Question 1

The Nash equilibrium is an outcome of a game:

Accepted Answer

A) when each player is doing the best he or she can,given the actions of the other players. 
B) each player has a competitive advantage over the other players. 
C) in which there are no winners only losers. 
D) when all the possibilities are revealed to the players. 
A) when each player is doing the best he or she can,given the actions of the other players. 
B) each player has a competitive advantage over the other players. 
C) in which there are no winners only losers. 
D) when all the possibilities are revealed to the players.

Question 2

Low-price guarantees worsen the duopolists' dilemma.

Accepted Answer

A) True 
 B)False

Question 3

Firms in an oligopoly can increase profit by:

Accepted Answer

A) jointly acting to reduce output and increase prices. 
B) independently acting to increase price. 
C) acting alone and refusing to join the group. 
D) none of the above. 
A) jointly acting to reduce output and increase prices. 
B) independently acting to increase price. 
C) acting alone and refusing to join the group. 
D) none of the above.

Question 4

Recall the application about the failure of the salt cartel,why did the salt cartels around the 19th century fail to get established,even though they paid new firms not to produce salt for a year?

Accepted Answer

A) Individual firms cheated on the cartel by selling outside the cartel. 
B) Artificially high price also caused new firms to enter the market. 
C) Salt consumers found substitutes and brought the price of salt down. 
D) A and B are correct. 
A) Individual firms cheated on the cartel by selling outside the cartel. 
B) Artificially high price also caused new firms to enter the market. 
C) Salt consumers found substitutes and brought the price of salt down. 
D) A and B are correct.

Question 5

-Refer to Figure 12.10.The data in the boxes are the annual profits for each company whether they choose to advertise or not.If Lil Box follows its dominant strategy it will:

Accepted Answer

A) earn$ 6 million. 
B) earn $4 million. 
C) earn $10 million. 
D) earn $5 million. 
A) earn$ 6 million. 
B) earn $4 million. 
C) earn $10 million. 
D) earn $5 million.

Question 6

Table 12.1
-Refer to Table 12.1.The four-firm concentration ratio of the cigarette industry is equal to:

Accepted Answer

A) 48%. 
B) 54%. 
C) 71%. 
D) 81%. 
A) 48%. 
B) 54%. 
C) 71%. 
D) 81%.

Question 7

-Refer to Figure 12.5.Section   of the demand curve assumes that competing firms will:

Accepted Answer

A) raise their price in response to this firm's price increase. 
B) decrease their price in response to this firm's price increase. 
C) not change their price in response to this firm's price increase. 
D) raise their price in response to this firm's price decrease. 
A) raise their price in response to this firm's price increase. 
B) decrease their price in response to this firm's price increase. 
C) not change their price in response to this firm's price increase. 
D) raise their price in response to this firm's price decrease.

Question 8

Not practicing limit pricing and allowing entry can hurt an incumbent firm's profits.

Accepted Answer

A) True 
 B)False

Question 9

The type of product sold is what differentiates oligopoly markets from the other three market structure types (perfect competition,monopoly,and monopolistic competition).

Accepted Answer

A) True 
 B)False

Question 10

The cigarette industry is not an example of an oligopolistic industry.

Accepted Answer

A) True 
 B)False

Question 11

If the five-firm concentration ratio in an oligopolistic industry is 100 percent and each firm has an equal share of the market,the Herfindahl-Hirschman Index is:

Accepted Answer

A) 10,000. 
B) 2,000. 
C) 2,500. 
D) 400. 
A) 10,000. 
B) 2,000. 
C) 2,500. 
D) 400.

Question 12

Which of the following industries was NOT charged with price fixing?

Accepted Answer

A) industrial diamonds 
B) electric generators 
C) music distribution 
D) none of the above 
A) industrial diamonds 
B) electric generators 
C) music distribution 
D) none of the above

Question 13

-Refer to Figure 12.5.The model of oligopoly in this diagram is the:

Accepted Answer

A) price leadership model. 
B) kinked demand curve model. 
C) cartel model. 
D) competitive oligopoly. 
A) price leadership model. 
B) kinked demand curve model. 
C) cartel model. 
D) competitive oligopoly.

Question 14

Table 12.1
-Refer to Table 12.1.If Firms L and M were to merge,the four-firm concentration ratio would:

Accepted Answer

A) rise to 71%. 
B) fall to 82%. 
C) fall to 40%. 
D) rise to 82%. 
A) rise to 71%. 
B) fall to 82%. 
C) fall to 40%. 
D) rise to 82%.

Question 15

The prisoners' dilemma is a simultaneous decision-making game.

Accepted Answer

A) True 
 B)False

Question 16

Table 12.2
-Refer to Table 12.2.Jeri and Tom are arrested for having committed a crime.They are being interrogated individually and need to decide if they should confess or not confess.The police have enough information to put them in jail for 5 years.They also know the pair have committed a more egregious crime but without the help of one of the suspects they will not be able to convict them on this charge.The first number in each cell refers to the number of years of prison time Jeri will receive if she confesses or does not confess and the second number in each cell refers to the number of years of prison time Tom will receive if he confesses or does not confess.The dominant strategy for Jeri is to ________ and the dominant strategy for Tom is to ________.

Accepted Answer

A) confess;confess 
B) not confess;not confess 
C) confess;not confess 
D) not confess;confess 
A) confess;confess 
B) not confess;not confess 
C) confess;not confess 
D) not confess;confess

Question 17

Because of the advertisers' dilemma,an industry,as a whole would,if legal have an incentive to ________ advertising to ________ competition among sellers.

Accepted Answer

A) restrict;increase 
B) encourage;increase 
C) restrict;reduce 
D) encourage;reduce 
A) restrict;increase 
B) encourage;increase 
C) restrict;reduce 
D) encourage;reduce

Question 18

-Figure 12.2 shows the decision tree for setting price for the only two firms in a market.One way for both firms to charge a high price is for both firms to:

Accepted Answer

A) play their dominant strategies. 
B) collude. 
C) expand output. 
D) any of the above 
A) play their dominant strategies. 
B) collude. 
C) expand output. 
D) any of the above

Question 19

-Refer to Figure 12.10.The data in the boxes are the annual profits for each company whether they choose to advertise or not.If Lil Box decides not to advertise:

Accepted Answer

A) Big Box should not advertise. 
B) Big Box should advertise. 
C) Lil Box will make $6 million. 
D) Lil Box will make $10 million. 
A) Big Box should not advertise. 
B) Big Box should advertise. 
C) Lil Box will make $6 million. 
D) Lil Box will make $10 million.

Question 20

What is one way that firms can overcome the duopolists' dilemma and promote cartel pricing?

Accepted Answer

A) One firm can guarantee it will match a lower price of a competitor. 
B) Firms can come to an agreement to be at Nash equilibrium. 
C) Firms create a cartel to control prices. 
D) none of the above 
A) One firm can guarantee it will match a lower price of a competitor. 
B) Firms can come to an agreement to be at Nash equilibrium. 
C) Firms create a cartel to control prices. 
D) none of the above

The Nash equilibrium is an outcome of a game:

Low-price guarantees worsen the duopolists' dilemma.

Firms in an oligopoly can increase profit by:

Recall the application about the failure of the salt cartel,why did the salt cartels around the 19th century fail to get established,even though they paid new firms not to produce salt for a year?

-Refer to Figure 12.10.The data in the boxes are the annual profits for each company whether they choose to advertise or not.If Lil Box follows its dominant strategy it will:

Table 12.1 -Refer to Table 12.1.The four-firm concentration ratio of the cigarette industry is equal to:

-Refer to Figure 12.5.Section of the demand curve assumes that competing firms will:

Not practicing limit pricing and allowing entry can hurt an incumbent firm's profits.

The type of product sold is what differentiates oligopoly markets from the other three market structure types (perfect competition,monopoly,and monopolistic competition).

The cigarette industry is not an example of an oligopolistic industry.

If the five-firm concentration ratio in an oligopolistic industry is 100 percent and each firm has an equal share of the market,the Herfindahl-Hirschman Index is:

Which of the following industries was NOT charged with price fixing?

-Refer to Figure 12.5.The model of oligopoly in this diagram is the:

Table 12.1 -Refer to Table 12.1.If Firms L and M were to merge,the four-firm concentration ratio would:

The prisoners' dilemma is a simultaneous decision-making game.

Because of the advertisers' dilemma,an industry,as a whole would,if legal have an incentive to advertising to competition among sellers.

-Figure 12.2 shows the decision tree for setting price for the only two firms in a market.One way for both firms to charge a high price is for both firms to:

-Refer to Figure 12.10.The data in the boxes are the annual profits for each company whether they choose to advertise or not.If Lil Box decides not to advertise:

What is one way that firms can overcome the duopolists' dilemma and promote cartel pricing?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 12: Oligopoly and Strategic Behavior

The Nash equilibrium is an outcome of a game:

Low-price guarantees worsen the duopolists' dilemma.

Firms in an oligopoly can increase profit by:

Recall the application about the failure of the salt cartel,why did the salt cartels around the 19th century fail to get established,even though they paid new firms not to produce salt for a year?

-Refer to Figure 12.10.The data in the boxes are the annual profits for each company whether they choose to advertise or not.If Lil Box follows its dominant strategy it will:

Table 12.1 -Refer to Table 12.1.The four-firm concentration ratio of the cigarette industry is equal to:

-Refer to Figure 12.5.Section of the demand curve assumes that competing firms will:

Not practicing limit pricing and allowing entry can hurt an incumbent firm's profits.

The type of product sold is what differentiates oligopoly markets from the other three market structure types (perfect competition,monopoly,and monopolistic competition).

The cigarette industry is not an example of an oligopolistic industry.

If the five-firm concentration ratio in an oligopolistic industry is 100 percent and each firm has an equal share of the market,the Herfindahl-Hirschman Index is:

Which of the following industries was NOT charged with price fixing?

-Refer to Figure 12.5.The model of oligopoly in this diagram is the:

Table 12.1 -Refer to Table 12.1.If Firms L and M were to merge,the four-firm concentration ratio would:

The prisoners' dilemma is a simultaneous decision-making game.

Because of the advertisers' dilemma,an industry,as a whole would,if legal have an incentive to ________ advertising to ________ competition among sellers.

-Figure 12.2 shows the decision tree for setting price for the only two firms in a market.One way for both firms to charge a high price is for both firms to:

-Refer to Figure 12.10.The data in the boxes are the annual profits for each company whether they choose to advertise or not.If Lil Box decides not to advertise:

What is one way that firms can overcome the duopolists' dilemma and promote cartel pricing?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Because of the advertisers' dilemma,an industry,as a whole would,if legal have an incentive to advertising to competition among sellers.