Question 1. Question : One of your classmates asserts that advertising, marketing
research, and brand management are redundant expenditures because a firm can
obtain the same information by simply looking at what customers are already
buying. Which of the following is not a response you might offer her?
Conducting market research is a good way for
firms to keep abreast of changing consumer tastes and preferences.
Advertising and brand management allow a firm
to create an entry barrier which will insulate the firm from competition and
from undertaking further product innovations.
Marketing research could allow a firm to
identify new market opportunities and at least, in the short run, a firm can
make a profit supplying products to this market segment.
If a firm successfully manages its brand,
customers become less price sensitive as they perceive fewer substitutes for
the firm's brand.
Question 2. Question
: Figure 12-3
Figure 12-3 shows short run cost and demand curves for a
monopolistically competitive firm in the market for designer watches.
Refer to Figure 12-3.What is the area that represents the
total revenue made by the firm?
Question 3. Question
: Table 12-3
Table 12-3 shows the firm's demand and cost schedules for a
firm in monopolistic competition.
Refer to Table 12-3. What is the amount of the firm's loss
at its optimal output level?
Question 4. Question
: Figure 12-6
Refer to Figure 12-6. What is the amount of excess capacity?
Q4 - Q3 units
Q4 - Q2 units
Q3 - Q2 units
Q3 - Q1 units
Question 5. Question
: What type of demand curve does
a monopolistically competitive firm face?
Question 6. Question
: Table 13-4
Table 13-4 shows the payoff matrix for Wal-Mart and Target
from every combination of pricing strategies for the popularPlayStation 3. At
the start of the game each firm charges a low price and each earns a profit of
Refer to Table 13-4. For each firm, is there a better
outcome than the current situation in which each firm charges the low price and
earns a profit of $7,000?
Yes, the firms can implicitly collude and
agree to charge a higher price.
No, there is no incentive for each firm to
consider any other strategy.
No, any other strategy hurts consumers.
Yes, each firm can implicitly agree to
increase output and not to deviate from a low price.
Question 7. Question
: Each member of OPEC can
increase its income by selling more oil than its output quota because
by selling more at OPEC's cartel price, a
member will automatically earn more income.
each member's demand is more elastic than the
total demand for oil.
demand for oil is inelastic, total revenue increases.
the demand for oil is perfectly elastic.
Question 8. Question
: An example of a barrier to
superior technological knowledge.
increasing marginal costs
Question 9. Question
: In an oligopoly market
the pricing decisions of all other firms have no effect on an individual
individual firms pay no attention to the
behavior of other firms.
advertising of one firm has no effect on all
one firm's pricing decision affects all the
Question 10. Question
: The DeBeers Company of South
Africa was able to block competition through
economies of scale.
ownership of an essential input.
differentiating its product.