WKU ECON 202--Wilson Quiz 6

The more product differentiation in the market, the ______ the firm specific demand curve. The less product differentiation in the market, the _____ the firm specific demand curve

Steeper, flatter

Gasoline Stations carrying the same fuel brand (e.g., Chevron) are able to charge different prices in San Francisco because:

Location is a source for product differentiation

Oligopoly differs from monopoly and perfect competition in that:

All of the above

You notice that the price of butter, a competitive product, falls and then rises. The best explanation for this is that:

Demand for butter decreased causing price to fall, which induced other firms to exit the market causing supply to decrease, which caused the price to go back up

Which of the following is NOT a characteristic of a monopolistically competitive market?

There are substantial barriers to entry

Market power is the power to

Control prices

A monopolist maximizes profit by setting the quantity where:

Marginal revenue equal to marginal cost

Price Fixing is an arrangement whereby firms agree to:

Coordinate their pricing decisions

Which of the following is NOT a barrier to entry for monopoly?

A large number of existing firms in a market

The demand curve that a monopolist faces is:

the market demand curve

Under the conditions of monopolistic competition:

Economic profit is zero in the long run

The merits of a patent system is:

All of the above

When firms cooperate with each other rather than compete:

The firms will end up better off

The word "monopolistic" in the label "monopolistic competition" refers to the fact that:

Each firm produces a slightly different version of the product

Price Discrimination is related to elasticity because:

The firm can increase revenues by charging customers with elastic demands lower prices and charging customers with inelastic demands higher prices

In order to practice price discrimination a firm must:

Be able to divide consumers into groups with different demands for their product

Given that a monopolist are acting in a profit maximizing manner, the above illustrates a monopolist:

Making a positive economic profit

The deadweight loss associated with the monopoly woudl be represented by the area:

ADE

Cartels engage in price fixing in order to:

Increase profits