Question 1

The Orlando,Florida,theme park industry tends to follow a price leadership model.This means that:

Accepted Answer

A) each theme park sets its own price and operating hours independent of what other parks do. 
B) Disney often sets a price and rival theme parks then follow with similar if not identical prices. 
C) Disney often sets prices only to be undercut by rival firms who prefer to engage in price wars. 
D) firms use explicit written agreements to charge identical prices. 
A) each theme park sets its own price and operating hours independent of what other parks do. 
B) Disney often sets a price and rival theme parks then follow with similar if not identical prices. 
C) Disney often sets prices only to be undercut by rival firms who prefer to engage in price wars. 
D) firms use explicit written agreements to charge identical prices.

Question 2

Use the following to answer question:
Figure: Pricing Strategy in Cable TV Market II  
-(Figure: Pricing Strategy in Cable TV Market II)Use Figure: Pricing Strategy in Cable TV Market II.If the two firms in the cable TV market collude:

Accepted Answer

A) CableNorth will set a high price and earn $80,000,and CableSouth will set a low price and earn $130,000. 
B) CableNorth will set a low price and earn $130,000,and CableSouth will set a high price and earn $80,000. 
C) both firms will set a low price and each will earn $90,000. 
D) both firms will set a high price and each will earn $100,000. 
A) CableNorth will set a high price and earn $80,000,and CableSouth will set a low price and earn $130,000. 
B) CableNorth will set a low price and earn $130,000,and CableSouth will set a high price and earn $80,000. 
C) both firms will set a low price and each will earn $90,000. 
D) both firms will set a high price and each will earn $100,000.

Question 3

The effect of product differentiation is to:

Accepted Answer

A) start a price war. 
B) reduce prices to the noncooperative level. 
C) reduce the intensity of competition among the firms in the oligopoly. 
D) increase the intensity of competition among the firms in the oligopoly. 
A) start a price war. 
B) reduce prices to the noncooperative level. 
C) reduce the intensity of competition among the firms in the oligopoly. 
D) increase the intensity of competition among the firms in the oligopoly.

Question 4

Use the following to answer question:
Figure: Monopoly Profits in Duopoly  
-(Figure: Monopoly Profits in Duopoly)Use Figure: Monopoly Profits in Duopoly.The efficient solution in the figure is found where price is _____ and quantity is _____.

Accepted Answer

A) P1;Q4 
B) P2;Q2 
C) P2;Q1 
D) P3;Q1 
A) P1;Q4 
B) P2;Q2 
C) P2;Q1 
D) P3;Q1

Question 5

Oligopolies are industries:

Accepted Answer

A) dominated by one seller who shares market power equally with all other sellers. 
B) made up of few firms,each with some market power and therefore aware of their interdependence with the other firms. 
C) composed of many buyers and sellers,all of whom are price takers. 
D) that are the same as monopolistically competitive industries,except that they sell a standardized product. 
A) dominated by one seller who shares market power equally with all other sellers. 
B) made up of few firms,each with some market power and therefore aware of their interdependence with the other firms. 
C) composed of many buyers and sellers,all of whom are price takers. 
D) that are the same as monopolistically competitive industries,except that they sell a standardized product.

Question 6

The effect of product differentiation is to increase price competition.

Accepted Answer

A) True 
 B)False

Question 7

Which factor would make it difficult for Georgia peach suppliers to collude?

Accepted Answer

A) only a few suppliers 
B) each supplier having the same costs 
C) buyers of peaches having very little bargaining power since peaches are homogeneous 
D) only a few buyers of peaches 
A) only a few suppliers 
B) each supplier having the same costs 
C) buyers of peaches having very little bargaining power since peaches are homogeneous 
D) only a few buyers of peaches

Question 8

The field of law that attempts to limit the ability of oligopolists to collude and restrict competition is called:

Accepted Answer

A) antitrust policy. 
B) product safety policy. 
C) fuel-efficiency standards. 
D) excise tax policy. 
A) antitrust policy. 
B) product safety policy. 
C) fuel-efficiency standards. 
D) excise tax policy.

Question 9

The largest Herfindahl-Hirschman index possible is _____,and the industry is a(n)_____.

Accepted Answer

A) 10;monopoly 
B) 10,000;monopoly 
C) 100,000;monopoly 
D) 100,000;oligopoly 
A) 10;monopoly 
B) 10,000;monopoly 
C) 100,000;monopoly 
D) 100,000;oligopoly

Question 10

The practice of one company tacitly setting prices for the industry as a whole is:

Accepted Answer

A) tacit collusion. 
B) product differentiation. 
C) antitrust policy. 
D) price leadership. 
A) tacit collusion. 
B) product differentiation. 
C) antitrust policy. 
D) price leadership.

Question 11

Attempts by the federal government to prevent the exercise of monopoly power in the United States are known as _____ policy.

Accepted Answer

A) stabilization 
B) antitrust 
C) fiscal 
D) government 
A) stabilization 
B) antitrust 
C) fiscal 
D) government

Question 12

Use the following to answer question:  
-(Table: Demand Schedule of Gadgets)Use Table: Demand Schedule of Gadgets.The market for gadgets consists of two producers,Margaret and Ray.Each firm can produce gadgets with no marginal cost or fixed cost.Suppose that these two producers have formed a cartel and are maximizing total industry profits and splitting the production of output evenly between themselves.If Margaret decides to cheat on the agreement and sell 100 more gadgets,how many gadgets will she sell?

Accepted Answer

A) 0 
B) 250 
C) 350 
D) 600 
A) 0 
B) 250 
C) 350 
D) 600

Question 13

(Scenario: Two Identical Firms)Use Scenario: Two Identical Firms.When the firms collude and produce the profit-maximizing output,what is the profit earned by each firm if they split production equally? Scenario: Two Identical Firms
Two identical firms make up an industry in which the market demand curve is represented by Q = 5,000 - 4P,where Q is the quantity demanded and P is price per unit.The marginal cost of producing the good in this industry is constant and equal to $650.Fixed cost is zero.

Accepted Answer

A) $360,000 
B) $180,000 
C) $15,000 
D) $25,000 
A) $360,000 
B) $180,000 
C) $15,000 
D) $25,000

Question 14

The law enacted in 1890 to break up existing monopolies and prevent the formation of new ones was the Sherman Antitrust Act.

Accepted Answer

A) True 
 B)False

Question 15

(Scenario: Payoff Matrix for Firms X and Y)Payoff Matrix for Firms X and Y.If firm X and firm Y wish to maximize joint profits: Scenario: Payoff Matrix for Firms X and Y
The following payoff matrix depicts the profits for the only two firms in this oligopolistic industry.

Accepted Answer

A) each firm should choose its dominant strategy. 
B) firm Y should choose a dominant strategy and firm X should choose a nondominant strategy. 
C) each should consider its specific situation before choosing a strategy since strategies also entail costs. 
D) each should choose a nondominant strategy. 
A) each firm should choose its dominant strategy. 
B) firm Y should choose a dominant strategy and firm X should choose a nondominant strategy. 
C) each should consider its specific situation before choosing a strategy since strategies also entail costs. 
D) each should choose a nondominant strategy.

Question 16

Tacit collusion is difficult to achieve in practice:

Accepted Answer

A) the larger the number of firms in the industry. 
B) the fewer the number of products being sold. 
C) the more similar the marginal costs of each firm. 
D) if customers have little or no bargaining power. 
A) the larger the number of firms in the industry. 
B) the fewer the number of products being sold. 
C) the more similar the marginal costs of each firm. 
D) if customers have little or no bargaining power.

Question 17

The purpose of antitrust policy is to prevent the exercise of monopoly power.

Accepted Answer

A) True 
 B)False

Question 18

Use the following to answer question:
Figure: Pricing Strategy in Cable TV Market II  
-(Figure: Pricing Strategy in Cable TV Market II)Use Figure: Pricing Strategy in Cable TV Market II.The noncooperative equilibrium in the cable TV market occurs when:

Accepted Answer

A) CableNorth sets a high price and earns $80,000,and CableSouth sets a low price and earns $130,000. 
B) CableNorth sets a low price and earns $130,000,and CableSouth sets a high price and earns $80,000. 
C) both firms set a low price and each earns $90,000. 
D) both firms set a high price and each earns $100,000. 
A) CableNorth sets a high price and earns $80,000,and CableSouth sets a low price and earns $130,000. 
B) CableNorth sets a low price and earns $130,000,and CableSouth sets a high price and earns $80,000. 
C) both firms set a low price and each earns $90,000. 
D) both firms set a high price and each earns $100,000.

Question 19

The government agency in the United States that reviews proposed mergers of firms in the same industry and prohibits mergers that it believes will reduce competition is the:

Accepted Answer

A) Commerce Department. 
B) Federal Reserve. 
C) Labor Department 
D) Department of Justice. 
A) Commerce Department. 
B) Federal Reserve. 
C) Labor Department 
D) Department of Justice.

Question 20

Which statement does NOT describe OPEC?

Accepted Answer

A) OPEC is the Organization of Petroleum Exporting Countries. 
B) OPEC is an international cartel made up of 12 oil-producing countries and two unofficial members. 
C) OPEC is the cartel that was responsible for the large increases in crude oil prices in the 1970s. 
D) OPEC is the name of the free-trade zone encompassing the Middle East and other oil-producing nations. 
A) OPEC is the Organization of Petroleum Exporting Countries. 
B) OPEC is an international cartel made up of 12 oil-producing countries and two unofficial members. 
C) OPEC is the cartel that was responsible for the large increases in crude oil prices in the 1970s. 
D) OPEC is the name of the free-trade zone encompassing the Middle East and other oil-producing nations.

The Orlando,Florida,theme park industry tends to follow a price leadership model.This means that:

Use the following to answer question: Figure: Pricing Strategy in Cable TV Market II -(Figure: Pricing Strategy in Cable TV Market II)Use Figure: Pricing Strategy in Cable TV Market II.If the two firms in the cable TV market collude:

The effect of product differentiation is to:

Use the following to answer question: Figure: Monopoly Profits in Duopoly -(Figure: Monopoly Profits in Duopoly)Use Figure: Monopoly Profits in Duopoly.The efficient solution in the figure is found where price is _ and quantity is _.

Oligopolies are industries:

The effect of product differentiation is to increase price competition.

Which factor would make it difficult for Georgia peach suppliers to collude?

The field of law that attempts to limit the ability of oligopolists to collude and restrict competition is called:

The largest Herfindahl-Hirschman index possible is _,and the industry is a(n)_.

The practice of one company tacitly setting prices for the industry as a whole is:

Attempts by the federal government to prevent the exercise of monopoly power in the United States are known as _____ policy.

The law enacted in 1890 to break up existing monopolies and prevent the formation of new ones was the Sherman Antitrust Act.

(Scenario: Payoff Matrix for Firms X and Y)Payoff Matrix for Firms X and Y.If firm X and firm Y wish to maximize joint profits: Scenario: Payoff Matrix for Firms X and Y The following payoff matrix depicts the profits for the only two firms in this oligopolistic industry.

Tacit collusion is difficult to achieve in practice:

The purpose of antitrust policy is to prevent the exercise of monopoly power.

Use the following to answer question: Figure: Pricing Strategy in Cable TV Market II -(Figure: Pricing Strategy in Cable TV Market II)Use Figure: Pricing Strategy in Cable TV Market II.The noncooperative equilibrium in the cable TV market occurs when:

The government agency in the United States that reviews proposed mergers of firms in the same industry and prohibits mergers that it believes will reduce competition is the:

Which statement does NOT describe OPEC?

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Exam 14: Oligopoly

The Orlando,Florida,theme park industry tends to follow a price leadership model.This means that:

Use the following to answer question: Figure: Pricing Strategy in Cable TV Market II -(Figure: Pricing Strategy in Cable TV Market II)Use Figure: Pricing Strategy in Cable TV Market II.If the two firms in the cable TV market collude:

The effect of product differentiation is to:

Use the following to answer question: Figure: Monopoly Profits in Duopoly -(Figure: Monopoly Profits in Duopoly)Use Figure: Monopoly Profits in Duopoly.The efficient solution in the figure is found where price is _____ and quantity is _____.

Oligopolies are industries:

The effect of product differentiation is to increase price competition.

Which factor would make it difficult for Georgia peach suppliers to collude?

The field of law that attempts to limit the ability of oligopolists to collude and restrict competition is called:

The largest Herfindahl-Hirschman index possible is _____,and the industry is a(n)_____.

The practice of one company tacitly setting prices for the industry as a whole is:

Attempts by the federal government to prevent the exercise of monopoly power in the United States are known as _____ policy.

The law enacted in 1890 to break up existing monopolies and prevent the formation of new ones was the Sherman Antitrust Act.

(Scenario: Payoff Matrix for Firms X and Y)Payoff Matrix for Firms X and Y.If firm X and firm Y wish to maximize joint profits: Scenario: Payoff Matrix for Firms X and Y The following payoff matrix depicts the profits for the only two firms in this oligopolistic industry.

Tacit collusion is difficult to achieve in practice:

The purpose of antitrust policy is to prevent the exercise of monopoly power.

Use the following to answer question: Figure: Pricing Strategy in Cable TV Market II -(Figure: Pricing Strategy in Cable TV Market II)Use Figure: Pricing Strategy in Cable TV Market II.The noncooperative equilibrium in the cable TV market occurs when:

The government agency in the United States that reviews proposed mergers of firms in the same industry and prohibits mergers that it believes will reduce competition is the:

Which statement does NOT describe OPEC?

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Use the following to answer question: Figure: Monopoly Profits in Duopoly -(Figure: Monopoly Profits in Duopoly)Use Figure: Monopoly Profits in Duopoly.The efficient solution in the figure is found where price is _ and quantity is _.

The largest Herfindahl-Hirschman index possible is _,and the industry is a(n)_.