Question 1

The effect of television ads has been reduced by technology and the Internet.

Accepted Answer

A) True 
 B)False  True

Question 2

A solution or best response to a situation that depends on what is MOST "obvious" and is used in situations in which there is more than one Nash equilibrium is called a

Accepted Answer

A)  point of decision. 
B)  focal point. 
C)  payoff equilibrium. 
D)  bliss point. 
A)  point of decision. 
B)  focal point. 
C)  payoff equilibrium. 
D)  bliss point. B

Question 3

(Table) Referring to the payoff matrix for Norm and Pete (with Norm's profit in plain text and Pete's profit in italics), what is the MOST likely outcome of this noncooperative game?
$\begin{array}{c}
 \quad  \quad  \quad  \quad  \quad  \quad  \quad \text { Pete's Pasta Dinners } \
\begin{array}{|l|l|ll|ll|}
\hline & & {\text { High Price }} & &{\text { Price }} \
\hline \text {Norm's Noodle  Bowls } & \text { High Price } & \$ 4,000 & \$ 4,500 & \$ 700 & \$ 3,500 \
\hline  &\text { Low Price } & \$ 2,800 & \$ 500 & \$ 3,000 & \$ 3,700 \
\hline
\end{array}\end{array}$

Accepted Answer

A)  Both charge a high price. 
B)  Both charge a low price. 
C)  Norm charges a high price and Pete charges a low price. 
D)  Pete charges a high price and Norm charges a low price. 
A)  Both charge a high price. 
B)  Both charge a low price. 
C)  Norm charges a high price and Pete charges a low price. 
D)  Pete charges a high price and Norm charges a low price. B

Question 4

There is easy entry and exit into an oligopolistic market.

Accepted Answer

A) True 
 B)False

Question 5

What are the characteristics of oligopolies?

Accepted Answer

All oligopoly models share several commo

Question 6

In a Nash equilibrium

Accepted Answer

A)  each player tries to maximize the welfare of the other players. 
B)  each player tries to minimize the welfare of the other players. 
C)  one player is made better off at the expense of another player. 
D)  each player selects the best possible strategy, given the other player's intended strategies. 
A)  each player tries to maximize the welfare of the other players. 
B)  each player tries to minimize the welfare of the other players. 
C)  one player is made better off at the expense of another player. 
D)  each player selects the best possible strategy, given the other player's intended strategies.

Question 7

What is TRUE of a Nash equilibrium?

Accepted Answer

A)  Both players achieve their highest possible payoff among all possible outcomes. 
B)  Both players must have a dominant strategy. 
C)  The outcome does not maximize all players' expected payoffs. 
D)  No individual player can do better by unilaterally changing her or his mind. 
A)  Both players achieve their highest possible payoff among all possible outcomes. 
B)  Both players must have a dominant strategy. 
C)  The outcome does not maximize all players' expected payoffs. 
D)  No individual player can do better by unilaterally changing her or his mind.

Question 8

A cartel is an oligopoly model in which firms work with one another as though they were a single firm.

Accepted Answer

A) True 
 B)False

Question 9

One of the practical implications of the existence of the Nash equilibrium is that game theory can be fruitfully used to analyze real-world economic problems.

Accepted Answer

A) True 
 B)False

Question 10

It is easy to enter into and exit from which of these industrial structures?

Accepted Answer

A)  monopoly 
B)  natural monopoly 
C)  oligopoly 
D)  monopolistic competition 
A)  monopoly 
B)  natural monopoly 
C)  oligopoly 
D)  monopolistic competition

Question 11

If consumer expectations of a branded product are met

Accepted Answer

A)  no monopoly power is present. 
B)  consumers are willing to pay more for the product. 
C)  a perfectly elastic demand curve results. 
D)  a perfectly elastic supply curve results. 
A)  no monopoly power is present. 
B)  consumers are willing to pay more for the product. 
C)  a perfectly elastic demand curve results. 
D)  a perfectly elastic supply curve results.

Question 12

Describe the reasons that, in the long run, monopolistically competitive firms earn only normal profits. Draw a graph illustrating the long-run equilibrium.

Accepted Answer

If firms in a monopolistically competiti

Question 13

Monopolistic competition is like perfect competition in that they both

Accepted Answer

A)  have numerous competitors. 
B)  put labels on their products. 
C)  erect barriers to entry. 
D)  make zero economic profit in the short run. 
A)  have numerous competitors. 
B)  put labels on their products. 
C)  erect barriers to entry. 
D)  make zero economic profit in the short run.

Question 14

If a cartel member is considering cheating in order to earn additional profits, it should

Accepted Answer

A)  increase the price of the goods it sells at the quota quantity. 
B)  decrease the price of the goods it sells at the quota quantity. 
C)  increase the quantity it sells at the quota price. 
D)  decrease the quantity it sells at the quota price. 
A)  increase the price of the goods it sells at the quota quantity. 
B)  decrease the price of the goods it sells at the quota quantity. 
C)  increase the quantity it sells at the quota price. 
D)  decrease the quantity it sells at the quota price.

Question 15

Monopolies and monopolistically competitive firms generally make the same amount of profit in the short run.

Accepted Answer

A) True 
 B)False

Question 16

If everyone drives his or her car to work, taking the city bus would take a lot of time due to the congestion caused by everyone driving his or her car, so you would also choose to drive your car. But if everybody rides the bus to work, the roads would be less congested, so you would again choose to drive your car. In this example, driving your car would be classified as a

Accepted Answer

A)  prisoner's dilemma. 
B)  dominant strategy. 
C)  Nash equilibrium. 
D)  focal point. 
A)  prisoner's dilemma. 
B)  dominant strategy. 
C)  Nash equilibrium. 
D)  focal point.

Question 17

The person who most influenced strategic economic analysis and who developed modern game theory is Adam Smith.

Accepted Answer

A) True 
 B)False

Question 18

(Table) Referring to the payoff matrix for Norm and Pete (with Norm's profit in plain text and Pete's profit in italics), which statement BEST describes the scenario displayed in the table?
$\begin{array}{c}
 \quad  \quad  \quad  \quad  \quad  \quad  \quad \text { Pete's Pasta Dinners } \
\begin{array}{|l|l|ll|ll|}
\hline & & {\text { High Price }} & &{\text { Price }} \
\hline \text {Norm's Noodle  Bowls } & \text { High Price } & \$ 4,000 & \$ 4,500 & \$ 700 & \$ 3,500 \
\hline  &\text { Low Price } & \$ 2,800 & \$ 500 & \$ 3,000 & \$ 3,700 \
\hline
\end{array}\end{array}$

Accepted Answer

A)  It depicts a prisoner's dilemma. 
B)  Neither Norm nor Pete has a dominant strategy. 
C)  Norm's dominant strategy is a high price. 
D)  Pete has a dominant strategy, but Norm does not. 
A)  It depicts a prisoner's dilemma. 
B)  Neither Norm nor Pete has a dominant strategy. 
C)  Norm's dominant strategy is a high price. 
D)  Pete has a dominant strategy, but Norm does not.

Question 19

Why is the market for cardiologists (heart specialists) more likely to be oligopolistic than the market for family practice doctors?

Accepted Answer

A)  There are fewer potential patients for cardiologists than for family practice doctors. 
B)  Higher incomes for family practice doctors create greater incentive for medical students to enter the field of family practice. 
C)  The extra years of training needed to become a cardiologist create a higher barrier to entry than to the field of family practice. 
D)  Cardiologists have lower ATC and MC curves than family practice doctors. 
A)  There are fewer potential patients for cardiologists than for family practice doctors. 
B)  Higher incomes for family practice doctors create greater incentive for medical students to enter the field of family practice. 
C)  The extra years of training needed to become a cardiologist create a higher barrier to entry than to the field of family practice. 
D)  Cardiologists have lower ATC and MC curves than family practice doctors.

Question 20

(Table) Boeing and Airbus can either comply with a cartel agreement or cheat. Based on the table, where Boeing's payoff is listed first in each outcome, if Boeing cheats on the cartel agreement and Airbus complies with the agreement, Boeing's profit will be
$\begin{array}{c}
\quad \quad \quad \quad \quad \quad \quad \quad \text { Airbus }\
\begin{array}{ccc}
&& \text { Cheat } & \text { Comply } \
 \text {Boeing   } &\text { Cheat } & \$ 0, \$ 0 & \$ 3 \text { million, }-\$ 1 \text { million } \
&\text { Comply } & -\$ 1 \text { million, } \$ 3 \text { milton } & \$ 2 \text { million, } \$ 2 \text { million }
\end{array}\end{array}$

Accepted Answer

A)  $3 million. 
B)  $2 million. 
C)  -$1 million. 
D)  Boeing will make no profit. 
A)  $3 million. 
B)  $2 million. 
C)  -$1 million. 
D)  Boeing will make no profit.

The effect of television ads has been reduced by technology and the Internet.

A solution or best response to a situation that depends on what is MOST "obvious" and is used in situations in which there is more than one Nash equilibrium is called a

There is easy entry and exit into an oligopolistic market.

What are the characteristics of oligopolies?

In a Nash equilibrium

What is TRUE of a Nash equilibrium?

A cartel is an oligopoly model in which firms work with one another as though they were a single firm.

One of the practical implications of the existence of the Nash equilibrium is that game theory can be fruitfully used to analyze real-world economic problems.

It is easy to enter into and exit from which of these industrial structures?

If consumer expectations of a branded product are met

Describe the reasons that, in the long run, monopolistically competitive firms earn only normal profits. Draw a graph illustrating the long-run equilibrium.

Monopolistic competition is like perfect competition in that they both

If a cartel member is considering cheating in order to earn additional profits, it should

Monopolies and monopolistically competitive firms generally make the same amount of profit in the short run.

The person who most influenced strategic economic analysis and who developed modern game theory is Adam Smith.

Why is the market for cardiologists (heart specialists) more likely to be oligopolistic than the market for family practice doctors?

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Elasticity

Consumer Choice and Demand

Production and Costs

Perfect Competition

Monopoly

The Labor Market

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Exam 10: Monopolistic Competition, Oligopoly, and Game Theory

The effect of television ads has been reduced by technology and the Internet.

A solution or best response to a situation that depends on what is MOST "obvious" and is used in situations in which there is more than one Nash equilibrium is called a

There is easy entry and exit into an oligopolistic market.

What are the characteristics of oligopolies?

In a Nash equilibrium

What is TRUE of a Nash equilibrium?

A cartel is an oligopoly model in which firms work with one another as though they were a single firm.

One of the practical implications of the existence of the Nash equilibrium is that game theory can be fruitfully used to analyze real-world economic problems.

It is easy to enter into and exit from which of these industrial structures?

If consumer expectations of a branded product are met

Describe the reasons that, in the long run, monopolistically competitive firms earn only normal profits. Draw a graph illustrating the long-run equilibrium.

Monopolistic competition is like perfect competition in that they both

If a cartel member is considering cheating in order to earn additional profits, it should

Monopolies and monopolistically competitive firms generally make the same amount of profit in the short run.

The person who most influenced strategic economic analysis and who developed modern game theory is Adam Smith.

Why is the market for cardiologists (heart specialists) more likely to be oligopolistic than the market for family practice doctors?

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Elasticity

Consumer Choice and Demand

Production and Costs

Perfect Competition

Monopoly

The Labor Market

Land, Capital Markets, and Innovation

Externalities and Public Goods

Network Goods

Poverty and Income Distribution

International Trade

Filters