Question 1

The concentration ratio for an industry can be increased almost overnight by

Accepted Answer

A)  collusion among the leading four firms 
B)  the creation of a cartel 
C)  a conglomerate merger 
D)  a vertical merger 
E)  a horizontal merger 
A)  collusion among the leading four firms 
B)  the creation of a cartel 
C)  a conglomerate merger 
D)  a vertical merger 
E)  a horizontal merger

Question 2

Examples used in the text to illustrate "competition among the few" include all of the following industries except

Accepted Answer

A)  cereal 
B)  airline 
C)  fish 
D)  automobile 
E)  baby food 
A)  cereal 
B)  airline 
C)  fish 
D)  automobile 
E)  baby food

Question 3

If one firm has 80 percent of industry sales, while the remaining four firms share the other 20 percent of sales, then we can conclude that this is a(n)

Accepted Answer

A)  monopoly 
B)  price-taker market 
C)  low concentration ratio industry 
D)  balanced oligopoly 
E)  unbalanced oligopoly 
A)  monopoly 
B)  price-taker market 
C)  low concentration ratio industry 
D)  balanced oligopoly 
E)  unbalanced oligopoly

Question 4

Although highly unlikely in the real world, in a perfectly balanced oligopoly with eightfirms, the market share of each firm is

Accepted Answer

A)  16.2 percent 
B)  14.0 percent 
C)  13.5 percent 
D)  12.5 percent 
E)  8.0 percent 
A)  16.2 percent 
B)  14.0 percent 
C)  13.5 percent 
D)  12.5 percent 
E)  8.0 percent

Question 5

-In Exhibit L-2, the table shows the market shares of five firms that operate in three different industries. Using the HHI, the most concentrated of these three industries is(are)

Accepted Answer

A)  Industry I 
B)  Industry II 
C)  Industry III 
D)  Industries I and III (their HHIs are identical) 
E)  Industries II and III (their HHIs are identical) 
A)  Industry I 
B)  Industry II 
C)  Industry III 
D)  Industries I and III (their HHIs are identical) 
E)  Industries II and III (their HHIs are identical)

Question 6

A four-firm concentration ratio of 60 percent would indicate the likely presence of oligopoly.

Accepted Answer

A) True 
 B)False

Question 7

A detail from the text: OPEC is an acronym for the world's most famous cartel. The acronym stands for

Accepted Answer

A)  Oil and Petroleum Export Cartel 
B)  Organization of Producers of Exported Crude 
C)  Organization of Production and Exchange Countries 
D)  Organization of Petroleum Exporting Countries 
E)  Oil and Petroleum Extraction Countries 
A)  Oil and Petroleum Export Cartel 
B)  Organization of Producers of Exported Crude 
C)  Organization of Production and Exchange Countries 
D)  Organization of Petroleum Exporting Countries 
E)  Oil and Petroleum Extraction Countries

Question 8

Unbalanced oligopolies are not stable.

Accepted Answer

A) True 
 B)False

Question 9

Recall the Added Perspective on the prisoner's dilemma. When there is a prisoner's dilemma,

Accepted Answer

A)  the prisoners stick to a joint strategy 
B)  each prisoner's best strategy is not to confess 
C)  the prisoners must make a once-and-for-all decision 
D)  game theory does not apply 
E)  there is no mutual interdependence 
A)  the prisoners stick to a joint strategy 
B)  each prisoner's best strategy is not to confess 
C)  the prisoners must make a once-and-for-all decision 
D)  game theory does not apply 
E)  there is no mutual interdependence

Question 10

A concentration ratio is the ratio of

Accepted Answer

A)  market share to the number of firms in an industry 
B)  total sales to the number of firms in an industry 
C)  large firms to small firms in an industry 
D)  total sales of the leading firms to total sales in the industry 
E)  total profits of the leading firms to total profits in the industry 
A)  market share to the number of firms in an industry 
B)  total sales to the number of firms in an industry 
C)  large firms to small firms in an industry 
D)  total sales of the leading firms to total sales in the industry 
E)  total profits of the leading firms to total profits in the industry

Question 11

-In Exhibit L-2, the table shows the market shares of five firms that operate in three different industries. The HHI in industry III is

Accepted Answer

A)  20 percent 
B)  20 
C)  4,050 
D)  1,600 
E)  80 percent 
A)  20 percent 
B)  20 
C)  4,050 
D)  1,600 
E)  80 percent

Question 12

The kinked demand curve explains why __________ occurs in oligopoly even when costs change

Accepted Answer

A)  collusion 
B)  oligopolistic competition 
C)  price rigidity 
D)  marginal revenue rigidity 
E)  the kink 
A)  collusion 
B)  oligopolistic competition 
C)  price rigidity 
D)  marginal revenue rigidity 
E)  the kink

Question 13

The text states that the Herfindahl-Hirschman Index (HHI) for electronic computers is 680, while the HHI for chocolate is 2,188. We can interpret this to mean that

Accepted Answer

A)  people buy more chocolate than computers 
B)  the price of computers is higher than the price of chocolate 
C)  the demand for computers is relatively more inelastic than the demand for chocolate 
D)  market power is more heavily concentrated in the chocolate market than in the computer market 
E)  computers are more of a necessity than chocolate 
A)  people buy more chocolate than computers 
B)  the price of computers is higher than the price of chocolate 
C)  the demand for computers is relatively more inelastic than the demand for chocolate 
D)  market power is more heavily concentrated in the chocolate market than in the computer market 
E)  computers are more of a necessity than chocolate

Question 14

A merger between two firms in a supplier-purchaser relationship is called a vertical merger.

Accepted Answer

A) True 
 B)False

Question 15

Suppose two industries had the same four-firm concentration ratio, but one industry was an unbalanced oligopoly and the other was balanced. The market share of the fourth largest firm in the unbalanced oligopoly will be

Accepted Answer

A)  smaller or larger than the market share of the first largest firm in the unbalanced oligopoly 
B)  smaller than the market share of the fourth largest firm in the balanced oligopoly 
C)  larger than the market share of the first largest firm in the balanced oligopoly 
D)  more than 20 percent 
E)  the same as the fourth largest firm in the balanced oligopoly 
A)  smaller or larger than the market share of the first largest firm in the unbalanced oligopoly 
B)  smaller than the market share of the fourth largest firm in the balanced oligopoly 
C)  larger than the market share of the first largest firm in the balanced oligopoly 
D)  more than 20 percent 
E)  the same as the fourth largest firm in the balanced oligopoly

Question 16

Economists are aware and note that the concentration ratio of the U.S. automobile industry may be misleading in representing the industry's market power because it does not include the

Accepted Answer

A)  market sales of the four biggest car companies 
B)  scooter market 
C)  the increased use of public transportation 
D)  bicycle market 
E)  imported car market 
A)  market sales of the four biggest car companies 
B)  scooter market 
C)  the increased use of public transportation 
D)  bicycle market 
E)  imported car market

Question 17

Price discrimination by an oligopolist is an attempt to

Accepted Answer

A)  lower costs of production 
B)  increase efficiency 
C)  increase market share 
D)  create a uniform price in a market where multiple prices exist 
E)  turn consumer surplus into economic profit 
A)  lower costs of production 
B)  increase efficiency 
C)  increase market share 
D)  create a uniform price in a market where multiple prices exist 
E)  turn consumer surplus into economic profit

Question 18

Suppose you were a consultant to General Motors and were concerned with the fact that although demand is great today, GM may do poorly in the future because competition from foreign producers is growing and there is no indication it will stop. What would be awise strategy now for you to address this concern? Advise GM that it should

Accepted Answer

A)  seek a conglomerate merger with some other firm or group of firms 
B)  build larger plant capacity to increase your market share 
C)  create more brands (car models) in order to price discriminate 
D)  cut price to establish brand loyalty 
E)  seek a vertical merger with some other firm or group of firms 
A)  seek a conglomerate merger with some other firm or group of firms 
B)  build larger plant capacity to increase your market share 
C)  create more brands (car models) in order to price discriminate 
D)  cut price to establish brand loyalty 
E)  seek a vertical merger with some other firm or group of firms

Question 19

Have you used ketchup? Have you bought ketchup in a supermarket? Consider the characteristics of market structures and decide to which the ketchup industry belongs.

Accepted Answer

A)  oligopoly because it represents competition among the few 
B)  monopolistic competition because the demand curves for each brand is horizontal 
C)  perfect competition because the good is identical (ketchup is ketchup) 
D)  monopoly because the firm demand curve is the industry demand curve 
E)  monopoly because there are no good substitutes 
A)  oligopoly because it represents competition among the few 
B)  monopolistic competition because the demand curves for each brand is horizontal 
C)  perfect competition because the good is identical (ketchup is ketchup) 
D)  monopoly because the firm demand curve is the industry demand curve 
E)  monopoly because there are no good substitutes

Question 20

By agreeing to cooperate and abide by joint decisions, cartels most often

Accepted Answer

A)  increase concentration ratios 
B)  increase the market share of member firms 
C)  increase the efficiency of production 
D)  behave like a monopolist 
E)  appear oligopolistic 
A)  increase concentration ratios 
B)  increase the market share of member firms 
C)  increase the efficiency of production 
D)  behave like a monopolist 
E)  appear oligopolistic

The concentration ratio for an industry can be increased almost overnight by

Examples used in the text to illustrate "competition among the few" include all of the following industries except

If one firm has 80 percent of industry sales, while the remaining four firms share the other 20 percent of sales, then we can conclude that this is a(n)

Although highly unlikely in the real world, in a perfectly balanced oligopoly with eightfirms, the market share of each firm is

-In Exhibit L-2, the table shows the market shares of five firms that operate in three different industries. Using the HHI, the most concentrated of these three industries is(are)

A four-firm concentration ratio of 60 percent would indicate the likely presence of oligopoly.

A detail from the text: OPEC is an acronym for the world's most famous cartel. The acronym stands for

Unbalanced oligopolies are not stable.

Recall the Added Perspective on the prisoner's dilemma. When there is a prisoner's dilemma,

A concentration ratio is the ratio of

-In Exhibit L-2, the table shows the market shares of five firms that operate in three different industries. The HHI in industry III is

The kinked demand curve explains why __________ occurs in oligopoly even when costs change

The text states that the Herfindahl-Hirschman Index (HHI) for electronic computers is 680, while the HHI for chocolate is 2,188. We can interpret this to mean that

A merger between two firms in a supplier-purchaser relationship is called a vertical merger.

Suppose two industries had the same four-firm concentration ratio, but one industry was an unbalanced oligopoly and the other was balanced. The market share of the fourth largest firm in the unbalanced oligopoly will be

Economists are aware and note that the concentration ratio of the U.S. automobile industry may be misleading in representing the industry's market power because it does not include the

Price discrimination by an oligopolist is an attempt to

Have you used ketchup? Have you bought ketchup in a supermarket? Consider the characteristics of market structures and decide to which the ketchup industry belongs.

By agreeing to cooperate and abide by joint decisions, cartels most often

Introduction

Production Possibilities and Opportunity Costs

Demand and Supply

Elasticity

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Entrepreneurship and Business Ownership

Costs of Production

Maximizing Profit

Identifying Markets and Market Structures

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Antitrust and Regulation

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

Filters

Exam 12: Price and Output Determination Under Oligopoly

The concentration ratio for an industry can be increased almost overnight by

Examples used in the text to illustrate "competition among the few" include all of the following industries except

If one firm has 80 percent of industry sales, while the remaining four firms share the other 20 percent of sales, then we can conclude that this is a(n)

Although highly unlikely in the real world, in a perfectly balanced oligopoly with eightfirms, the market share of each firm is

-In Exhibit L-2, the table shows the market shares of five firms that operate in three different industries. Using the HHI, the most concentrated of these three industries is(are)

A four-firm concentration ratio of 60 percent would indicate the likely presence of oligopoly.

A detail from the text: OPEC is an acronym for the world's most famous cartel. The acronym stands for

Unbalanced oligopolies are not stable.

Recall the Added Perspective on the prisoner's dilemma. When there is a prisoner's dilemma,

A concentration ratio is the ratio of

-In Exhibit L-2, the table shows the market shares of five firms that operate in three different industries. The HHI in industry III is

The kinked demand curve explains why __________ occurs in oligopoly even when costs change

The text states that the Herfindahl-Hirschman Index (HHI) for electronic computers is 680, while the HHI for chocolate is 2,188. We can interpret this to mean that

A merger between two firms in a supplier-purchaser relationship is called a vertical merger.

Suppose two industries had the same four-firm concentration ratio, but one industry was an unbalanced oligopoly and the other was balanced. The market share of the fourth largest firm in the unbalanced oligopoly will be

Economists are aware and note that the concentration ratio of the U.S. automobile industry may be misleading in representing the industry's market power because it does not include the

Price discrimination by an oligopolist is an attempt to

Have you used ketchup? Have you bought ketchup in a supermarket? Consider the characteristics of market structures and decide to which the ketchup industry belongs.

By agreeing to cooperate and abide by joint decisions, cartels most often

Introduction

Production Possibilities and Opportunity Costs

Demand and Supply

Elasticity

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Entrepreneurship and Business Ownership

Costs of Production

Maximizing Profit

Identifying Markets and Market Structures

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Antitrust and Regulation

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

Filters