Question 1

Advocates of limiting anti-trust action to cases which would promote economic efficiency believe that

Accepted Answer

A)  courts should consider the distribution of income between producers and consumers. 
B)  the welfare of small firms should be a factor in pursuing anti-trust action. 
C)  preventing mergers that would benefit consumers constitutes a misapplication of the law. 
D)  more competition is always preferred to less. 
A)  courts should consider the distribution of income between producers and consumers. 
B)  the welfare of small firms should be a factor in pursuing anti-trust action. 
C)  preventing mergers that would benefit consumers constitutes a misapplication of the law. 
D)  more competition is always preferred to less. C

Question 2

Social welfare consequences are ambiguous when two or more manufacturers merge to take advantage of economies of scale.

Accepted Answer

A) True 
 B)False  True

Question 3

The Prisoners' Dilemma game is another situation where the Invisible Hand Theorem is true.

Accepted Answer

A) True 
 B)False  False

Question 4

In what way is monopolistic competition superior to perfect competition?

Accepted Answer

A)  The cost of producing the industry's output is lower in monopolistic competition. 
B)  Consumers benefit from having differentiated products instead of identical products. 
C)  Long-run profits are higher in monopolistic competition than in pure competition. 
D)  In monopolistic competition,firms can fully exploit any existing economies of scale. 
A)  The cost of producing the industry's output is lower in monopolistic competition. 
B)  Consumers benefit from having differentiated products instead of identical products. 
C)  Long-run profits are higher in monopolistic competition than in pure competition. 
D)  In monopolistic competition,firms can fully exploit any existing economies of scale.

Question 5

The key defining feature of oligopoly,in addition to firms' market power,is

Accepted Answer

A)  collusion. 
B)  free entry and exit. 
C)  firms take rivals' actions into account. 
D)  the Prisoner's Dilemma. 
A)  collusion. 
B)  free entry and exit. 
C)  firms take rivals' actions into account. 
D)  the Prisoner's Dilemma.

Question 6

A merger between Gateway,a manufacturer of computers,and Logitech,a manufacturer of components for computers,would be an example of horizontal integration.

Accepted Answer

A) True 
 B)False

Question 7

History and Adam Smith both point out that people of the same trade

Accepted Answer

A)  often face the temptation to engage in collusion. 
B)  rarely consider engaging in collusion. 
C)  meet only to consider how to improve the quality of their products. 
D)  scrupulously avoid engaging in discussions about their trade since they are competitors. 
A)  often face the temptation to engage in collusion. 
B)  rarely consider engaging in collusion. 
C)  meet only to consider how to improve the quality of their products. 
D)  scrupulously avoid engaging in discussions about their trade since they are competitors.

Question 8

According to the Bertrand model,price and output is higher under oligopoly than under competition.

Accepted Answer

A) True 
 B)False

Question 9

Firms in monopolistic competition resemble monopolies in that both types of firms

Accepted Answer

A)  earn positive economic profits in the long run. 
B)  charge prices higher than their marginal costs. 
C)  possess barriers to entry that keep potential rivals out of the market. 
D)  produce their output so that their average cost is minimized. 
A)  earn positive economic profits in the long run. 
B)  charge prices higher than their marginal costs. 
C)  possess barriers to entry that keep potential rivals out of the market. 
D)  produce their output so that their average cost is minimized.

Question 10

Cournot Problem. Consider a Cournot oligopoly with two identical firms.  These firms each have constant marginal costs of $10. The market for these firms’ product has demand Q = 100 - P.

-Refer to Cournot Problem.In the Nash Equilibrium,each firm will receive producer surplus of

Accepted Answer

A)  $300 
B)  $450 
C)  $600 
D)  $900 
A)  $300 
B)  $450 
C)  $600 
D)  $900

Question 11

When a monopolist integrates vertically with another monopolist the result:

Accepted Answer

A)  is always beneficial to consumers. 
B)  is never beneficial to consumers. 
C)  may or may not be beneficial to consumers. 
D)  does not have any effect on consumers. 
A)  is always beneficial to consumers. 
B)  is never beneficial to consumers. 
C)  may or may not be beneficial to consumers. 
D)  does not have any effect on consumers.

Question 12

A firm has the incentive to cheat on a cartel agreement only when it fears that other cartel members will also cheat.

Accepted Answer

A) True 
 B)False

Question 13

What is resale price maintenance and why would a manufacturer want to use it? Under what circumstances would resale price maintenance increase social gain?

Accepted Answer

When a manufacturer uses resale price ma

Question 14

Which of the following is an example of regulating quality standards?

Accepted Answer

A)  Advertising bans. 
B)  Blue laws. 
C)  The minimum wage. 
D)  Professional licensing requirements. 
A)  Advertising bans. 
B)  Blue laws. 
C)  The minimum wage. 
D)  Professional licensing requirements.

Question 15

Cournot Problem. Consider a Cournot oligopoly with two identical firms.  These firms each have constant marginal costs of $10. The market for these firms’ product has demand Q = 100 - P.

-Refer to Cournot Problem.In the Nash Equilibrium,the deadweight loss will be

Accepted Answer

A)  $300 
B)  $450 
C)  $600 
D)  $900 
A)  $300 
B)  $450 
C)  $600 
D)  $900

Question 16

Social welfare would be increased if a monopolistically competitive industry were replaced with a competitive industry.

Accepted Answer

A) True 
 B)False

Question 17

An individual firm desiring to obey the letter of the law while avoiding the effects of regulation may use

Accepted Answer

A)  predatory pricing. 
B)  tit-for-tat strategies. 
C)  creative response. 
D)  collusion. 
A)  predatory pricing. 
B)  tit-for-tat strategies. 
C)  creative response. 
D)  collusion.

Question 18

The Peltzman study shows consumers overall have benefited from the requirement that drug manufacturers prove the safety and effectiveness of their products.

Accepted Answer

A) True 
 B)False

Question 19

An example of a horizontal integration would be a merger between

Accepted Answer

A)  a newspaper and a television station. 
B)  two grocery store chains. 
C)  Intel and Dell. 
D)  Delta Airlines and American Airlines. 
A)  a newspaper and a television station. 
B)  two grocery store chains. 
C)  Intel and Dell. 
D)  Delta Airlines and American Airlines.

Question 20

An attorney that finds a loophole in a law has formed a creative response to the law.

Accepted Answer

A) True 
 B)False

Advocates of limiting anti-trust action to cases which would promote economic efficiency believe that

Social welfare consequences are ambiguous when two or more manufacturers merge to take advantage of economies of scale.

The Prisoners' Dilemma game is another situation where the Invisible Hand Theorem is true.

In what way is monopolistic competition superior to perfect competition?

The key defining feature of oligopoly,in addition to firms' market power,is

A merger between Gateway,a manufacturer of computers,and Logitech,a manufacturer of components for computers,would be an example of horizontal integration.

History and Adam Smith both point out that people of the same trade

According to the Bertrand model,price and output is higher under oligopoly than under competition.

Firms in monopolistic competition resemble monopolies in that both types of firms

Cournot Problem. Consider a Cournot oligopoly with two identical firms. These firms each have constant marginal costs of $10. The market for these firms’ product has demand Q = 100 - P. -Refer to Cournot Problem.In the Nash Equilibrium,each firm will receive producer surplus of

When a monopolist integrates vertically with another monopolist the result:

A firm has the incentive to cheat on a cartel agreement only when it fears that other cartel members will also cheat.

What is resale price maintenance and why would a manufacturer want to use it? Under what circumstances would resale price maintenance increase social gain?

Which of the following is an example of regulating quality standards?

Cournot Problem. Consider a Cournot oligopoly with two identical firms. These firms each have constant marginal costs of $10. The market for these firms’ product has demand Q = 100 - P. -Refer to Cournot Problem.In the Nash Equilibrium,the deadweight loss will be

Social welfare would be increased if a monopolistically competitive industry were replaced with a competitive industry.

An individual firm desiring to obey the letter of the law while avoiding the effects of regulation may use

The Peltzman study shows consumers overall have benefited from the requirement that drug manufacturers prove the safety and effectiveness of their products.

An example of a horizontal integration would be a merger between

An attorney that finds a loophole in a law has formed a creative response to the law.

Supply,demand,and Equilibrium

Prices,costs and Gains From Trade

The Behavior of Consumers

Consumers in the Marketplace

The Behavior of Firms

Production and Costs

Competition

Welfare Economics and the Gains From Trade

Knowledge and Information

Monopoly

The Theory of Games

External Costs and Benefits

Common Property and Public Goods

The Demand for Factors of Production

The Market for Labor

Allocating Goods Over Time

Risk and Uncertainty

What Is Economics

Filters

Exam 11: Market Power,collusion,and Oligopoly

Advocates of limiting anti-trust action to cases which would promote economic efficiency believe that

Social welfare consequences are ambiguous when two or more manufacturers merge to take advantage of economies of scale.

The Prisoners' Dilemma game is another situation where the Invisible Hand Theorem is true.

In what way is monopolistic competition superior to perfect competition?

The key defining feature of oligopoly,in addition to firms' market power,is

A merger between Gateway,a manufacturer of computers,and Logitech,a manufacturer of components for computers,would be an example of horizontal integration.

History and Adam Smith both point out that people of the same trade

According to the Bertrand model,price and output is higher under oligopoly than under competition.

Firms in monopolistic competition resemble monopolies in that both types of firms

Cournot Problem. Consider a Cournot oligopoly with two identical firms. These firms each have constant marginal costs of $10. The market for these firms’ product has demand Q = 100 - P. -Refer to Cournot Problem.In the Nash Equilibrium,each firm will receive producer surplus of

When a monopolist integrates vertically with another monopolist the result:

A firm has the incentive to cheat on a cartel agreement only when it fears that other cartel members will also cheat.

What is resale price maintenance and why would a manufacturer want to use it? Under what circumstances would resale price maintenance increase social gain?

Which of the following is an example of regulating quality standards?

Cournot Problem. Consider a Cournot oligopoly with two identical firms. These firms each have constant marginal costs of $10. The market for these firms’ product has demand Q = 100 - P. -Refer to Cournot Problem.In the Nash Equilibrium,the deadweight loss will be

Social welfare would be increased if a monopolistically competitive industry were replaced with a competitive industry.

An individual firm desiring to obey the letter of the law while avoiding the effects of regulation may use

The Peltzman study shows consumers overall have benefited from the requirement that drug manufacturers prove the safety and effectiveness of their products.

An example of a horizontal integration would be a merger between

An attorney that finds a loophole in a law has formed a creative response to the law.

Supply,demand,and Equilibrium

Prices,costs and Gains From Trade

The Behavior of Consumers

Consumers in the Marketplace

The Behavior of Firms

Production and Costs

Competition

Welfare Economics and the Gains From Trade

Knowledge and Information

Monopoly

The Theory of Games

External Costs and Benefits

Common Property and Public Goods

The Demand for Factors of Production

The Market for Labor

Allocating Goods Over Time

Risk and Uncertainty

What Is Economics

Filters