In December 2004, the oil producing nations of OPEC began reducing output to kee
ID: 1230896 • Letter: I
Question
In December 2004, the oil producing nations of OPEC began reducing output to keep prices above $40 per barrel. In doing this, OPEC was acting as a monopoly even though there was more than one producer. OPEC is a: (Points : 5)cartel.
price taker.
producer in a contestable market.
producer in a monopolistically competitive market.
8. The difference between a perfectly competitive firm and a monopolistically competitive firm is that a monopolistically competitive firm faces a: (Points : 5)
horizontal demand curve and price equals marginal cost in equilibrium.
horizontal demand curve and price exceeds marginal cost in equilibrium.
downward-sloping demand curve and price equals marginal cost in equilibrium.
downward-sloping demand curve and price exceeds marginal cost in equilibrium.
9. Suppose an industry only has four firms and they each have 10 percent, 8 percent, 8 percent, and 6 percent of the market. The Herfindahl index of this market is closest to which of the following? (Points : 5)
8
32
66
264
Explanation / Answer
7. In December 2004, the oil producing nations of OPEC began reducing output to keep prices above $40 per barrel. In doing this, OPEC was acting as a monopoly even though there was more than one producer. OPEC is a: correct ans--cartel 8. The difference between a perfectly competitive firm and a monopolistically competitive firm is that a monopolistically competitive firm faces a: correct ans--downward-sloping demand curve and price exceeds marginal cost in equilibrium. 9. Suppose an industry only has four firms and they each have 10 percent, 8 percent, 8 percent, and 6 percent of the market. The Herfindahl index of this market is closest to which of the following? correct ans--264