Davenport Econ625 final exam

Jun 25th, 2016
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Question Question 1 In the long run, the most helpful action that a monopolistically competitive firm can take to maintain its economic profit is to continue its efforts to differentiate its product. raise its price. lower its price. do nothing, because it will inevitably experience a decline in profits 2 points Question 2 The four-firm concentration ratio indicates the total profitability among the top four firms in an industry is an indicator of the degree of monopolistic competition. indicates the presence and intensity of an oligopoly market. is used by the government as a basis for anti-trust cases. 2 points Question 3 Which of the following industries is most likely to represent the monopolistic competition market structure? automobiles tobacco products restaurants farm equipment 2 points Question 4 Mutual interdependence occurs when all firms in an industry are affected by the same macro economic conditions, such as a recession, inflation, interest rates,

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Davenport Econ625 final examQuestionQuestion 1In the long run, the most helpful action that a monopolistically competitive firm can take tomaintain its economic profit is tocontinue its efforts to differentiate its product.raise its price.lower its price.do nothing, because it will inevitably experience a decline in profits2 pointsQuestion 2The four-firm concentration ratioindicates the total profitability among the top four firms in an industryis an indicator of the degree of monopolistic competition.indicates the presence and intensity of an oligopoly market.is used by the government as a basis for anti-trust cases.2 pointsQuestion 3Which of the following industries is most likely to represent the monopolistic competitionmarket structure?automobilestobacco productsrestaurantsfarm equipment2 pointsQuestion 4Mutual interdependence occurs whenall firms in an industry are affected by the same macro economic conditions, such as a recession,inflation, interest rates, exchange rates, etc.the actions of firms are independent of each other.the actions of one firm in an industry are easily recognized and perhaps copied by others.monopolists recognize that they must face eventual competition in the long run.2 pointsQuestion 5Firms in monopolistic competition wouldpersistently realize economic profits in both the short and long run.may realize economic profits in the long run and normal profits in the short run.tend to incur persistent losses in b

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