 watches per year. The fourfirm concentration ratio for the town's watch-making industry is:
a. 5
b. 70
c. 90
d. 100

Armaan Tourani

Numerade Educator

Problem 2

In the small town of Geneva, there are 5 firms that make watches. The firms' respective output levels are 30 watches per year, 20 watches per year, 20 watches per year, 20 watches per year, and 10 watches per year. The four-firm concentration ratio for the town's watch-making industry is: $\mathrm{LO} 13.1$
a. 5 .
b. 70 .
c. 90 .
d. 100 .

Jennifer Stoner

Jennifer Stoner

Numerade Educator

Problem 3

Which of the following best describes the efficiency of monopolistically competitive firms?
a. Allocatively efficient but productively inefficient.
b. Allocatively inefficient but productively efficient.
c. Both allocatively efficient and productively efficient.
d. Neither allocatively efficient nor productively efficient.

Marianne Hayek

Numerade Educator

Problem 4

Which of the following apply to oligopoly industries? Select one or more answers from the choices shown.
a. A few large producers.
b. Many small producers.
c. Strategic behavior.
d. Price taking.

Oluwadamilola Ameobi

Oluwadamilola Ameobi

Numerade Educator

Problem 5

Faceblock, Gargle+, and MyMace are rival firms in an oligopoly industry. If kinked-demand theory applies to these three firms, Faceblock’s demand curve will be:
a. More elastic above the current price than below it.
b. Less elastic above the current price than below it.
c. Of equal elasticity both above and below the current price.
d. None of the above.

Oluwadamilola Ameobi

Oluwadamilola Ameobi

Numerade Educator

Problem 6

Consider an oligopoly industry whose firms have identical demand and cost conditions. If the firms decide to collude, then they will want to collectively produce the amount of output that would be produced by:
a. A monopolistic competitor.
b. A pure competitor.
c. A pure monopolist.
d. None of the above.

Oluwadamilola Ameobi

Oluwadamilola Ameobi

Numerade Educator

Problem 7

In an oligopoly, each firm’s share of the total market is typically determined by:
a. Scarcity and competition.
b. Kinked demand curves and payoff matrices.
c. Homogeneous products and import competition.
d. Product development and advertising.

Oluwadamilola Ameobi

Oluwadamilola Ameobi

Numerade Educator

Problem 8

Some analysts consider oligopolies to be potentially less efficient than monopoly firms because at least monopoly firms tend to be regulated. Arguments in favor of a more benign view of oligopolies include:
a. Oligopolies are self-regulating.
b. Oligopolies can be kept in line by foreign competition.
c. Oligopolistic industries may promote technological progress.
d. Oligopolies may engage in limit pricing to keep out potential entrants.

Oluwadamilola Ameobi

Oluwadamilola Ameobi

Numerade Educator