Question 1

Other things being equal,which market structure would produce the least output and the highest average product price?

Accepted Answer

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

Question 2

The most common reason for the existence of oligopolies is

Accepted Answer

A) ease of entry. 
B) economies of scale. 
C) diseconomies of scale. 
D) advertising. 
A) ease of entry. 
B) economies of scale. 
C) diseconomies of scale. 
D) advertising. B

Question 3

If a company that drilled for and produced oil acquired a firm which refined oil into gasoline,this would be referred to as a

Accepted Answer

A) horizontal merger. 
B) vertical merger. 
C) conglomerate merger. 
D) reverse merger. 
A) horizontal merger. 
B) vertical merger. 
C) conglomerate merger. 
D) reverse merger. B

Question 4

A reaction function is

Accepted Answer

A) companies colluding in order to make higher than competitive rates of return. 
B) the manner in which one oligopolist reacts to a change in price made by another oligopolist in the industry. 
C) a game in which firms will not negotiate in any way. 
D) when plans made by firms are known as game strategies. 
A) companies colluding in order to make higher than competitive rates of return. 
B) the manner in which one oligopolist reacts to a change in price made by another oligopolist in the industry. 
C) a game in which firms will not negotiate in any way. 
D) when plans made by firms are known as game strategies.

Question 5

Refer to the above payoff matrix for the profits (in $ millions)of two firms (A and B)making a decision to advertise or not.Which of the following is the outcome of the dominant strategy without cooperation?

Accepted Answer

A) Both firm A and firm B choose not to advertise. 
B) Both firm A and firm B choose to advertise. 
C) Firm A chooses to advertise while firm B chooses not to advertise. 
D) Firm A chooses not to advertise while firm B chooses to advertise. 
A) Both firm A and firm B choose not to advertise. 
B) Both firm A and firm B choose to advertise. 
C) Firm A chooses to advertise while firm B chooses not to advertise. 
D) Firm A chooses not to advertise while firm B chooses to advertise.

Question 6

When oligopolistic firms in an industry form a cartel,then it is most likely that

Accepted Answer

A) both industry output and prices will increase. 
B) both industry output and prices will decrease. 
C) industry output will increase while prices will decrease. 
D) industry output will decrease while prices will increase. 
A) both industry output and prices will increase. 
B) both industry output and prices will decrease. 
C) industry output will increase while prices will decrease. 
D) industry output will decrease while prices will increase.

Question 7

Why do firms form a cartel? How do cartels achieve their goals?

Accepted Answer

Firms form a cartel in order t

Question 8

In which market structure does a firm have the LEAST influence over the market price?

Accepted Answer

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

Question 9

In game theory,behavior that results in cooperation as long as the other players continue to cooperate,is referred to as

Accepted Answer

A) nice behavior. 
B) tit-for-tat strategic behavior. 
C) simple behavior. 
D) opportunistic behavior. 
A) nice behavior. 
B) tit-for-tat strategic behavior. 
C) simple behavior. 
D) opportunistic behavior.

Question 10

When a player in a game adopts a strategy which always yields the highest benefit regardless of what the other player does,that player is using a(n)

Accepted Answer

A) opportunistic strategy. 
B) dominant strategy. 
C) tit-for-tat strategy. 
D) aggressive strategy. 
A) opportunistic strategy. 
B) dominant strategy. 
C) tit-for-tat strategy. 
D) aggressive strategy.

Question 11

A merger between firms in which one firm purchases an input from the other is called a

Accepted Answer

A) conglomerate merger. 
B) horizontal merger. 
C) vertical merger. 
D) none of the above. 
A) conglomerate merger. 
B) horizontal merger. 
C) vertical merger. 
D) none of the above.

Question 12

Which of the following is NOT a condition that helps enforce a cartel agreement?

Accepted Answer

A) a small number of firms 
B) nearly homogeneous products 
C) easily observable prices 
D) large variation in input prices 
A) a small number of firms 
B) nearly homogeneous products 
C) easily observable prices 
D) large variation in input prices

Question 13

After participating members of a cartel form an agreement on common prices and output quotas,then an individual firm can increase its own profits by

Accepted Answer

A) increasing production. 
B) increasing prices. 
C) leaving the cartel. 
D) incurring higher input costs. 
A) increasing production. 
B) increasing prices. 
C) leaving the cartel. 
D) incurring higher input costs.

Question 14

Suppose an industry is composed of 10 firms.Each firm's share of total sales in the industry is 10 percent.If two of the firms merge,then the four-firm concentration ratio in the industry is

Accepted Answer

A) 40 percent. 
B) 45 percent. 
C) 50 percent. 
D) unable to determine. 
A) 40 percent. 
B) 45 percent. 
C) 50 percent. 
D) unable to determine.

Question 15

Suppose two firms are in a game situation,and they each must decide on a strategy regarding whether to select a high price or a low price.Profits for a firm are highest when it selects a low price,while the other selects a high price; profits are lowest if one selects a high price,while the other selects a low price; profits are in between when both select low prices; and profits are slightly higher when both select high prices.In the absence of collusion we expect

Accepted Answer

A) one of the firms to select a high price and the other a low price. 
B) one firm to select a high price and the other a low price in the first period,followed by a reversal in the second period. 
C) both to select high prices. 
D) both to select low prices. 
A) one of the firms to select a high price and the other a low price. 
B) one firm to select a high price and the other a low price in the first period,followed by a reversal in the second period. 
C) both to select high prices. 
D) both to select low prices.

Question 16

A concentration ratio measures

Accepted Answer

A) the average size of the firms in the industry. 
B) the sales of the three largest firms in the industry minus the costs of these three largest firms in the industry. 
C) the share of industry sales accounted for by the largest firms in the industry. 
D) the excess capacity found in a particular oligopolistic industry. 
A) the average size of the firms in the industry. 
B) the sales of the three largest firms in the industry minus the costs of these three largest firms in the industry. 
C) the share of industry sales accounted for by the largest firms in the industry. 
D) the excess capacity found in a particular oligopolistic industry.

Question 17

A realtor in the real estate market is an example of

Accepted Answer

A) an end user in a shared-input market. 
B) a platform in a shared-input market. 
C) a platform in a matchmaking market. 
D) an end user in a matchmaking market. 
A) an end user in a shared-input market. 
B) a platform in a shared-input market. 
C) a platform in a matchmaking market. 
D) an end user in a matchmaking market.

Question 18

In a 50-firm industry,two of the smallest firms merge.Yet the 4-firm concentration ratio and the 8-firm concentration ratio did not change.All things considered,we can say that the industry has

Accepted Answer

A) moved closer to pure competition because the number of firms decreased. 
B) moved farther away from competition because the number of firms decreased. 
C) experienced no change in competition even though the number of firms decreased. 
D) to be identified first; otherwise there is no way to tell. 
A) moved closer to pure competition because the number of firms decreased. 
B) moved farther away from competition because the number of firms decreased. 
C) experienced no change in competition even though the number of firms decreased. 
D) to be identified first; otherwise there is no way to tell.

Question 19

How do economies of scale contribute to the development of an oligopoly?

Accepted Answer

A) Economies of scale make it legally difficult for new firms to enter. 
B) Economies of scale make small-scale producers inefficient. 
C) Economies of scale are based on control of a key resource,without which other firms cannot enter an industry. 
D) Economies of scale are guaranteed when a patent is granted. 
A) Economies of scale make it legally difficult for new firms to enter. 
B) Economies of scale make small-scale producers inefficient. 
C) Economies of scale are based on control of a key resource,without which other firms cannot enter an industry. 
D) Economies of scale are guaranteed when a patent is granted.

Question 20

Which of the following is NOT a cause for an oligopoly to exist?

Accepted Answer

A) economies of scale 
B) structural dependence 
C) barriers to entry 
D) horizontal mergers 
A) economies of scale 
B) structural dependence 
C) barriers to entry 
D) horizontal mergers

Other things being equal,which market structure would produce the least output and the highest average product price?

The most common reason for the existence of oligopolies is

If a company that drilled for and produced oil acquired a firm which refined oil into gasoline,this would be referred to as a

A reaction function is

Refer to the above payoff matrix for the profits (in $ millions)of two firms (A and B)making a decision to advertise or not.Which of the following is the outcome of the dominant strategy without cooperation?

When oligopolistic firms in an industry form a cartel,then it is most likely that

Why do firms form a cartel? How do cartels achieve their goals?

In which market structure does a firm have the LEAST influence over the market price?

In game theory,behavior that results in cooperation as long as the other players continue to cooperate,is referred to as

When a player in a game adopts a strategy which always yields the highest benefit regardless of what the other player does,that player is using a(n)

A merger between firms in which one firm purchases an input from the other is called a

Which of the following is NOT a condition that helps enforce a cartel agreement?

After participating members of a cartel form an agreement on common prices and output quotas,then an individual firm can increase its own profits by

Suppose an industry is composed of 10 firms.Each firm's share of total sales in the industry is 10 percent.If two of the firms merge,then the four-firm concentration ratio in the industry is

A concentration ratio measures

A realtor in the real estate market is an example of

In a 50-firm industry,two of the smallest firms merge.Yet the 4-firm concentration ratio and the 8-firm concentration ratio did not change.All things considered,we can say that the industry has

How do economies of scale contribute to the development of an oligopoly?

Which of the following is NOT a cause for an oligopoly to exist?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 13: Oligopoly and Strategic Behavior

Other things being equal,which market structure would produce the least output and the highest average product price?

The most common reason for the existence of oligopolies is

If a company that drilled for and produced oil acquired a firm which refined oil into gasoline,this would be referred to as a

A reaction function is

Refer to the above payoff matrix for the profits (in $ millions)of two firms (A and B)making a decision to advertise or not.Which of the following is the outcome of the dominant strategy without cooperation?

When oligopolistic firms in an industry form a cartel,then it is most likely that

Why do firms form a cartel? How do cartels achieve their goals?

In which market structure does a firm have the LEAST influence over the market price?

In game theory,behavior that results in cooperation as long as the other players continue to cooperate,is referred to as

When a player in a game adopts a strategy which always yields the highest benefit regardless of what the other player does,that player is using a(n)

A merger between firms in which one firm purchases an input from the other is called a

Which of the following is NOT a condition that helps enforce a cartel agreement?

After participating members of a cartel form an agreement on common prices and output quotas,then an individual firm can increase its own profits by

Suppose an industry is composed of 10 firms.Each firm's share of total sales in the industry is 10 percent.If two of the firms merge,then the four-firm concentration ratio in the industry is

A concentration ratio measures

A realtor in the real estate market is an example of

In a 50-firm industry,two of the smallest firms merge.Yet the 4-firm concentration ratio and the 8-firm concentration ratio did not change.All things considered,we can say that the industry has

How do economies of scale contribute to the development of an oligopoly?

Which of the following is NOT a cause for an oligopoly to exist?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters