Question 1

The equilibrium in the prisoners' dilemma
i.minimizes the prisoners' combined jail time.
ii.has one prisoner confessing and the other denying.
iii.is a Nash equilibrium.

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  i, ii, and iii C

Question 2

"The Clayton Act repealed the Sherman Act so that only the Clayton Act remains in force." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect.The Sherman Act remains part of the law of the land.

Question 3

Economists are skeptical that ________ occurs very often because firms engaging in it are certain to suffer an economic loss for a period of time.

Accepted Answer

A)  a tying arrangement 
B)  inefficient resale price maintenance 
C)  predatory pricing 
D)  efficient resale price maintenance 
E)  exclusive dealing 
A)  a tying arrangement 
B)  inefficient resale price maintenance 
C)  predatory pricing 
D)  efficient resale price maintenance 
E)  exclusive dealing C

Question 4

$$\begin{array} { c c } 
\text { Firm } & \begin{array} { c } 
\text { Market share } \
\text { (percent) }
\end{array} \
\hline \text { A } & 15 \
\text { B } & 15 \
\text { C } & 15 \
\text { D } & 10 \
\text { E } & 10 \
\text { F } & 10 \
\text { G } & 10 \
\text { H } & 5 \
\text { I } & 5 \
\text { J } & 5
\end{array}$$
-A market has ten firms,whose market shares are given in the table above.
a.If firms I and J wanted to merge,according to the Department of Justice guidelines,would the Federal Trade Commission challenge the merger?
b.If firms A and B wanted to merge,according to the Federal Trade Commission guidelines,would the Federal Trade Commission challenge the merger?

Accepted Answer

a.The decision whether to challenge the

Question 5

If Polka Cola prevents all of its retail outlets from selling any other competing soft drink,it is engaged in

Accepted Answer

A)  a tying agreement. 
B)  a requirement contract. 
C)  an exclusive deal. 
D)  territorial confinement. 
E)  resale price maintenance. 
A)  a tying agreement. 
B)  a requirement contract. 
C)  an exclusive deal. 
D)  territorial confinement. 
E)  resale price maintenance.

Question 6

If firms in an oligopolistic industry consistently cut their price to sell more output,what price and output will result?

Accepted Answer

A)  the monopoly price and output 
B)  the competitive price and output 
C)  the monopolistically competitive price and output 
D)  a price lower than the competitive price and less output than the competitive amount 
E)  a price lower than the competitive price and more output than the competitive amount 
A)  the monopoly price and output 
B)  the competitive price and output 
C)  the monopolistically competitive price and output 
D)  a price lower than the competitive price and less output than the competitive amount 
E)  a price lower than the competitive price and more output than the competitive amount

Question 7

Which of the following can be games played by firms in an oligopoly?
i.choosing how much to spend on advertising
ii.choosing how much to spend on R&D
iii.choosing to enter a legal duopoly

Accepted Answer

A)  i and ii 
B)  i and iii 
C)  ii and iii 
D)  ii only 
E)  iii only 
A)  i and ii 
B)  i and iii 
C)  ii and iii 
D)  ii only 
E)  iii only

Question 8

The Federal Trade Commission uses ________ to help determine whether to challenge a possible merger.

Accepted Answer

A)  the Sherman Act 
B)  the Clayton Act 
C)  the Herfindahl-Hirschman Index 
D)  the antitrust law of natural monopolies 
E)  the four-firm concentration ratio 
A)  the Sherman Act 
B)  the Clayton Act 
C)  the Herfindahl-Hirschman Index 
D)  the antitrust law of natural monopolies 
E)  the four-firm concentration ratio

Question 9

-Two firms are introducing an improved version of their toothpastes.They must decide whether or not to advertise their products.The table above gives the payoff matrix in terms of the economic profits they expect in each case.The payoffs are in terms of millions of dollars.
a.What is the Nash equilibrium for the game?
b.If they could cooperate,what strategy would they prefer? What would be the payoff?

Accepted Answer

a.The Nash equilibrium has each firm adv

Question 10

"If firms in an oligopoly operate as a monopoly,the industry produces the most output and if they operate as perfect competitors,the industry produces the least output." Is the previous statement correct or incorrect? Why?

Accepted Answer

The statement is incorrect; it reverses

Question 11

The prisoners' dilemma is similar to the problem faced by firms in an oligopoly in the United States because

Accepted Answer

A)  mutual interdependence exists, and collusion is illegal in the United States, so the firms cannot legally communicate. 
B)  collusion is legal in the United States, and firms can communicate their pricing decisions to each other. 
C)  failure to cooperate leads to better outcomes than cooperation. 
D)  private prisons are run by oligopolies. 
E)  the firms can communicate but mutual interdependence exists. 
A)  mutual interdependence exists, and collusion is illegal in the United States, so the firms cannot legally communicate. 
B)  collusion is legal in the United States, and firms can communicate their pricing decisions to each other. 
C)  failure to cooperate leads to better outcomes than cooperation. 
D)  private prisons are run by oligopolies. 
E)  the firms can communicate but mutual interdependence exists.

Question 12

A cartel is

Accepted Answer

A)  another name for a firm in an oligopoly. 
B)  a collusive agreement among a number of firms. 
C)  a government body that regulates an industry. 
D)  an antitrust law. 
E)  a type of regulation that focuses on quantities rather than price. 
A)  another name for a firm in an oligopoly. 
B)  a collusive agreement among a number of firms. 
C)  a government body that regulates an industry. 
D)  an antitrust law. 
E)  a type of regulation that focuses on quantities rather than price.

Question 13

Describe the characteristics of an oligopoly.

Accepted Answer

There are a small number of firms that a

Question 14

Resale price maintenance is efficient if

Accepted Answer

A)  it is used in conjunction with a tying arrangement. 
B)  the manufacturer does not engage in predatory pricing. 
C)  retailers charge the lowest price for the product. 
D)  it enables a manufacturer to induce an efficient standard of service from retailers. 
E)  it takes the place of an exclusive deal. 
A)  it is used in conjunction with a tying arrangement. 
B)  the manufacturer does not engage in predatory pricing. 
C)  retailers charge the lowest price for the product. 
D)  it enables a manufacturer to induce an efficient standard of service from retailers. 
E)  it takes the place of an exclusive deal.

Question 15

-The figure above shows the market demand curve and the ATC curve for a firm.Each firm in the market has the same ATC curve.If the firms in the industry agree to form a cartel,the firms in the industry make an economic profit if there are ________ firms,each producing ________ units per hour.

Accepted Answer

A)  3; 4,000 
B)  4; 3,000 
C)  2; 6,000 
D)  2; 4,000 
E)  2; 12,000 
A)  3; 4,000 
B)  4; 3,000 
C)  2; 6,000 
D)  2; 4,000 
E)  2; 12,000

Question 16

What is meant by the term "exclusive dealing"? Give an example of an exclusive deal.When is it illegal?

Accepted Answer

Exclusive dealing is a contract that pre

Question 17

What three characteristics do all games have in common?

Accepted Answer

The all ha

Question 18

A Nash equilibrium occurs

Accepted Answer

A)  when each player acts without considering the actions of the other player. 
B)  when each player takes the best possible action given the action of the other player. 
C)  only when players use the tit-for-tat strategy. 
D)  only when the game is played in Nashville, TN. 
E)  when each player takes the action that makes the combined payoff for all players as large as possible. 
A)  when each player acts without considering the actions of the other player. 
B)  when each player takes the best possible action given the action of the other player. 
C)  only when players use the tit-for-tat strategy. 
D)  only when the game is played in Nashville, TN. 
E)  when each player takes the action that makes the combined payoff for all players as large as possible.

Question 19

-In the above figure,the output of an oligopoly will range between

Accepted Answer

A)  0 and Q₁. 
B)  Q₁ and Q₂. 
C)  Q₁ and Q₃. 
D)  Q₂ and Q₃. 
E)  0 and Q₂. 
A)  0 and Q₁. 
B)  Q₁ and Q₂. 
C)  Q₁ and Q₃. 
D)  Q₂ and Q₃. 
E)  0 and Q₂.

Question 20

The first antitrust act was ________ passed in ________.

Accepted Answer

A)  the Clayton Act; 1890 
B)  the Sherman Act; 1890 
C)  the Clinton Act; 1999 
D)  the Rockefeller Act; 1890 
E)  the Clayton Act; 1914 
A)  the Clayton Act; 1890 
B)  the Sherman Act; 1890 
C)  the Clinton Act; 1999 
D)  the Rockefeller Act; 1890 
E)  the Clayton Act; 1914

The equilibrium in the prisoners' dilemma i.minimizes the prisoners' combined jail time. ii.has one prisoner confessing and the other denying. iii.is a Nash equilibrium.

"The Clayton Act repealed the Sherman Act so that only the Clayton Act remains in force." Is the previous statement correct or incorrect?

Economists are skeptical that ________ occurs very often because firms engaging in it are certain to suffer an economic loss for a period of time.

If Polka Cola prevents all of its retail outlets from selling any other competing soft drink,it is engaged in

If firms in an oligopolistic industry consistently cut their price to sell more output,what price and output will result?

Which of the following can be games played by firms in an oligopoly? i.choosing how much to spend on advertising ii.choosing how much to spend on R&D iii.choosing to enter a legal duopoly

The Federal Trade Commission uses ________ to help determine whether to challenge a possible merger.

"If firms in an oligopoly operate as a monopoly,the industry produces the most output and if they operate as perfect competitors,the industry produces the least output." Is the previous statement correct or incorrect? Why?

The prisoners' dilemma is similar to the problem faced by firms in an oligopoly in the United States because

A cartel is

Describe the characteristics of an oligopoly.

Resale price maintenance is efficient if

-The figure above shows the market demand curve and the ATC curve for a firm.Each firm in the market has the same ATC curve.If the firms in the industry agree to form a cartel,the firms in the industry make an economic profit if there are firms,each producing units per hour.

What is meant by the term "exclusive dealing"? Give an example of an exclusive deal.When is it illegal?

What three characteristics do all games have in common?

A Nash equilibrium occurs

-In the above figure,the output of an oligopoly will range between

The first antitrust act was passed in .

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Markets for Factors of Production

Economic Inequality

Filters

Exam 18: Oligopoly

The equilibrium in the prisoners' dilemma i.minimizes the prisoners' combined jail time. ii.has one prisoner confessing and the other denying. iii.is a Nash equilibrium.

"The Clayton Act repealed the Sherman Act so that only the Clayton Act remains in force." Is the previous statement correct or incorrect?

Economists are skeptical that ________ occurs very often because firms engaging in it are certain to suffer an economic loss for a period of time.

If Polka Cola prevents all of its retail outlets from selling any other competing soft drink,it is engaged in

If firms in an oligopolistic industry consistently cut their price to sell more output,what price and output will result?

Which of the following can be games played by firms in an oligopoly? i.choosing how much to spend on advertising ii.choosing how much to spend on R&D iii.choosing to enter a legal duopoly

The Federal Trade Commission uses ________ to help determine whether to challenge a possible merger.

"If firms in an oligopoly operate as a monopoly,the industry produces the most output and if they operate as perfect competitors,the industry produces the least output." Is the previous statement correct or incorrect? Why?

The prisoners' dilemma is similar to the problem faced by firms in an oligopoly in the United States because

A cartel is

Describe the characteristics of an oligopoly.

Resale price maintenance is efficient if

-The figure above shows the market demand curve and the ATC curve for a firm.Each firm in the market has the same ATC curve.If the firms in the industry agree to form a cartel,the firms in the industry make an economic profit if there are ________ firms,each producing ________ units per hour.

What is meant by the term "exclusive dealing"? Give an example of an exclusive deal.When is it illegal?

What three characteristics do all games have in common?

A Nash equilibrium occurs

-In the above figure,the output of an oligopoly will range between

The first antitrust act was ________ passed in ________.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Markets for Factors of Production

Economic Inequality

Filters

-The figure above shows the market demand curve and the ATC curve for a firm.Each firm in the market has the same ATC curve.If the firms in the industry agree to form a cartel,the firms in the industry make an economic profit if there are firms,each producing units per hour.

The first antitrust act was passed in .