Question 1

Whats defention of terms:
-cartel

Accepted Answer

a group of firms that acts as a monopoly

Question 2

Whats defention of terms:
-monopolistic competition

Accepted Answer

exists in an industry composed of many small firms, each producing a slightly differentiated product

Question 3

Whats defention of terms:
-oligopoly

Accepted Answer

exists when a few business firms dominate an industry

Question 4

Explain how oligopolies and monopolistic competition differ from competitive markets.
-What conditions for a perfectly competitive market are violated by oligopolies? Monopolistic competition?

Accepted Answer

The answer of Explain how oligopolies and monopolistic competition differ...

Question 5

Explain how oligopolies and monopolistic competition differ from competitive markets.
-Compare and contrast oligopolies and monopolistic competition. What is an advantage for a firm operating in each market structure? Disadvantage?

Accepted Answer

The answer of Explain how oligopolies and monopolistic competition differ...

Question 6

Understand how brands create a monopoly for a product in monopolistic competition.
-Describe how brand names are legally protected. How does this resemble a monopoly?

Accepted Answer

The answer of Understand how brands create a monopoly for...

Question 7

Understand how brands create a monopoly for a product in monopolistic competition.
-Explain how product differentiation leads to competing brands.

Accepted Answer

The answer of Understand how brands create a monopoly for...

Question 8

Explain why advertising is so important to firms in monopolistically competitive markets.
-Explain the link of advertising and brand names (product differentiation) in maintaining profits for firms in monopolistic competition.

Accepted Answer

The answer of Explain why advertising is so important to...

Question 9

Explain why advertising is so important to firms in monopolistically competitive markets.
-Demonstrate graphically what happens to profits if more advertising results in more consumers. Now demonstrate what happens to profit if more advertising raises the costs to the firm.

Accepted Answer

The answer of Explain why advertising is so important to...

Question 10

Explain why pricing and output decisions of firms in oligopolistic markets are so different from firms in all the other markets.
-Explain why pricing decisions of a firm in an oligopolistic market depend on decisions of other firms. How is this different from decisions of firms in perfectly competitive markets?

Accepted Answer

The answer of Explain why pricing and output decisions of...

Question 11

Explain why pricing and output decisions of firms in oligopolistic markets are so different from firms in all the other markets.
-Compare and contrast explicit and implicit collusion. What are examples of pricing models for explicit and implicit collusion? Explain.

Accepted Answer

The answer of Explain why pricing and output decisions of...

Question 12

What is monopolistic competition?

Accepted Answer

Monopolistic competition is a market structure in which there are many firms selling products that are differentiated from each other (such as through branding, packaging, or other features), but are still close substitutes. This means that there is not just one seller, but there may be a few sellers with some market power over their own product. Option A is incorrect as it describes a pure monopoly. Option B is incorrect as it describes a monopoly rather than monopolistic competition. Option C is incorrect as it is contradictory; a monopolist would not begin to act competitively as they would already be the sole seller in the market with complete market power.

Question 13

A monopolistically competitive firm gains advantage over other firms by

Accepted Answer

In a monopolistically competitive market, firms differentiate their products from those of their competitors in order to gain an advantage. By convincing customers that their product is significantly different, the firm can create some degree of customer loyalty that will allow them to charge a slightly higher price than their competitors. This differentiation could come from a variety of factors, such as quality, design, or branding.

Question 14

Compared to a firm operating in a perfectly competitive market, a firm in monopolistic competition

Accepted Answer

A firm in monopolistic competition has some market power, allowing it to charge a higher price than firms in a perfectly competitive market. However, it also faces competition from other firms producing differentiated products, which limits its ability to raise prices too high. Therefore, the firm will produce less output than a perfectly competitive firm, but at a higher price.

Question 15

Which of the following is an example of monopolistic competition?

Accepted Answer

The Shell gas station at a specific location is an example of monopolistic competition because it is selling similar products as other gas stations, but it has its own unique location and characteristics that make it stand out from competitors. Shell Oil company is too large to be an example of monopolistic competition, Generic Inc. is an example of pure competition, and Wal-Mart is an example of oligopoly.

Question 16

What is oligopoly?

Accepted Answer

Oligopoly is a market structure in which a few large firms dominate the industry, and they can influence prices and output. These firms may compete with each other, but they also collude at times to maximize their profits. Option A is incorrect as it describes monopolistic competition, not oligopoly. Option B is incorrect as it describes perfect competition. Option D is incorrect as it describes a monopolistic market structure.

Question 17

When would it be most advantageous for an oligopolist to raise its price?

Accepted Answer

When an oligopolist raises its price, it can increase its profits as long as its competitors follow suit and also raise prices. If only one firm raises its prices, it risks losing customers to its competitors who may keep their prices lower, resulting in lower profits. Therefore, it is most advantageous for an oligopolist to raise its price when it can be sure that other firms will also raise their prices.

Question 18

In the long run, a perfectly competitive firm will make zero excess profits. In the long run, oligopolies

Accepted Answer

In the long run, oligopolies normally make excess profits. This is because barriers to entry prevent new firms from entering the market and competing away profits. The existing firms can then use their market power to set prices higher than the perfectly competitive level and earn excess profits. However, the extent of excess profits may depend on the level of competition within the oligopoly structure.

Question 19

Which of the following is an example of oligopoly?

Accepted Answer

Wal-Mart operates in a market with few dominant players, making it an example of oligopoly.

Question 20

What is a cartel?

Accepted Answer

A cartel is a group of firms that work together to act as a monopoly, typically by coordinating prices and output levels to increase profits. This often results in reduced competition and higher prices for consumers.

Quiz 34: Monopolistic Competition and Oligopoly

Whats defention of terms: -cartel

Whats defention of terms: -monopolistic competition

Whats defention of terms: -oligopoly

Explain how oligopolies and monopolistic competition differ from competitive markets. -What conditions for a perfectly competitive market are violated by oligopolies? Monopolistic competition?

Explain how oligopolies and monopolistic competition differ from competitive markets. -Compare and contrast oligopolies and monopolistic competition. What is an advantage for a firm operating in each market structure? Disadvantage?

Understand how brands create a monopoly for a product in monopolistic competition. -Describe how brand names are legally protected. How does this resemble a monopoly?

Understand how brands create a monopoly for a product in monopolistic competition. -Explain how product differentiation leads to competing brands.

Explain why advertising is so important to firms in monopolistically competitive markets. -Explain the link of advertising and brand names (product differentiation) in maintaining profits for firms in monopolistic competition.

Explain why advertising is so important to firms in monopolistically competitive markets. -Demonstrate graphically what happens to profits if more advertising results in more consumers. Now demonstrate what happens to profit if more advertising raises the costs to the firm.

Explain why pricing and output decisions of firms in oligopolistic markets are so different from firms in all the other markets. -Compare and contrast explicit and implicit collusion. What are examples of pricing models for explicit and implicit collusion? Explain.