Question 1

Price and concentration ratios are inversely related.

Accepted Answer

A) True 
 B)False

Question 2

Monopolists engage in game theory pricing behavior.

Accepted Answer

A) True 
 B)False

Question 3

The payoff matrix is associated with

Accepted Answer

A)  cartel pricing 
B)  game theory 
C)  the behavior of a godfather firm in oligopoly 
D)  long-run equilibrium in monopolistic competition 
E)  price discrimination 
A)  cartel pricing 
B)  game theory 
C)  the behavior of a godfather firm in oligopoly 
D)  long-run equilibrium in monopolistic competition 
E)  price discrimination

Question 4

Prices do not necessarily tend toward equilibrium and are subject to fits of change when a market is

Accepted Answer

A)  a natural monopoly 
B)  an unbalanced oligopoly 
C)  monopolistically competitive 
D)  in a long-run situation 
E)  an oligopoly using game theory strategies 
A)  a natural monopoly 
B)  an unbalanced oligopoly 
C)  monopolistically competitive 
D)  in a long-run situation 
E)  an oligopoly using game theory strategies

Question 5

According to the text, what explains why a firm would produce different brands of an essentially identical (or highly close-substitute) good? With different brands, the firm

Accepted Answer

A)  creates higher productivity 
B)  increases its market share 
C)  better satisfies demand 
D)  increases the effectiveness of its advertising 
E)  lowers the cost structures of each brand so that it becomes more efficient 
A)  creates higher productivity 
B)  increases its market share 
C)  better satisfies demand 
D)  increases the effectiveness of its advertising 
E)  lowers the cost structures of each brand so that it becomes more efficient

Question 6

The formation of cartels is primarily a concern in the __________ market structure(s).

Accepted Answer

A)  perfectly competitive 
B)  monopolistically competitive 
C)  oligopoly 
D)  monopoly 
E)  perfectly competitive and monopolistically competitive 
A)  perfectly competitive 
B)  monopolistically competitive 
C)  oligopoly 
D)  monopoly 
E)  perfectly competitive and monopolistically competitive

Question 7

A conglomerate merger occurs when

Accepted Answer

A)  the goods produced by the merging firms are not related 
B)  one firm produces goods while the other produces services 
C)  one firm is a domestic firm while the other is a foreign firm 
D)  the firms are in a buyer-seller relationship 
E)  the merging firms produce identical or close substitute goods 
A)  the goods produced by the merging firms are not related 
B)  one firm produces goods while the other produces services 
C)  one firm is a domestic firm while the other is a foreign firm 
D)  the firms are in a buyer-seller relationship 
E)  the merging firms produce identical or close substitute goods

Question 8

Successful collusion requires all of the following except

Accepted Answer

A)  a monopoly market with strong barriers to entry 
B)  all firms cooperate, none cheat 
C)  all firms belong to the same industry 
D)  collusion will be more profitable than non-collusion 
E)  the government does not interfere 
A)  a monopoly market with strong barriers to entry 
B)  all firms cooperate, none cheat 
C)  all firms belong to the same industry 
D)  collusion will be more profitable than non-collusion 
E)  the government does not interfere

Question 9

Unlike oligopoly, other market structures are such that

Accepted Answer

A)  profits are usually low or nonexistent 
B)  firms in those structures need not observe each other to make price and production decisions 
C)  collusion within the structures is easy to accomplish because firms try to avoid competition 
D)  prices tend toward a stable equilibrium 
E)  there are more firms in every other structure 
A)  profits are usually low or nonexistent 
B)  firms in those structures need not observe each other to make price and production decisions 
C)  collusion within the structures is easy to accomplish because firms try to avoid competition 
D)  prices tend toward a stable equilibrium 
E)  there are more firms in every other structure

Question 10

Suppose there are 8 firms in an industry, and each has a different market share. If the largest firm has twice the market share of the second largest, which has twice the market share of the third largest (and so on to the eighth firm), what is the approximate four-firm concentration ratio?

Accepted Answer

A)  65 percent 
B)  84 percent 
C)  94 percent 
D)  60 percent 
E)  50 percent 
A)  65 percent 
B)  84 percent 
C)  94 percent 
D)  60 percent 
E)  50 percent

Question 11

A vertical merger occurs when

Accepted Answer

A)  the goods produced by the merging firms are not related 
B)  one firm produces goods while the other produces services 
C)  one firm is a domestic firm while the other is a foreign firm 
D)  the firms are in a buyer-seller relationship 
E)  the merging firms produce identical or close substitute goods 
A)  the goods produced by the merging firms are not related 
B)  one firm produces goods while the other produces services 
C)  one firm is a domestic firm while the other is a foreign firm 
D)  the firms are in a buyer-seller relationship 
E)  the merging firms produce identical or close substitute goods

Question 12

-In Exhibit L-2, the table shows the market shares of five firms that operate in three different industries. The four-firm concentration ratio in Industry I is equal to

Accepted Answer

A)  20 percent 
B)  100 percent 
C)  80 percent 
D)  60 percent 
E)  40 percent 
A)  20 percent 
B)  100 percent 
C)  80 percent 
D)  60 percent 
E)  40 percent

Question 13

In an unbalanced oligopoly,

Accepted Answer

A)  one firm has significantly greater market power than any other in the industry 
B)  only one firm exists in the industry 
C)  the industry is rapidly converging into a monopolistically competitive industry 
D)  all firms have near-equal market share 
E)  the four-firm concentration ratio exceeds 100 percent 
A)  one firm has significantly greater market power than any other in the industry 
B)  only one firm exists in the industry 
C)  the industry is rapidly converging into a monopolistically competitive industry 
D)  all firms have near-equal market share 
E)  the four-firm concentration ratio exceeds 100 percent

Question 14

Conglomerate mergers are designed to increase market share.

Accepted Answer

A) True 
 B)False

Question 15

According to the text, producing different brands of essentially the same good is called brand

Accepted Answer

A)  multiplication 
B)  duplication 
C)  amplification 
D)  recognition 
E)  loyalty 
A)  multiplication 
B)  duplication 
C)  amplification 
D)  recognition 
E)  loyalty

Question 16

If a firm reacts to other firms' market decisions by anticipating how the others will then react, this reflects

Accepted Answer

A)  the behavior of followers of a price leader 
B)  the behavior associated with price leadership 
C)  a market with a low concentration ratio 
D)  mutual interdependence 
E)  collusion by definition 
A)  the behavior of followers of a price leader 
B)  the behavior associated with price leadership 
C)  a market with a low concentration ratio 
D)  mutual interdependence 
E)  collusion by definition

Question 17

-In Exhibit L-4, the four-firm concentration ratio for lemonade stands in Econcity is

Accepted Answer

A)  1.0 
B)  0.87 
C)  0.66 
D)  250 
E)  300 
A)  1.0 
B)  0.87 
C)  0.66 
D)  250 
E)  300

Question 18

The market for widgets is divided as follows: Wally's Widgets has 45 percent of the market; Willy's Widgets has 22 percent of the market; Woody's Widgets has 10 percent of the market; and Wanda's Widgets has 8 percent of the market. The other 542 firms in the widget industry have the remaining 15percent of the market. How would you describe the widget market?

Accepted Answer

It's an unbalanced oligopoly b

Question 19

The kinked demand curve is composed of two segments of two demand curves that intersect. The two segments that make up the kinked demand curves are

Accepted Answer

A)  both related to industry demand 
B)  derived by subtracting the firm's demand curve from the market demand curve and adding it to the industry demand curve 
C)  derived from the firm demand curve and the industry demand curve 
D)  the least elastic segment above price and the more elastic segment below price 
E)  the more elastic segment above price and the least elastic segment below price 
A)  both related to industry demand 
B)  derived by subtracting the firm's demand curve from the market demand curve and adding it to the industry demand curve 
C)  derived from the firm demand curve and the industry demand curve 
D)  the least elastic segment above price and the more elastic segment below price 
E)  the more elastic segment above price and the least elastic segment below price

Question 20

-Suppose in Exhibit L-3, representing the demand curves that make up a firm's kinked demand curve, that price is $50. If the firm raises the price, it will then

Accepted Answer

A)  follow along demand curve D1 
B)  follow along demand curve D2 
C)  find that the other firms will ignore the price increase so that the price-raising firm will face D1 
D)  find that the other firms will ignore the price increase so that the price-raising firm will face D2 
E)  find that the other firms will lower their prices 
A)  follow along demand curve D1 
B)  follow along demand curve D2 
C)  find that the other firms will ignore the price increase so that the price-raising firm will face D1 
D)  find that the other firms will ignore the price increase so that the price-raising firm will face D2 
E)  find that the other firms will lower their prices

Price and concentration ratios are inversely related.

Monopolists engage in game theory pricing behavior.

The payoff matrix is associated with

Prices do not necessarily tend toward equilibrium and are subject to fits of change when a market is

According to the text, what explains why a firm would produce different brands of an essentially identical (or highly close-substitute) good? With different brands, the firm

The formation of cartels is primarily a concern in the __________ market structure(s).

A conglomerate merger occurs when

Successful collusion requires all of the following except

Unlike oligopoly, other market structures are such that

Suppose there are 8 firms in an industry, and each has a different market share. If the largest firm has twice the market share of the second largest, which has twice the market share of the third largest (and so on to the eighth firm), what is the approximate four-firm concentration ratio?

A vertical merger occurs when

-In Exhibit L-2, the table shows the market shares of five firms that operate in three different industries. The four-firm concentration ratio in Industry I is equal to

In an unbalanced oligopoly,

Conglomerate mergers are designed to increase market share.

According to the text, producing different brands of essentially the same good is called brand

If a firm reacts to other firms' market decisions by anticipating how the others will then react, this reflects

-In Exhibit L-4, the four-firm concentration ratio for lemonade stands in Econcity is

The kinked demand curve is composed of two segments of two demand curves that intersect. The two segments that make up the kinked demand curves are

-Suppose in Exhibit L-3, representing the demand curves that make up a firm's kinked demand curve, that price is $50. If the firm raises the price, it will then

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

Price and concentration ratios are inversely related.

Monopolists engage in game theory pricing behavior.

The payoff matrix is associated with

Prices do not necessarily tend toward equilibrium and are subject to fits of change when a market is

According to the text, what explains why a firm would produce different brands of an essentially identical (or highly close-substitute) good? With different brands, the firm

The formation of cartels is primarily a concern in the __________ market structure(s).

A conglomerate merger occurs when

Successful collusion requires all of the following except

Unlike oligopoly, other market structures are such that

Suppose there are 8 firms in an industry, and each has a different market share. If the largest firm has twice the market share of the second largest, which has twice the market share of the third largest (and so on to the eighth firm), what is the approximate four-firm concentration ratio?

A vertical merger occurs when

-In Exhibit L-2, the table shows the market shares of five firms that operate in three different industries. The four-firm concentration ratio in Industry I is equal to

In an unbalanced oligopoly,

Conglomerate mergers are designed to increase market share.

According to the text, producing different brands of essentially the same good is called brand

If a firm reacts to other firms' market decisions by anticipating how the others will then react, this reflects

-In Exhibit L-4, the four-firm concentration ratio for lemonade stands in Econcity is

The kinked demand curve is composed of two segments of two demand curves that intersect. The two segments that make up the kinked demand curves are

-Suppose in Exhibit L-3, representing the demand curves that make up a firm's kinked demand curve, that price is $50. If the firm raises the price, it will then

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