Question : 18.5   Chapter Figures The figure above shows the market for airplanes. 1) : 1241322

 

18.5   Chapter Figures

 

The figure above shows the market for airplanes.

 

1) Suppose the airplane market is an oligopoly. If the firms act as a monopolist, the price will be ________ and if the firms act as competitors the price will be ________.

A) $13 million per plane; $1 million per plane

B) $1 million per plane; $13 million per plane

C) $13 million per plane; $13 million per plane

D) $1 million per plane; $1 million per plane

E) None of the above answers is correct.

2) Suppose the airplane market is an oligopoly. According to the figure above, if the firms act as a monopolist, the quantity produced will be ________ planes per week, and if the firms act as competitors, the quantity produced will be ________ planes per week.

A) 6; 12

B) 12; 6

C) 0; 6

D) 12; 0

E) None of the above answers is correct.

 

3) Suppose the airplane market is an oligopoly. According to the figure above, the price can range as high as ________ and as low as ________.

A) $13 million per plane; $1 million per plane

B) $30 million per plane; $13 million per plane

C) $13 million per plane; $13 million per plane

D) $1 million per plane; $1 million per plane

E) None of the above answers is correct.

 

4) Suppose the airplane market is an oligopoly. According to the figure above, the quantity produced can range as high as ________ planes per week and as low as ________ planes per week.

A) 10; 4

B) 12; 6

C) 6; 0

D) 12; 0

E) None of the above answers is correct.

18.6   Integrative Questions

 

1) A characteristic common in both oligopoly and monopolistic competition is

A) a small number of firms compete in the market.

B) natural or legal barriers prevent the entry of new firms into the market.

C) each firm faces a downward-sloping demand curve.

D) the firms in the market are interdependent.

E) each firm has a large share of the market.

 

2) If the HHI for an industry equals 3,200,

A) firms in the industry must enter a cartel in order to earn an economic profit.

B) firms in the industry are most likely to make zero economic profit.

C) the industry is probably an oligopoly.

D) firms in the industry are likely to act independently of each other.

E) the industry is almost surely monopolistic competition.

 

3) Which of the following are characteristics of an oligopoly?

i)The HHI for an oligopoly is between 100 and 1800.

ii)There are a few firms that compete.

iii)The firms can increase their profit by forming a cartel.

A) i and ii

B) i and iii

C) ii and iii

D) i, ii, and iii

E) i only.

4) When a market has barriers to entry,

A) then in the long run it is possible for the firms to incur economic losses.

B) then in the long run the only possible outcome for the firms to make zero economic profit.

C) then in the long run it might be possible for the firms to make a positive economic profit.

D) oligopolies cannot be created.

E) the HHI almost always falls below 1,000.

5) The figure above shows the market demand curve and the ATC curve for a firm. If all firms in the market have the same ATC curve, then ________ limit(s) the market to 3 firms.

A) economies of scale

B) a “tit for tat” strategy

C) collusion

D) a Nash equilibrium

E) legal requirements

6) The figure above shows the market demand curve and the ATC curve for a firm. Each firm in the market has the same ATC curve. If the firms in the industry agree to form a cartel, the firms in the industry make an economic profit if there are ________ firms, each producing ________ units per hour.

A) 3; 4,000

B) 4; 3,000

C) 2; 6,000

D) 2; 4,000

E) 2; 12,000