3. If a firm must reduce price in order to sell a larger output:

a. the firm has some monopoly or market power

b. MR >P

c. the demand curve facing the firm is perfectly inelastic

d. the firm is a price taker

e. the firm is a natural monopoly

9. Assuming that there are two firms in the market, which of the following statements is accurate concerning equilibrium market output in the Cournot and Bertrand models?

a. equilibrium market output will be less than the competitive market output for both models.

b. equilibrium market output will be less than the competitive market output for Cournot but   

    equal to the competitive market output for Bertrand.

c. equilibrium market output will be less than the competitive market output for Bertrand but   

    equal to the competitive market output for Cournot.        

d. equilibrium market output will be greater than the competitive market output for both

    models.

e. equilibrium market output will be less than the competitive market output for Cournot but   

    greater than the competitive market output for Bertrand.

15. As new firms enter a monopolistically competitive market:

a. the typical firm’s long-run average cost curve shifts downward

b. the typical firm’s demand curve shifts leftward

c. the typical firm’s demand curve becomes less elastic

d. the typical firm’s profit increases

e. none of the above

***7. The cell phone service industry is an example of:

a. monopoly

b. oligopoly

c. perfect competition

d. monopolistic competition

e. a cartel         

***8.The primary difference between the Cournot and Bertrand models of oligopoly is the difference in anticipated rival reaction. In the Cournot model, each firm expects its rival to maintain its current ________, whereas in the Bertrand model, each firm expects its rival to maintain its current ________.

a. output; price

b. output; profit

c. price; profit

d. price; output

e. price; location

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