Question 1

The largest problem faced in cartel pricing agreements such as OPEC is:

Accepted Answer

A)  detecting violations of quota barriers by cartel participants 
B)  arriving at a profit maximizing price 
C)  attracting participants in the cartel 
D)  none of the above 
A)  detecting violations of quota barriers by cartel participants 
B)  arriving at a profit maximizing price 
C)  attracting participants in the cartel 
D)  none of the above A

Question 2

In barometric price leadership,one firm announces a change in price

Accepted Answer

A)  and the other firms follow 
B)  but the other firms refuse to follow 
C)  that it hopes will be accepted by others 
D)  which is merely a test of the market 
E)  none of the above. 
A)  and the other firms follow 
B)  but the other firms refuse to follow 
C)  that it hopes will be accepted by others 
D)  which is merely a test of the market 
E)  none of the above. C

Question 3

Which of the following is an example of an oligopolistic market structure?

Accepted Answer

A)  public utilities 
B)  air transport industry 
C)  liquor retailers 
D)  wheat farmers 
E)  none of the above 
A)  public utilities 
B)  air transport industry 
C)  liquor retailers 
D)  wheat farmers 
E)  none of the above B

Question 4

In the Cournot duopoly model,each of the two firms,in determining its profit-maximizing price-output level,assumes that the other firm's ____ will not change.

Accepted Answer

A)  price 
B)  output 
C)  marketing strategy 
D)  inventory 
E)  none of the above 
A)  price 
B)  output 
C)  marketing strategy 
D)  inventory 
E)  none of the above

Question 5

A cartel is a situation where firms in the industry

Accepted Answer

A)  have an agreement to restrict output. 
B)  agree to produce identical products. 
C)  obey the rules of dominant firm price leadership. 
D)  experience the pain of a kinked demand curve. 
E)  have a barometric price leader 
A)  have an agreement to restrict output. 
B)  agree to produce identical products. 
C)  obey the rules of dominant firm price leadership. 
D)  experience the pain of a kinked demand curve. 
E)  have a barometric price leader

Question 6

The existence of a kinked demand curve under oligopoly conditions may result in

Accepted Answer

A)  volatile prices 
B)  competitive pricing. 
C)  prices above the monopoly price. 
D)  an increase in the coefficient of variation of prices. 
E)  stable prices 
A)  volatile prices 
B)  competitive pricing. 
C)  prices above the monopoly price. 
D)  an increase in the coefficient of variation of prices. 
E)  stable prices

Question 7

Factors that affect the ability of oligopolistic firms to successfully engage in cooperation include ____.

Accepted Answer

A)  number and size distribution of sellers 
B)  size and frequency of orders 
C)  product heterogeneity 
D)  a and b only 
E)  a,b,and c 
A)  number and size distribution of sellers 
B)  size and frequency of orders 
C)  product heterogeneity 
D)  a and b only 
E)  a,b,and c

Question 8

If a cartel seeks to maximize profits,the market share (or quota)for each firm should be set at a level such that the ____ of all firms is identical.

Accepted Answer

A)  average total cost 
B)  average profit 
C)  marginal profit 
D)  marginal cost 
E)  marginal revenue 
A)  average total cost 
B)  average profit 
C)  marginal profit 
D)  marginal cost 
E)  marginal revenue

Question 9

Even ideal cartels tend to be unstable because

Accepted Answer

A)  firms typically prefer competition to collusion as competition,because it leads to more profits. 
B)  collusion leads to lowest possible overall profits in the industry. 
C)  oligopolistic managers are extremely risk loving. 
D)  firms can benefit by secretly selling more than they promised the other firms 
E)  all of the above 
A)  firms typically prefer competition to collusion as competition,because it leads to more profits. 
B)  collusion leads to lowest possible overall profits in the industry. 
C)  oligopolistic managers are extremely risk loving. 
D)  firms can benefit by secretly selling more than they promised the other firms 
E)  all of the above

Question 10

Effective oligopolistic collusion is more likely to occur when customer orders are small,frequent,and received on a regular basis as compared with large orders that are received infrequently at irregular intervals.

Accepted Answer

A) True 
 B)False

Question 11

The distinctive characteristic of an oligopolistic market structure is that there are recognizable interdependencies among the decisions of the firms.

Accepted Answer

A) True 
 B)False

Question 12

A(n)____ is characterized by a relatively small number of firms producing a product.

Accepted Answer

A)  monopoly 
B)  syndicate 
C)  cooperative 
D)  oligopoly 
E)  none of the above 
A)  monopoly 
B)  syndicate 
C)  cooperative 
D)  oligopoly 
E)  none of the above

Question 13

Regarding price leadership,which of the following is NOT true? ​

Accepted Answer

A)  ​one firm may establish itself as the dominant firm 
B)  ​the dominant firm is frequently a larger size or has lower cost structure 
C)  ​Price leadership is a model of price-output determination 
D)  ​Once established,a barometric price leader will not change 
E)  ​price leadership is a pricing strategy followed in many oligopolistic industries 
A)  ​one firm may establish itself as the dominant firm 
B)  ​the dominant firm is frequently a larger size or has lower cost structure 
C)  ​Price leadership is a model of price-output determination 
D)  ​Once established,a barometric price leader will not change 
E)  ​price leadership is a pricing strategy followed in many oligopolistic industries

Question 14

The kinked demand curve model helps to explain:

Accepted Answer

A)  fluctuations of prices in pure competition 
B)  stabilities observed in prices in oligopolistic industries 
C)  fluctuations observed in prices in oligopolistic industries 
D)  all of the above 
E)  none of the above 
A)  fluctuations of prices in pure competition 
B)  stabilities observed in prices in oligopolistic industries 
C)  fluctuations observed in prices in oligopolistic industries 
D)  all of the above 
E)  none of the above

Question 15

In the absence of any legally binding enforcement mechanism,individual cartel producers may find it advantageous to cheat on the agreements and engage in secret price concessions.

Accepted Answer

A) True 
 B)False

Question 16

In a kinked demand market,whenever one firm decides to lower its price,

Accepted Answer

A)  other firms will automatically follow. 
B)  none of the other firms will follow. 
C)  one half of the firms follow and one half of the firms don't follow the price cut. 
D)  other firms all decide to exit the industry 
E)  all of the other firms raise their prices. 
A)  other firms will automatically follow. 
B)  none of the other firms will follow. 
C)  one half of the firms follow and one half of the firms don't follow the price cut. 
D)  other firms all decide to exit the industry 
E)  all of the other firms raise their prices.

Question 17

Suppose that in a perfectly competitive industry the equilibrium industry quantity is 10,000 units.Suppose that the monopoly output is 5,000.For a 2-firm Cournot Oligopoly (N =2)known as a duopoly,what is a likely Cournot QUANTITY for the industry?

Accepted Answer

A)  3,000 units 
B)  5,000 units 
C)  6,667 units 
D)  10,000 units 
E)  15,000 units 
A)  3,000 units 
B)  5,000 units 
C)  6,667 units 
D)  10,000 units 
E)  15,000 units

Question 18

Barometric price leadership exists when

Accepted Answer

A)  one firm in the industry initiates a price change and the others follow it as a signal of changes in cost or demand in the industry. 
B)  one firm imposes its best price on the rest of the industry. 
C)  all firms agree to change prices simultaneously. 
D)  one company forms a price umbrella for all others. 
E)  the firms are all colluding. 
A)  one firm in the industry initiates a price change and the others follow it as a signal of changes in cost or demand in the industry. 
B)  one firm imposes its best price on the rest of the industry. 
C)  all firms agree to change prices simultaneously. 
D)  one company forms a price umbrella for all others. 
E)  the firms are all colluding.

Question 19

An oligopoly is characterized by:

Accepted Answer

A)  a relatively small number of firms 
B)  either differentiated or undifferentiated products 
C)  actions of any individual firm will affect sales of other firms in the industry 
D)  a and b 
E)  a,b,and c 
A)  a relatively small number of firms 
B)  either differentiated or undifferentiated products 
C)  actions of any individual firm will affect sales of other firms in the industry 
D)  a and b 
E)  a,b,and c

Question 20

Some market conditions make cartels MORE likely to succeed in collusion.Which of the following will make collusion more successful?

Accepted Answer

A)  The products are heterogeneous 
B)  The orders are small and frequent 
C)  The firms are all about the same size 
D)  Costs differ across the firms 
E)  Firms are geographically widely scattered 
A)  The products are heterogeneous 
B)  The orders are small and frequent 
C)  The firms are all about the same size 
D)  Costs differ across the firms 
E)  Firms are geographically widely scattered

The largest problem faced in cartel pricing agreements such as OPEC is:

In barometric price leadership,one firm announces a change in price

Which of the following is an example of an oligopolistic market structure?

In the Cournot duopoly model,each of the two firms,in determining its profit-maximizing price-output level,assumes that the other firm's ____ will not change.

A cartel is a situation where firms in the industry

The existence of a kinked demand curve under oligopoly conditions may result in

Factors that affect the ability of oligopolistic firms to successfully engage in cooperation include ____.

If a cartel seeks to maximize profits,the market share (or quota)for each firm should be set at a level such that the ____ of all firms is identical.

Even ideal cartels tend to be unstable because

Effective oligopolistic collusion is more likely to occur when customer orders are small,frequent,and received on a regular basis as compared with large orders that are received infrequently at irregular intervals.

The distinctive characteristic of an oligopolistic market structure is that there are recognizable interdependencies among the decisions of the firms.

A(n)____ is characterized by a relatively small number of firms producing a product.

Regarding price leadership,which of the following is NOT true?

The kinked demand curve model helps to explain:

In the absence of any legally binding enforcement mechanism,individual cartel producers may find it advantageous to cheat on the agreements and engage in secret price concessions.

In a kinked demand market,whenever one firm decides to lower its price,

Suppose that in a perfectly competitive industry the equilibrium industry quantity is 10,000 units.Suppose that the monopoly output is 5,000.For a 2-firm Cournot Oligopoly (N =2)known as a duopoly,what is a likely Cournot QUANTITY for the industry?

Barometric price leadership exists when

An oligopoly is characterized by:

Some market conditions make cartels MORE likely to succeed in collusion.Which of the following will make collusion more successful?

Introduction and Goals of the Firm

Fundamental Economic Concepts

Demand Analysis

Estimating Demand

Business and Economic Forecasting

Managing in the Global Economy

Production Economics

Cost Analysis

Applications of Cost Theory

Prices,output,and Strategy: Pure and Monopolistic Competition

Price and Output Determination: Monopoly and Dominant Firms

Best-Practice Tactics: Game Theory

Pricing Techniques and Analysis

Contracting,governance,and Organizational Form

Government Regulation

Long-Term Investment Analysis

Filters

Exam 12: Price and Output Determination: Oligopoly

The largest problem faced in cartel pricing agreements such as OPEC is:

In barometric price leadership,one firm announces a change in price

Which of the following is an example of an oligopolistic market structure?

In the Cournot duopoly model,each of the two firms,in determining its profit-maximizing price-output level,assumes that the other firm's ____ will not change.

A cartel is a situation where firms in the industry

The existence of a kinked demand curve under oligopoly conditions may result in

Factors that affect the ability of oligopolistic firms to successfully engage in cooperation include ____.

If a cartel seeks to maximize profits,the market share (or quota)for each firm should be set at a level such that the ____ of all firms is identical.

Even ideal cartels tend to be unstable because

Effective oligopolistic collusion is more likely to occur when customer orders are small,frequent,and received on a regular basis as compared with large orders that are received infrequently at irregular intervals.

The distinctive characteristic of an oligopolistic market structure is that there are recognizable interdependencies among the decisions of the firms.

A(n)____ is characterized by a relatively small number of firms producing a product.

Regarding price leadership,which of the following is NOT true? ​

The kinked demand curve model helps to explain:

In the absence of any legally binding enforcement mechanism,individual cartel producers may find it advantageous to cheat on the agreements and engage in secret price concessions.

In a kinked demand market,whenever one firm decides to lower its price,

Suppose that in a perfectly competitive industry the equilibrium industry quantity is 10,000 units.Suppose that the monopoly output is 5,000.For a 2-firm Cournot Oligopoly (N =2)known as a duopoly,what is a likely Cournot QUANTITY for the industry?

Barometric price leadership exists when

An oligopoly is characterized by:

Some market conditions make cartels MORE likely to succeed in collusion.Which of the following will make collusion more successful?

Introduction and Goals of the Firm

Fundamental Economic Concepts

Demand Analysis

Estimating Demand

Business and Economic Forecasting

Managing in the Global Economy

Production Economics

Cost Analysis

Applications of Cost Theory

Prices,output,and Strategy: Pure and Monopolistic Competition

Price and Output Determination: Monopoly and Dominant Firms

Best-Practice Tactics: Game Theory

Pricing Techniques and Analysis

Contracting,governance,and Organizational Form

Government Regulation

Long-Term Investment Analysis

Filters

Regarding price leadership,which of the following is NOT true?