Monopolistic Competition

13794 Words56 Pages
CHAPTER 25
Monopolistic Competition and Oligopoly

Topic Question numbers
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1. Monopolistic competition: definition; characteristics 1-17
2. Demand curve 18-24
3. Price-output behavior 25-78
4. Efficiency aspects 79-88
5. Oligopoly: definition; characteristics 89-112
6. Concentration ratio; Herfindahl Index 113-140
7. Game theory 141-156
8. Kinked-demand curve model 157-176
9. Collusion; cartels; price leadership 177-194
10. Advertising 195-200
11. Efficiency aspects 201-204
12. Review of four structures 205-226 Consider This 227-228 Last Word 229-233 True-False 234-258
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C) the industry would more closely approximate pure competition. D) the likelihood of collusive pricing would increase.
Answer: C

Type: A Topic: 1 E: 461 MI: 217 10. Economic analysis of a monopolistically competitive industry is more complicated than that of pure competition because: A) the number of firms in the industry is larger. B) monopolistically competitive firms cannot realize an economic profit in the long run. C) of product differentiation and consequent product promotion activities. D) monopolistically competitive producers use strategic pricing strategies to combat rivals.
Answer: C

Type: A Topic: 1 E: 461 MI: 217 11. A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from: A) the likelihood of collusion. C) product differentiation. B) high entry barriers. D) mutual interdependence in decision making.
Answer: C

Type: D Topic: 1 E: 462 MI: 218 12. Nonprice competition refers to: A) low barriers to entry. B) product development, advertising, and product packaging. C) the differences in information which consumers have regarding various products. D) an industry or firm in long-run equilibrium.
Answer: B

Type: A Topic: 1 E: 461 MI: 217 13. A significant difference between a monopolistically competitive firm
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