1. All of the following are ways monopolistically competitive firms differentiate their products EXCEPT

A. Selling with slightly different physical characteristics.
B. Selling products at different locations.
C. Offering different levels of service that come with a product.
D. Creating a special aura or image for the product with advertising.
E. None of the above are exceptions they are all ways of differentiating products.

A. Both firms both choose a high price, although both would be better off with the low price.
B. Both firms choose a low price, although both would be better off with the high price.
C. The firms are better off if one chooses a high price while the other chooses a low price.
D. Both firms choose to cut production, although both would be better off producing a larger output.
E. None of the above.

A. Be forced to shut down.
B. Have an incentive to decrease costs.
C. Earn economic profit greater than zero.
D. Produce more than it would if it were unregulated.
E. Earn more profit that it would if it were unregulated.

A. Price competition to non-price (product differentiation) competition because consumers care more about price than other features.
B. To act independently in establishing their prices.
C. To compete in terms of product differentiation, because such changes are more difficult and take longer to match than price changes.
D. To compete in terms of product differentiation because these changes reduce costs and make consumer demand more elastic.
E. None of the above.

A. Are legal under the Clayton Act.
B. Are contracts which require the purchase of one good in order to purchase another.
C. Create a barrier to entry by giving firms control over essential raw materials.
D. Are agreements which say that if one firm cheats on a price-fixing agreement, the other will cheat on the agreement in the next month.
E. None of the above.

A. Firms consider each others' actions when choosing price and quantity.
B. There are a few but not infinitely many firms in the industry.
C. Firms act strategically.
D. The firms are not subject to diminishing returns in the short-run.
E. There are no exceptions

A. Eliminating his competitors' incentive to reduce price if his threat is credible.
B. Driving out his competition.
C. Increasing his competitors incentive to reduce price if his threat is credible.
D. Triggering an antitrust investigation.
E. None of the above.

A. Farmer Jones's wheat farm.
B. Post Breakfast Cereals.
C. TCI Cablevision, a supplier of cable T.V. services.
D. T.J.'s Clothes, a local retail clothing store.
E. None of the above.

A. Decreases prices and profits.
B. Decreases price, but increases profits.
C. Increases price and profits.
D. Increases price and decreases profits.
E. Decreases profits but does not affect prices.

A. Implies that this is a monopolistically competitive industry.
B. Means that the largest four firms in the industry earn 75 percent of the industry's profits.
C. Indicates a high degree of product differentiation because the four largest firms produce a total of 75 different brands of the product.
D. Indicates that this is a highly contestable market.
E. None of the above.

A. Because oligopolists have more managerial resources, they are likely to be more careful in keeping costs to a minimum than perfectly competitive firms.
B. The higher the industry concentration ratio, the more efficient the industry in maximizing the total value of market transactions.
C. Unregulated monopolists and oligopolists will usually earn economics profits; monopolistically competitive and perfectly competitive firms will earn zero profit.
D. Perfectly competitive and monopolistically competitive firms are more innovative than oligopolists and monopolists.
E. All of the above.

A. Is more likely to be maintained when there number of firms in the cartel is large.
B. Increases both price and industry output.
C. Is most likely to be maintained when there is free entry into the market.
D. Establishes a price equal to the marginal cost of the average firm.
E. Is illegal under the terms of the Sherman Act.