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Oligopoly
Multiple-Choice Questions
4) In the long run, the most helpful action that a monopolistically competitive
firm can take to maintain its economic profit is to:
A) continue its efforts to differentiate its product.
B) raise its price.
C) lower its price.
D) do nothing, because it will inevitably experience a decline in profits.
8) The demand curve, which assumes that competitors will follow price
decreases but not price increases, is called
A) an industry demand curve. B) an inelastic demand curve.
C) a kinked demand curve. D) a competitive demand curve.
10). In the Kinked Demand curve model, the demand curve is ________ for
prices increases and _______ for price decreases
A) unit elastic; relatively elastic
B) relatively inelastic; relatively elastic
C) relatively elastic; relatively inelastic
D) perfectly elastic; perfectly inelastic
11) The existence of a kinked demand curve under oligopoly conditions may
result in
A) price flexibility. B) price rigidity.
C) competitive pricing. D) None of the above.
13) In which of these markets would the firms be facing the least elastic
demand curve?
A) perfect competition B) pure monopoly
C) monopolistic competition D) oligopoly
14) Porter's "Five Forces Model" is based on:
A) the laws of supply and demand.
B) the law of diminishing returns.
C) the Structure-Conduct-Performance model.
D) the key factors affecting demand.
Analytical Question
Reference:
Chapter 9 - Pricing and Output Decisions: Monopolistic Competition and
Oligopoly
Keat, Paul and Philip K.Y. Young (2003). Managerial Economics: Economic
Tools for Today’s Decision Makers.