Reading 20: Monopolistic Competition and Oligopoly-LOS a 习题 2011, include, likely, border, center

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Session 5: Economics: Market Structure and Macroeconomic Analysis
Reading 20: Monopolistic Competition and Oligopoly

LOS a: Describe the characteristics of monopolistic competition and an oligopoly.

 

 

Characteristics of an oligopoly least likely include:

A) interdependence among competitors.

B) identical products.

C) significant barriers to entry.

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In an oligopoly, a small number of producers sell products that can be similar or differentiated. An oligopoly typically features significant barriers to entry including economies of scale. Pricing and output decisions by each firm directly influence the decisions of competing firms.

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Under which type of market structure are the production and pricing alternatives of a firm most affected by the decisions of its competitors?

A) Monopolistic competition.

B) Oligopoly.

C) Perfect competition.

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An oligopoly market structure is characterized by a small number of firms producing similar or differentiated products, with a high degree of interdependence among competitors. Each firm’s optimal price and output are strongly affected by the pricing and output decisions of its competitors.

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The type of economic market that features a large number of competitors offering differentiated products is best characterized as:

A) perfect competition.

B) oligopoly.

C) monopolistic competition.

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Monopolistic competition is used to describe markets where there are a large number of competitors producing differentiated products.

In perfect competition all firms produce identical products. In an oligopoly there is a small number of firms.

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A market that is characterized by monopolistic competition is least likely to feature:

A) a small number of independent sellers.

B) low barriers to entry.

C) sellers that produce a differentiated product.

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In monopolistic competition, there is a large, not small, number of independent sellers.

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Which of the following most accurately describes why firms under monopolistic competition face elastic demand for their products?

A) Allocative efficiency.

B) The availability of many close substitutes.

C) High barriers to entry.

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The demand for products from firms competing in monopolistic competition is relatively elastic due to the availability of close substitutes. If a firm increases its product price, it will lose customers to firms selling slightly differentiated products at lower prices.

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Which of the following is least likely to be considered a feature that is common to both monopolistic competition and perfect competition?

A) Low or no barriers to entry.

B) Extensive advertising to differentiate products.

C) Zero economic profits in the long run.

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The only item listed in the question that monopolistic competition and perfect competition do not have in common is the use of advertising to differentiate their products. Extensive advertising is a key feature of monopolistic competition.

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An oligopoly is characterized by all of the following EXCEPT:

A) large economies of scale.

B) significant barriers to entry.

C) a large number of sellers.

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Oligopolies consist of a small number of sellers. Their products may be either similar or differentiated.

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Monopolistic competition differs from pure monopoly in that:

A) monopolistic competitors are price takers and monopolists are not.

B) monopolistic competitors have low barriers to entry and monopolists do not.

C) monopolists maximize profits and monopolistic competitors do not.

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Another name for monopolistic competition is a competitive price searcher market. Monopolistic competition refers to a large number of independent sellers, each produces a differentiated product, each market has a low barrier to entry, and each producer faces a downward sloping demand curve.

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Which one of the following structures is characterized by free entry and exit, a differentiated product, and price searcher behavior?

A) Oligopoly.

B) Monopolistic competition.

C) Pure competition.

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Monopolistic competition is another name for competitive price-searcher markets. There are a large number of independent sellers, each produces a differentiated product, each market has a low barrier to entry, and each producer faces a downward sloping demand curve.

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Which one of the following is NOT a characteristic of monopolistic competition?

A) A single seller.

B) Low barriers to entry and exit.

C) Differentiated products.

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There are many sellers or producers who sell differentiated products that permit firms to attract customers without reducing price; and there are low barriers to entry.