21. Which of the following is most likely produced in a monopolistically competi

Question

21. Which of the following is most likely produced in a monopolistically competitive market? a. soybeans b. autos c fast food d. oi e. local phone service 22. A profit-maximizing firm in monopolistic competition should shut down in the short a. if marginal revenue is less than price b. if price is always less than average total cost c. if price is always less than average fixed cost d. ifprice is always less than average variable cost e under no circumstances 23. Oligopolistic industries consist of a. a few independent firms b. a few interdependent firms c. many interdependent firms d. many independent firms e. a small monopoly 24. Collusion occurs when a. a firm chooses a level of output to maximize its own profit b. firms get together to maximize joint profits c. firms refuse to follow their price leaders d. firms petition their U.S. senators for favors e. two firms' price and output decisions come into conflict 25. Tacit collusion occurs in industries that a. are monopolistically competitive b. contain price leaders c. experience rapid technological change d. are regulated e. produce very differentiated products

Explanation / Answer

1> c

Fast foods are generally differentiated product with a lot of brands trying to sell it.

2> d

Fixed cost is a sunk cost in the short run, so the firm should focus on the variable cost.

3> b

In oligopoly. each firm's decision affects other's profit, so they are inter-dependent.

4> b

In collusion, firms co-operate rather than competing with each other.

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