Question 1

In a three firm market where the market share split is 50%,30% & 20%,what is the Herfindahl index?

Accepted Answer

.38

Question 2

Which of the following is not a characteristic of substitute products X and Y?

Accepted Answer

A) They have the same or similar product performance characteristics 
B) They have the same or similar occasions for use 
C) They are sold in the same geographic market 
D) Customers are indifferent between X and Y 
E) A price increase of X while keeping the Y's price constant leads to a drop in purchases of X and an increase in purchases of Y 
A) They have the same or similar product performance characteristics 
B) They have the same or similar occasions for use 
C) They are sold in the same geographic market 
D) Customers are indifferent between X and Y 
E) A price increase of X while keeping the Y's price constant leads to a drop in purchases of X and an increase in purchases of Y D

Question 3

What is a catchment area?

Accepted Answer

A) The area of a firm's customers as defined by traditional county lines 
B) The area a firm's customers shops due to idiosyncratic reasons 
C) The area a firm operates in which it has no competition 
D) The area where a firms customer will go to shop in the event the firm were to raise prices 
E) The contiguous area from which a firm draws most of its customers 
A) The area of a firm's customers as defined by traditional county lines 
B) The area a firm's customers shops due to idiosyncratic reasons 
C) The area a firm operates in which it has no competition 
D) The area where a firms customer will go to shop in the event the firm were to raise prices 
E) The contiguous area from which a firm draws most of its customers E

Question 4

Of the following industries listed,which one is generally thought of as having the highest search costs?

Accepted Answer

A) Consumer packaged goods 
B) Electronics 
C) Physician service 
D) Automotive 
E) Apparel 
A) Consumer packaged goods 
B) Electronics 
C) Physician service 
D) Automotive 
E) Apparel

Question 5

What is defined by the number and size distribution of the firms in a market?

Accepted Answer

A) Herfindahl index 
B) Market share 
C) Market structure 
D) SSNIP 
E) Numbers-equivalent of firms 
A) Herfindahl index 
B) Market share 
C) Market structure 
D) SSNIP 
E) Numbers-equivalent of firms

Question 6

What term does Sutton use to describe the costs of establishing a credible brand?

Accepted Answer

A) Brand investment 
B) Cost of brand establishment 
C) Cost of advertising 
D) Endogenous sunk cost 
E) Market establishment cost 
A) Brand investment 
B) Cost of brand establishment 
C) Cost of advertising 
D) Endogenous sunk cost 
E) Market establishment cost

Question 7

In what type of market do the actions of individual firms materially affect the overall market?

Accepted Answer

A) Perfectly competitive 
B) Monopolistically competitive 
C) Oligopoly 
D) Monopoly 
E) Diversified 
A) Perfectly competitive 
B) Monopolistically competitive 
C) Oligopoly 
D) Monopoly 
E) Diversified

Question 8

Which U.S.agency is responsible for preventing anticompetitive conduct?

Accepted Answer

A) Securities and Exchange Commission 
B) Department of Justice 
C) Office of Fair Trading 
D) Competition Commission 
E) Competition Authority 
A) Securities and Exchange Commission 
B) Department of Justice 
C) Office of Fair Trading 
D) Competition Commission 
E) Competition Authority

Question 9

What group/type of preferences describes when tastes differ markedly from one person to the next and result in horizontal differentiation?

Accepted Answer

A) Search preferences 
B) Horizontal preferences 
C) Consumer preferences 
D) Spatial preferences 
E) Idiosyncratic preferences 
A) Search preferences 
B) Horizontal preferences 
C) Consumer preferences 
D) Spatial preferences 
E) Idiosyncratic preferences

Question 10

What criterion developed by the DOJ is used to identify all potential competitors within the market?

Accepted Answer

A) Market competition criterion 
B) DOJ competition criterion 
C) SSNIP criterion 
D) SIC criterion 
E) DOJ market criterion 
A) Market competition criterion 
B) DOJ competition criterion 
C) SSNIP criterion 
D) SIC criterion 
E) DOJ market criterion

Question 11

What term describes the differentiation of a product when it is unambiguously better or worse than competing products?

Accepted Answer

A) Horizontal differentiation 
B) Vertical differentiation 
C) Idiosyncratic differentiation 
D) Spatial differentiation 
E) Non-price differentiation 
A) Horizontal differentiation 
B) Vertical differentiation 
C) Idiosyncratic differentiation 
D) Spatial differentiation 
E) Non-price differentiation

Question 12

Suppose two hot dog stands,Al's & Bob's,position themselves at different ends of a 1000 yard stretch of beach.Assume there are 100 beach goers evenly distributed along the stretch of beach and travel costs are $.01 per yard.If Al charges $1 for his hot dogs and Bob charges $2 for his hot dogs,what is the cost of purchasing a hot dog from each stand for a hungry beachgoer situated at a position D yards from Al's end of the beach? How many consumers will go to Al's and how many will go to Bob's?

Accepted Answer

Cost of Al's=1+.01D; Cost of B

Question 13

In a two firm market,let the marginal cost of producing a product be $20 and the market demand for their products be given by Q₁=12-P₁+P₂ and Q₂=12-P₂+P₁.What is the Bertrand equilibrium price each firm would produce in this market?

Accepted Answer

The answer of In a two firm market,let the marginal...

Question 14

Which of the following market structures generally has a Herfindahl index at .6 and above (usually having light competition,unless threatened by entry)?

Accepted Answer

A) Perfect competition 
B) Monopolistic competition 
C) Oligopoly 
D) Monopoly 
E) N-firm 
A) Perfect competition 
B) Monopolistic competition 
C) Oligopoly 
D) Monopoly 
E) N-firm

Question 15

What empirical method generally is used to measure the degree to which products substitute for each other?

Accepted Answer

A) Cross-price elasticity 
B) Price comparison 
C) Relatedness factor 
D) Standard Industrial Classification 
E) SSNIP 
A) Cross-price elasticity 
B) Price comparison 
C) Relatedness factor 
D) Standard Industrial Classification 
E) SSNIP

Question 16

What term describes the differentiation of a product when only some consumers prefer it to competing products (holding price equal)?

Accepted Answer

A) Horizontal differentiation 
B) Vertical differentiation 
C) Idiosyncratic differentiation 
D) Spatial differentiation 
E) Non-price differentiation 
A) Horizontal differentiation 
B) Vertical differentiation 
C) Idiosyncratic differentiation 
D) Spatial differentiation 
E) Non-price differentiation

Question 17

What kind of competition is generally described as quantity competition?

Accepted Answer

A) Bertrand competition 
B) Cournot competition 
C) Perfect competition 
D) Chamberlin competition 
E) Monopolistic competition 
A) Bertrand competition 
B) Cournot competition 
C) Perfect competition 
D) Chamberlin competition 
E) Monopolistic competition

Question 18

The average PCM (percentage contribution margin)in a Cournot equilibrium is given by the formula PCM=H/η,where H is the Herfindahl index and η is the price elasticity of market demand.Given this equation,which of the following statements is true?

Accepted Answer

A) The more concentrated the industry, the smaller the PCMs in equilibrium 
B) The industry concentration only raises the PCMs in equilibrium 
C) The industry concentration has no bearing on PCM size in equilibrium 
D) The less concentrated the industry, the larger the PCMs in equilibrium 
E) The less concentrated the industry, the smaller the PCMs in equilibrium 
A) The more concentrated the industry, the smaller the PCMs in equilibrium 
B) The industry concentration only raises the PCMs in equilibrium 
C) The industry concentration has no bearing on PCM size in equilibrium 
D) The less concentrated the industry, the larger the PCMs in equilibrium 
E) The less concentrated the industry, the smaller the PCMs in equilibrium

Question 19

In what type of market structure to sellers set identical prices and are prices generally driven down to marginal costs?

Accepted Answer

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

Question 20

In a two firm market,let the marginal cost of producing a product be $20,the market demand be given by the function Q=60-P/2 and the market quantity be equal to Q₁+Q₂.What is the Cournot equilibrium quantity each firm would produce in this market?

Accepted Answer

50/3 units

In a three firm market where the market share split is 50%,30% & 20%,what is the Herfindahl index?

Which of the following is not a characteristic of substitute products X and Y?

What is a catchment area?

Of the following industries listed,which one is generally thought of as having the highest search costs?

What is defined by the number and size distribution of the firms in a market?

What term does Sutton use to describe the costs of establishing a credible brand?

In what type of market do the actions of individual firms materially affect the overall market?

Which U.S.agency is responsible for preventing anticompetitive conduct?

What group/type of preferences describes when tastes differ markedly from one person to the next and result in horizontal differentiation?

What criterion developed by the DOJ is used to identify all potential competitors within the market?

What term describes the differentiation of a product when it is unambiguously better or worse than competing products?

In a two firm market,let the marginal cost of producing a product be $20 and the market demand for their products be given by Q₁=12-P₁+P₂ and Q₂=12-P₂+P₁.What is the Bertrand equilibrium price each firm would produce in this market?

Which of the following market structures generally has a Herfindahl index at .6 and above (usually having light competition,unless threatened by entry)?

What empirical method generally is used to measure the degree to which products substitute for each other?

What term describes the differentiation of a product when only some consumers prefer it to competing products (holding price equal)?

What kind of competition is generally described as quantity competition?

The average PCM (percentage contribution margin)in a Cournot equilibrium is given by the formula PCM=H/η,where H is the Herfindahl index and η is the price elasticity of market demand.Given this equation,which of the following statements is true?

In what type of market structure to sellers set identical prices and are prices generally driven down to marginal costs?

In a two firm market,let the marginal cost of producing a product be $20,the market demand be given by the function Q=60-P/2 and the market quantity be equal to Q₁+Q₂.What is the Cournot equilibrium quantity each firm would produce in this market?

Basic Microeconomic Principles

Economies of Scale and Scope

Agency and Coordination

The Power of Principles - an Historical Perspective

The Vertical Boundaries of the Firm

Organizing Vertical Boundariesvertical Integration and Its Alternatives

Diversificationpart Threemarket and Competitive Analysis

Strategic Commitment

The Dynamics of Pricing Rivalry

Entry and Exit

Industry Analysispart Fourstrategic Position and Dynamics

Strategic Positioning for Competitive Advantage

Sustaining Competitive Advantage

The Origins of Competitive Advantage, innovation, evolution, and Environment part Five internal Organization

Performance Measurement and Incentives in Firms

Strategy and Structure

Environment, power, and Culture

Filters

Exam 8: Competitors and Competition

In a three firm market where the market share split is 50%,30% & 20%,what is the Herfindahl index?

Which of the following is not a characteristic of substitute products X and Y?

What is a catchment area?

Of the following industries listed,which one is generally thought of as having the highest search costs?

What is defined by the number and size distribution of the firms in a market?

What term does Sutton use to describe the costs of establishing a credible brand?

In what type of market do the actions of individual firms materially affect the overall market?

Which U.S.agency is responsible for preventing anticompetitive conduct?

What group/type of preferences describes when tastes differ markedly from one person to the next and result in horizontal differentiation?

What criterion developed by the DOJ is used to identify all potential competitors within the market?

What term describes the differentiation of a product when it is unambiguously better or worse than competing products?

In a two firm market,let the marginal cost of producing a product be $20 and the market demand for their products be given by Q₁=12-P₁+P₂ and Q₂=12-P₂+P₁.What is the Bertrand equilibrium price each firm would produce in this market?

Which of the following market structures generally has a Herfindahl index at .6 and above (usually having light competition,unless threatened by entry)?

What empirical method generally is used to measure the degree to which products substitute for each other?

What term describes the differentiation of a product when only some consumers prefer it to competing products (holding price equal)?

What kind of competition is generally described as quantity competition?

The average PCM (percentage contribution margin)in a Cournot equilibrium is given by the formula PCM=H/η,where H is the Herfindahl index and η is the price elasticity of market demand.Given this equation,which of the following statements is true?

In what type of market structure to sellers set identical prices and are prices generally driven down to marginal costs?

In a two firm market,let the marginal cost of producing a product be $20,the market demand be given by the function Q=60-P/2 and the market quantity be equal to Q₁+Q₂.What is the Cournot equilibrium quantity each firm would produce in this market?

Basic Microeconomic Principles

Economies of Scale and Scope

Agency and Coordination

The Power of Principles - an Historical Perspective

The Vertical Boundaries of the Firm

Organizing Vertical Boundariesvertical Integration and Its Alternatives

Diversificationpart Threemarket and Competitive Analysis

Strategic Commitment

The Dynamics of Pricing Rivalry

Entry and Exit

Industry Analysispart Fourstrategic Position and Dynamics

Strategic Positioning for Competitive Advantage

Sustaining Competitive Advantage

The Origins of Competitive Advantage, innovation, evolution, and Environment part Five internal Organization

Performance Measurement and Incentives in Firms

Strategy and Structure

Environment, power, and Culture

Filters