Which of the following statements is incorrect. In oligopoly ________. A. barriers to entry prevent new firms entering B. each firm’s profit is influenced by each other firms’ advertising C. each firm’s action is influenced by the actions and reactions of each other firm D. each firm is a price taker and the price is the monopoly profit-maximizing price

Conjugate the verb in the passive voice and give the Latin passive infinitive with its meaning: firmo, firmare, firmavi, firmatum

The four largest firms in a market have the following market shares of total revenue: 20 percent, 15 percent, 10 percent, and 5 percent. The ________ in this industry is ________.

A. four­firm concentration ratio; 50 percent

B. four­firm concentration ratio; 750 percent

C. Herfindahl­Hirschman Index; 50

D. Herfindahl­Hirschman Index; 2,500

A firm in monopolistic competition that is maximizing profit ________.

A. always makes a positive economic profit in the short run

B. never needs to shut down because its price always exceeds minimum average variable cost

C. might, in the short run, sell at a price that is less than average total cost

D. shuts down temporarily if it incurs a loss equal to total variable cost

In the long run, each firm in monopolistic competition ________. A. makes zero economic profit B. makes as much economic profit as it would if it was a monopoly C. has the same markup and excess capacity as it would if the market was perfectly competitive D. creates the same deadweight loss as it would if it was a monopoly

The four largest firms in a market have the following market shares of total revenue: 20 percent, 15 percent, 10 percent, and 5 percent. The ________ in this industry is ________. A. four-firm concentration ratio; 50 percent B. four-firm concentration ratio; 750 percent C. Herfindahl-Hirschman Index; 50 D. Herfindahl-Hirschman Index; 2,500

Each firm in monopolistic competition uses a brand name and advertising to achieve all of the following except to ________.

A. differentiate its good from its competitors’ goods B. signal quality and reliability of its good C. signal its market share D. influence the demand for its good

If one firm advertises and other firms in the market don’t, then ________.

A. the demand for the advertised good becomes more elastic

B. the profit­maximizing quantity of the advertised good decreases because total fixed costs increase

C. the average cost of producing a small quantity of the advertised good rises but the average total cost of producing a large quantity might fall

D. the economic profit made from the advertised good increases

Governments regulate natural monopoly by capping the price at ________.

A. marginal revenue and allowing the monopoly to maximize profit

B. marginal cost so that the monopoly is efficient and makes zero economic profit

C. average total cost, which allows the monopoly to be inefficient but make zero economic profit

D. the buyers’ willingness to pay, which makes the monopoly operate efficiently

Read Eye On the Wireless Oligopoly on p. 475 and then explain the effects of economies of scale and demand on the market for smartphone plans and illustrate it with a graph based on Figure 18.1.

Monopolistic competition differs from ________. A. monopoly because firms cannot set their own price B. oligopoly because firms produce differentiated goods or services C. perfect competition because the goods or services produced are differentiated D. monopoly because the good produced by each firm has no close substitute

A monopoly ________.

A. can choose its price and output and always has the option of price discriminating

B. is a price taker and by offering a range of discounts can price discriminate

C. that produces a good that cannot be resold might choose to price discriminate

D. book store that offers a discount on Tuesdays is price discriminating

Explain why the economic profit that Babolat and Sony make in this market is likely to be temporary. Draw a graph to illustrate the outcome in the long run. Show the excess capacity and markup in the long run.

Which of the following is an example of differentiated products? A. Coke and Pepsi B. automobiles and bicycles C. trucks and gasoline D. stocks and bonds E. gold and silver