Question 1

With barriers to the entry of new firms,

Accepted Answer

A)  a cartel is guaranteed to earn an economic profit. 
B)  a cartel's members have no incentive to cheat. 
C)  industry supply will expand if the firms form a cartel. 
D)  the cartel might earn an economic profit. 
A)  a cartel is guaranteed to earn an economic profit. 
B)  a cartel's members have no incentive to cheat. 
C)  industry supply will expand if the firms form a cartel. 
D)  the cartel might earn an economic profit.

Question 2

Oligopoly is

Accepted Answer

A)  like perfect competition because there are many firms in the industry. 
B)  like monopolistic competition because oligopoly firms all sell differentiated goods. 
C)  like perfect competition because oligopoly firms all sell homogeneous goods. 
D)  like monopoly because there are barriers to entry. 
A)  like perfect competition because there are many firms in the industry. 
B)  like monopolistic competition because oligopoly firms all sell differentiated goods. 
C)  like perfect competition because oligopoly firms all sell homogeneous goods. 
D)  like monopoly because there are barriers to entry.

Question 3

Asus
  
-Dell and Asus must decide whether to lower their prices, based on the potential economic profits shown in the payoff matrix above (in millions of dollars). If the firms collude and don't cheat, Dell's profit is _______ million and Asus's profit is _______ million.

Accepted Answer

A)  $5; $20 
B)  $10; $10 
C)  $20; $5 
D)  $15; $15 
A)  $5; $20 
B)  $10; $10 
C)  $20; $5 
D)  $15; $15

Question 4

A market structure in which a small number of firms compete is called _______.

Accepted Answer

A)  a small- number market 
B)  a monopoly 
C)  an oligopoly 
D)  monopolistic competition 
A)  a small- number market 
B)  a monopoly 
C)  an oligopoly 
D)  monopolistic competition

Question 5

In a prisoners' dilemma game, which of the following strategies gives the best outcome for both
Prisoners?

Accepted Answer

A)  One confesses while the other denies 
B)  Both deny (collusion) 
C)  Both confess (not collude) 
D)  None of the above 
A)  One confesses while the other denies 
B)  Both deny (collusion) 
C)  Both confess (not collude) 
D)  None of the above

Question 6

_______ is a group of firms that have colluded to limit their output and raise their price.

Accepted Answer

A)  An oligopoly 
B)  A strategy 
C)  A duopoly 
D)  A cartel 
A)  An oligopoly 
B)  A strategy 
C)  A duopoly 
D)  A cartel

Question 7

The practice of the only seller in a market charging a price at the highest level that would still inflict a loss on a new entrant into the market is called

Accepted Answer

A)  limit pricing. 
B)  trigger pricing. 
C)  agile pricing. 
D)  collusive pricing. 
A)  limit pricing. 
B)  trigger pricing. 
C)  agile pricing. 
D)  collusive pricing.

Question 8

Which of the following is a distinguishing characteristic of oligopoly?

Accepted Answer

A)  Firms are free to enter and exit the industry. 
B)  Natural or legal barriers prevent the entry of new firms. 
C)  A large number of firms compete. 
D)  No one firm's actions directly affect the actions of the other firms. 
A)  Firms are free to enter and exit the industry. 
B)  Natural or legal barriers prevent the entry of new firms. 
C)  A large number of firms compete. 
D)  No one firm's actions directly affect the actions of the other firms.

Question 9

Price wars are

Accepted Answer

A)  most likely when there is a monopoly. 
B)  most likely when there is perfect competition. 
C)  equally likely in the cases of monopoly, oligopoly and perfect competition. 
D)  most likely when there is oligopoly. 
A)  most likely when there is a monopoly. 
B)  most likely when there is perfect competition. 
C)  equally likely in the cases of monopoly, oligopoly and perfect competition. 
D)  most likely when there is oligopoly.

Question 10

Game theory can be used for studying which of the following types of market structure?

Accepted Answer

A)  Monopoly 
B)  Perfect competition 
C)  Monopolistic competition 
D)  Oligopoly 
A)  Monopoly 
B)  Perfect competition 
C)  Monopolistic competition 
D)  Oligopoly

Question 11

Game theory is a tool for studying _______.

Accepted Answer

A)  Nash behaviour 
B)  strategic behaviour 
C)  payoff dilemmas 
D)  rational dilemmas 
A)  Nash behaviour 
B)  strategic behaviour 
C)  payoff dilemmas 
D)  rational dilemmas

Question 12

Which of the following is a distinguishing characteristic of oligopoly?

Accepted Answer

A)  No one firm's actions directly affect the actions of the other firms. 
B)  Firms are free to enter and exit the industry. 
C)  A small number of firms compete. 
D)  Natural barriers cannot prevent the entry of new firms. 
A)  No one firm's actions directly affect the actions of the other firms. 
B)  Firms are free to enter and exit the industry. 
C)  A small number of firms compete. 
D)  Natural barriers cannot prevent the entry of new firms.

Question 13

Dr. Smith
  
-Libertyville has two optometrists, Dr. Smith and Dr. Jones. Each optometrist can choose to advertise his service or not. The incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. Which of the following statements correctly describes Dr. Smith's strategy given what Dr. Jones may do?

Accepted Answer

A)  Dr. Smith should advertise no matter what Dr. Jones does. 
B)  Dr. Smith should advertise only if Dr. Jones doesn't advertise. 
C)  Dr. Smith should advertise only if Dr. Jones advertises. 
D)  Dr. Smith should not advertise no matter what Dr. Jones does. 
A)  Dr. Smith should advertise no matter what Dr. Jones does. 
B)  Dr. Smith should advertise only if Dr. Jones doesn't advertise. 
C)  Dr. Smith should advertise only if Dr. Jones advertises. 
D)  Dr. Smith should not advertise no matter what Dr. Jones does.

Question 14

In the prisoners' dilemma game, when each player takes the best possible action given the action of the other player, _______.

Accepted Answer

A)  one player denies and one player confesses 
B)  a Nash equilibrium is reached 
C)  a competitive equilibrium is reached 
D)  both players deny 
A)  one player denies and one player confesses 
B)  a Nash equilibrium is reached 
C)  a competitive equilibrium is reached 
D)  both players deny

Question 15

Two firms, Alpha and Beta, produce identical computer hard drives. They have identical costs, and the hard drives they produce are identical. The industry is a natural duopoly. Alpha and Beta enter into a collusive agreement, according to which they split the market equally. If both firms comply with the agreement,

Accepted Answer

A)  together they will operate in a way indistinguishable from a monopoly. 
B)  the oligopoly will produce more hard drives than a profit- maximising monopoly would produce. 
C)  each firm will make zero economic profit. 
D)  the price of a hard drive will be equal to marginal cost. 
A)  together they will operate in a way indistinguishable from a monopoly. 
B)  the oligopoly will produce more hard drives than a profit- maximising monopoly would produce. 
C)  each firm will make zero economic profit. 
D)  the price of a hard drive will be equal to marginal cost.

Question 16

A cartel is a group of firms which agree to

Accepted Answer

A)  increase the amount they produce. 
B)  raise the price of their product. 
C)  behave competitively. 
D)  lower the price of their product. 
A)  increase the amount they produce. 
B)  raise the price of their product. 
C)  behave competitively. 
D)  lower the price of their product.

Question 17

A tit- for- tat strategy can be used in

Accepted Answer

A)  a single- play game but not a repeated game. 
B)  a single- play game or a repeated game. 
C)  a repeated game but not a single- play game. 
D)  neither a repeated game nor a single- play game. 
A)  a single- play game but not a repeated game. 
B)  a single- play game or a repeated game. 
C)  a repeated game but not a single- play game. 
D)  neither a repeated game nor a single- play game.

Question 18

Trade practices law _______ .

Accepted Answer

A)  always works in the public interest to maximise total surplus 
B)  can work in the public interest to maximise total surplus or in the self- interest of producers to maximise producer surpluses 
C)  always works in the self- interest of producers to maximise producer surpluses 
D)  encourages oligopolies to exhibit more monopolistic behaviours 
A)  always works in the public interest to maximise total surplus 
B)  can work in the public interest to maximise total surplus or in the self- interest of producers to maximise producer surpluses 
C)  always works in the self- interest of producers to maximise producer surpluses 
D)  encourages oligopolies to exhibit more monopolistic behaviours

Question 19

One of the reasons that concentration ratios are not a perfect measure of competitiveness is that they

Accepted Answer

A)  cannot be measured. 
B)  tell nothing about how high prices were in the past. 
C)  ignore potential competition. 
D)  do not measure how high the industry's prices are. 
A)  cannot be measured. 
B)  tell nothing about how high prices were in the past. 
C)  ignore potential competition. 
D)  do not measure how high the industry's prices are.

Question 20

Game theory is most useful for determining the outcome when _______.

Accepted Answer

A)  the market is dominated by a monopoly 
B)  prison terms are involved 
C)  monopolistic competition exists 
D)  the market structure is oligopoly 
A)  the market is dominated by a monopoly 
B)  prison terms are involved 
C)  monopolistic competition exists 
D)  the market structure is oligopoly

With barriers to the entry of new firms,

Oligopoly is

Asus -Dell and Asus must decide whether to lower their prices, based on the potential economic profits shown in the payoff matrix above (in millions of dollars). If the firms collude and don't cheat, Dell's profit is _ million and Asus's profit is _ million.

A market structure in which a small number of firms compete is called _______.

In a prisoners' dilemma game, which of the following strategies gives the best outcome for both Prisoners?

_______ is a group of firms that have colluded to limit their output and raise their price.

The practice of the only seller in a market charging a price at the highest level that would still inflict a loss on a new entrant into the market is called

Which of the following is a distinguishing characteristic of oligopoly?

Price wars are

Game theory can be used for studying which of the following types of market structure?

Game theory is a tool for studying _______.

Which of the following is a distinguishing characteristic of oligopoly?

In the prisoners' dilemma game, when each player takes the best possible action given the action of the other player, _______.

A cartel is a group of firms which agree to

A tit- for- tat strategy can be used in

Trade practices law _______ .

One of the reasons that concentration ratios are not a perfect measure of competitiveness is that they

Game theory is most useful for determining the outcome when _______.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Public Choices and Public Goods

Economics of the Environment

Monopoly and Its Regulation

Economic Inequality

Consumer Choices and Constraints

Producer Choices and Constraints

Perfect Competition

Monopolistic Competition

Decisions in Factor Markets

Filters

Exam 16: Oligopoly Games and Strategy

With barriers to the entry of new firms,

Oligopoly is

Asus -Dell and Asus must decide whether to lower their prices, based on the potential economic profits shown in the payoff matrix above (in millions of dollars). If the firms collude and don't cheat, Dell's profit is _______ million and Asus's profit is _______ million.

A market structure in which a small number of firms compete is called _______.

In a prisoners' dilemma game, which of the following strategies gives the best outcome for both Prisoners?

_______ is a group of firms that have colluded to limit their output and raise their price.

The practice of the only seller in a market charging a price at the highest level that would still inflict a loss on a new entrant into the market is called

Which of the following is a distinguishing characteristic of oligopoly?

Price wars are

Game theory can be used for studying which of the following types of market structure?

Game theory is a tool for studying _______.

Which of the following is a distinguishing characteristic of oligopoly?

In the prisoners' dilemma game, when each player takes the best possible action given the action of the other player, _______.

A cartel is a group of firms which agree to

A tit- for- tat strategy can be used in

Trade practices law _______ .

One of the reasons that concentration ratios are not a perfect measure of competitiveness is that they

Game theory is most useful for determining the outcome when _______.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Public Choices and Public Goods

Economics of the Environment

Monopoly and Its Regulation

Economic Inequality

Consumer Choices and Constraints

Producer Choices and Constraints

Perfect Competition

Monopolistic Competition

Decisions in Factor Markets

Filters

Asus -Dell and Asus must decide whether to lower their prices, based on the potential economic profits shown in the payoff matrix above (in millions of dollars). If the firms collude and don't cheat, Dell's profit is _ million and Asus's profit is _ million.