Microeconomics Homework Notes Chapter 13

10 July 2024
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Monopolistic competition is characterized by...
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Large number of firms and low entry barriers.
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Monopolistic competition resembles pure competition because...
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Barriers to entry are weak or almost nonexistent
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Non-price competition refers to...
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advertising, product promotion, and changes in the real or perceived characteristics of a product.
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The demand curve of a monopolistically competitive producer is:
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more elastic than that of a pure monopolist, but less elastic than that of a pure competitor.
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A monopolistically competitive firm's marginal revenue curve:
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is downsloping and lies below the demand curve.
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Monopolistically competitive firms:
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may realize either profits or losses in the short run but realize normal profits in the long run.
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#7 on homework
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#7 on homework
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#8 on homework
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#8 on homework
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#9 on homework
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#9 on homework
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In which of these continuums of degrees of competition (highest to lowest) is oligopoly properly placed?
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Pure competition, monopolistic competition, oligopoly, pure monopoly.
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Oligopoly
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Few firms producing a differentiated or a homogeneous product
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Oligopolistic industries are characterized by:
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a few dominant firms and substantial entry barriers.
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The automobile, household appliance, and automobile tire industries are all illustrations of:
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differentiated oligopoly.
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Example of Oligopoly?
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Automobile industry
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Demand and Marginal Revenue Curve Diverge in which markets?
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Pure monopoly, oligopoly, and monopolistic competition.
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Oligopoly exists when small number of firms are...
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Producing virtually identical products.
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Mutual interdependence means that each oligopolistic firm:
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must consider the reactions of its rivals when it determines its price policy.
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If the four-firm concentration ratio for industry X is 80:
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the four largest firms account for 80 percent of total sales.
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As a general rule, oligopoly exists when the four-firm concentration ratio:
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Is 40 percent or more.
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Herfindahl index for pure monopolist...
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10,000
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Industries X and Y both have four-firm concentration ratios of 65 percent, but the Herfindahl index for X is 1,500 while that for Y is 2,000. These data suggest:
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Greater market power in Y than X
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Assume six firms comprising an industry have market shares of 30, 30, 10, 10, 10, and 10 percent. The Herfindahl index for this industry is:
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2,200
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OPEC example of?
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International Cartel
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If the firms in an oligopolistic industry can establish an effective cartel, the resulting output and price will approximate those of:
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Pure monopoly
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In United States, cartels are...
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Violation of anti-trust laws.