Question 1

The possible alternatives for an oligopoly range from the monopoly case with ________ to the perfectly competitive case with ________.

Accepted Answer

A)  high output; low output 
B)  low prices; high prices 
C)  low profits; high profits 
D)  low output; high output 
E)  no cooperation among the firms; much cooperation among the firms 
A)  high output; low output 
B)  low prices; high prices 
C)  low profits; high profits 
D)  low output; high output 
E)  no cooperation among the firms; much cooperation among the firms D

Question 2

Briefly explain resale price maintenance.Is it legal or illegal? Does it create efficiency or inefficiency?

Accepted Answer

Resale price maintenance is a form of price fixing.It is an agreement between a manufacturer and a distributor on the price at which a product may be resold.Resale price maintenance agreements are illegal under the Sherman Act.But it is not illegal for a manufacturer to refuse to supply a retailer who does not accept the manufacturer's guidance on what price the retailer should charge.Resale price maintenance might create efficiency or it might create inefficiency.Resale price maintenance creates efficiency when it enables a manufacturer to induce dealers to provide the efficient level of service.It leads to inefficiency when it enables dealers to operate a cartel and charge the monopoly price.

Question 3

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,the lowest price at which a firm could stay in business in the long run is ________ per unit and the quantity demanded in the market at that price is ________ units per hour.

Accepted Answer

A)  $20; 4,000 
B)  $10; 8,000 
C)  $10; 4,000 
D)  $20; 2,000 
E)  $20; 8,000 
A)  $20; 4,000 
B)  $10; 8,000 
C)  $10; 4,000 
D)  $20; 2,000 
E)  $20; 8,000 B

Question 4

"A Nash equilibrium occurs when both parties to a game end up worse off as a result of the decisions that are made." Is the previous definition of a Nash equilibrium correct or incorrect?

Accepted Answer

The definition is incorrect.A

Question 5

Herb's Inc.has a large share of its market and is tempted to collude with the few firms that are in its market.Herb's operates in

Accepted Answer

A)  an oligopoly. 
B)  a monopolistically competitive market. 
C)  a monopoly market. 
D)  a perfectly competitive market. 
E)  a collusively protected market. 
A)  an oligopoly. 
B)  a monopolistically competitive market. 
C)  a monopoly market. 
D)  a perfectly competitive market. 
E)  a collusively protected market.

Question 6

If firms in an oligopolistic industry successfully collude and form a cartel,what price and output will result?

Accepted Answer

A)  the monopoly price and output 
B)  the competitive price and output 
C)  the monopolistically competitive price and output 
D)  a price higher than the monopoly price and, because there is more than one firm in the industry, more output than the monopoly amount 
E)  a price lower than the competitive price and, because there are only a few firms in the industry, less output than the competitive amount 
A)  the monopoly price and output 
B)  the competitive price and output 
C)  the monopolistically competitive price and output 
D)  a price higher than the monopoly price and, because there is more than one firm in the industry, more output than the monopoly amount 
E)  a price lower than the competitive price and, because there are only a few firms in the industry, less output than the competitive amount

Question 7

The first antitrust act was ________ passed in ________.

Accepted Answer

A)  the Clayton Act; 1890 
B)  the Sherman Act; 1890 
C)  the Clinton Act; 1999 
D)  the Rockefeller Act; 1890 
E)  the Clayton Act; 1914 
A)  the Clayton Act; 1890 
B)  the Sherman Act; 1890 
C)  the Clinton Act; 1999 
D)  the Rockefeller Act; 1890 
E)  the Clayton Act; 1914

Question 8

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,the lowest price at which a firm could stay in business in the long run is ________ per unit and the quantity demanded in the market at that price is ________ units per hour.

Accepted Answer

A)  $15; 6,000 
B)  $10; 8,000 
C)  $10; 6,000 
D)  $25; 2,000 
E)  $10; 4,000 
A)  $15; 6,000 
B)  $10; 8,000 
C)  $10; 6,000 
D)  $25; 2,000 
E)  $10; 4,000

Question 9

Describe the characteristics of an oligopoly.

Accepted Answer

There are a small number of firms that a

Question 10

When duopoly games are repeated and a "tit for tat" strategy is used,

Accepted Answer

A)  the competitive outcome is more likely to be reached than when the game is played once. 
B)  the monopoly outcome is more likely to be reached than when the game is played once. 
C)  both firms begin to incur economic losses. 
D)  one firm goes out of business. 
E)  because the game is repeated it is impossible to predict whether the competitive or the monopoly outcome is more likely. 
A)  the competitive outcome is more likely to be reached than when the game is played once. 
B)  the monopoly outcome is more likely to be reached than when the game is played once. 
C)  both firms begin to incur economic losses. 
D)  one firm goes out of business. 
E)  because the game is repeated it is impossible to predict whether the competitive or the monopoly outcome is more likely.

Question 11

-The table above has the market demand schedule in an industry that has two firms in it.The marginal cost of this product is zero because these two firms have exclusive ownership of the resource and it does not cost any additional amount to produce additional units.
a.If the firms cooperate with each other so that they operate as a monopoly,what price will they charge and what (total)output will they produce?
b.If the firms cannot cooperate but instead behave as perfect competitors,what will be the price and the (total)output they produce?

Accepted Answer

a.As a monopoly,the price will be $15 an

Question 12

-The table above shows the payoff matrix offered to two suspected criminals,Bonnie and Clyde.The payoffs are the years they will spend in prison.The suspected criminals are not allowed to communicate.Given the information in the payoff matrix,the Nash equilibrium is that Bonnie ________ and Clyde ________.

Accepted Answer

A)  confesses; denies 
B)  confesses; confesses 
C)  denies; denies 
D)  denies; confesses 
E)  denies; either confess or denies, either outcome is consistent with the Nash equilibrium. 
A)  confesses; denies 
B)  confesses; confesses 
C)  denies; denies 
D)  denies; confesses 
E)  denies; either confess or denies, either outcome is consistent with the Nash equilibrium.

Question 13

Which of the following provisions requires a firm to buy all of a particular item from a single firm?

Accepted Answer

A)  tying arrangement 
B)  requirements contracts 
C)  exclusive dealing 
D)  territorial confinement 
E)  quantity discrimination 
A)  tying arrangement 
B)  requirements contracts 
C)  exclusive dealing 
D)  territorial confinement 
E)  quantity discrimination

Question 14

Which of the following are U.S.antitrust laws?
i.The Rockefeller Act
ii.The Sherman Act
iii.The Natural Monopoly Act

Accepted Answer

A)  i and ii 
B)  ii and iii 
C)  ii only 
D)  i, ii, and iii 
E)  i only 
A)  i and ii 
B)  ii and iii 
C)  ii only 
D)  i, ii, and iii 
E)  i only

Question 15

In a prisoners' dilemma game,in the Nash equilibrium

Accepted Answer

A)  neither player gets his or her best outcome. 
B)  both players get their best outcome. 
C)  one player gets his or her best outcome and the other player does not. 
D)  collusion would not alter the outcome. 
E)  Either answer A or C might be correct depending on whether the players communicate with each other or do not communicate with each other. 
A)  neither player gets his or her best outcome. 
B)  both players get their best outcome. 
C)  one player gets his or her best outcome and the other player does not. 
D)  collusion would not alter the outcome. 
E)  Either answer A or C might be correct depending on whether the players communicate with each other or do not communicate with each other.

Question 16

"The duopolists' dilemma occurs when firms in a duopoly coordinate their decisions to achieve the best possible outcome." Is the previous statement correct or incorrect? Why?

Accepted Answer

The statement is incorrect.The

Question 17

A group of firms acting together to limit output,raise price,and increase economic profit is a called a

Accepted Answer

A)  duopoly. 
B)  monopolistic oligopoly. 
C)  competitive oligopoly. 
D)  cartel. 
E)  multi-firm competitive monopoly. 
A)  duopoly. 
B)  monopolistic oligopoly. 
C)  competitive oligopoly. 
D)  cartel. 
E)  multi-firm competitive monopoly.

Question 18

Firms in an oligopoly
i.are independent of each other's actions.
ii.can each influence the market price.
iii.charge a price equal to marginal revenue.

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  i, ii, and iii

Question 19

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,economies of scale limit the market to ________ firm(s).

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
E)  8 
A)  1 
B)  2 
C)  3 
D)  4 
E)  8

Question 20

If a firm engages in predatory pricing,it
A) is following marginal cost pricing.
B) is following average cost pricing.
C) sets a low price to drive rivals out of business.
D) has been regulated using a price cap.
E) is guilty of price fixing.

Accepted Answer

The answer of If a firm engages in predatory pricing,it
A)...

The possible alternatives for an oligopoly range from the monopoly case with to the perfectly competitive case with .

Briefly explain resale price maintenance.Is it legal or illegal? Does it create efficiency or inefficiency?

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,the lowest price at which a firm could stay in business in the long run is per unit and the quantity demanded in the market at that price is units per hour.

"A Nash equilibrium occurs when both parties to a game end up worse off as a result of the decisions that are made." Is the previous definition of a Nash equilibrium correct or incorrect?

Herb's Inc.has a large share of its market and is tempted to collude with the few firms that are in its market.Herb's operates in

If firms in an oligopolistic industry successfully collude and form a cartel,what price and output will result?

The first antitrust act was passed in .

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,the lowest price at which a firm could stay in business in the long run is per unit and the quantity demanded in the market at that price is units per hour.

Describe the characteristics of an oligopoly.

When duopoly games are repeated and a "tit for tat" strategy is used,

-The table above shows the payoff matrix offered to two suspected criminals,Bonnie and Clyde.The payoffs are the years they will spend in prison.The suspected criminals are not allowed to communicate.Given the information in the payoff matrix,the Nash equilibrium is that Bonnie and Clyde .

Which of the following provisions requires a firm to buy all of a particular item from a single firm?

Which of the following are U.S.antitrust laws? i.The Rockefeller Act ii.The Sherman Act iii.The Natural Monopoly Act

In a prisoners' dilemma game,in the Nash equilibrium

"The duopolists' dilemma occurs when firms in a duopoly coordinate their decisions to achieve the best possible outcome." Is the previous statement correct or incorrect? Why?

A group of firms acting together to limit output,raise price,and increase economic profit is a called a

Firms in an oligopoly i.are independent of each other's actions. ii.can each influence the market price. iii.charge a price equal to marginal revenue.

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,economies of scale limit the market to ________ firm(s).

If a firm engages in predatory pricing,it A) is following marginal cost pricing. B) is following average cost pricing. C) sets a low price to drive rivals out of business. D) has been regulated using a price cap. E) is guilty of price fixing.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Markets for Factors of Production

Economic Inequality

Filters

Exam 18: Oligopoly

The possible alternatives for an oligopoly range from the monopoly case with ________ to the perfectly competitive case with ________.

Briefly explain resale price maintenance.Is it legal or illegal? Does it create efficiency or inefficiency?

"A Nash equilibrium occurs when both parties to a game end up worse off as a result of the decisions that are made." Is the previous definition of a Nash equilibrium correct or incorrect?

Herb's Inc.has a large share of its market and is tempted to collude with the few firms that are in its market.Herb's operates in

If firms in an oligopolistic industry successfully collude and form a cartel,what price and output will result?

The first antitrust act was ________ passed in ________.

Describe the characteristics of an oligopoly.

When duopoly games are repeated and a "tit for tat" strategy is used,

Which of the following provisions requires a firm to buy all of a particular item from a single firm?

Which of the following are U.S.antitrust laws? i.The Rockefeller Act ii.The Sherman Act iii.The Natural Monopoly Act

In a prisoners' dilemma game,in the Nash equilibrium

"The duopolists' dilemma occurs when firms in a duopoly coordinate their decisions to achieve the best possible outcome." Is the previous statement correct or incorrect? Why?

A group of firms acting together to limit output,raise price,and increase economic profit is a called a

Firms in an oligopoly i.are independent of each other's actions. ii.can each influence the market price. iii.charge a price equal to marginal revenue.

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,economies of scale limit the market to ________ firm(s).

If a firm engages in predatory pricing,it A) is following marginal cost pricing. B) is following average cost pricing. C) sets a low price to drive rivals out of business. D) has been regulated using a price cap. E) is guilty of price fixing.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Markets for Factors of Production

Economic Inequality

Filters

The possible alternatives for an oligopoly range from the monopoly case with to the perfectly competitive case with .

The first antitrust act was passed in .