Question 1

-Refer to Figure 12.6.Assume the firm represented is selling its product at $12.It could increase its revenue by:

Accepted Answer

A) raising its price. 
B) by lowering its price. 
C) by producing more. 
D) None of these are correct. 
A) raising its price. 
B) by lowering its price. 
C) by producing more. 
D) None of these are correct.

Question 2

A dominant strategy exists when a firm's choice is the best regardless of other firms' decisions.

Accepted Answer

A) True 
 B)False

Question 3

Recall the application about Microsoft having a virtual monopoly in the market for personal-computer operating systems and business software.Which of the following best represents the way Microsoft keeps other firms from entering the market?

Accepted Answer

A) Microsoft buys out small firms that have the potential to make a similar product. 
B) Microsoft uses limit pricing to deter entry. 
C) Microsoft has a patent that prohibits any firm from producing a similar product. 
D) Microsoft is a pure monopoly where it is impossible for other firms to enter the market. 
A) Microsoft buys out small firms that have the potential to make a similar product. 
B) Microsoft uses limit pricing to deter entry. 
C) Microsoft has a patent that prohibits any firm from producing a similar product. 
D) Microsoft is a pure monopoly where it is impossible for other firms to enter the market.

Question 4

In an oligopolistic market,the government may limit the number of firms in a market by issuing patents.

Accepted Answer

A) True 
 B)False

Question 5

-Refer to Figure 12.1.Assume the firms have formed a cartel.If the cartel is maximizing profits,the cartel's profits are:

Accepted Answer

A) $0. 
B) $1,080. 
C) $1,800. 
D) indeterminate from this information. 
A) $0. 
B) $1,080. 
C) $1,800. 
D) indeterminate from this information.

Question 6

If one duopolist chooses the highest price it will maximize its profit.

Accepted Answer

A) True 
 B)False

Question 7

Under price leadership,when firm A suddenly drops its price what could its competitors interpret by the drop in price?

Accepted Answer

A) Firm A is breaking an explicit pricing agreement. 
B) Firm A is forming a cartel. 
C) Firm A is not cooperating with the price fixing. 
D) Firm A observed a change in demand or production. 
A) Firm A is breaking an explicit pricing agreement. 
B) Firm A is forming a cartel. 
C) Firm A is not cooperating with the price fixing. 
D) Firm A observed a change in demand or production.

Question 8

-Refer to Figure 12.8.Which of the following would be a Nash equilibrium?

Accepted Answer

A) Both A and B advertise. 
B) Both A and B do not advertise. 
C) A advertises and B does not. 
D) B advertises and A does not. 
A) Both A and B advertise. 
B) Both A and B do not advertise. 
C) A advertises and B does not. 
D) B advertises and A does not.

Question 9

When a company increases output and accepts a lower price to keep new companies from entering the market,it is engaging in:

Accepted Answer

A) cartel team up. 
B) limit pricing. 
C) collusion. 
D) price ceiling. 
A) cartel team up. 
B) limit pricing. 
C) collusion. 
D) price ceiling.

Question 10

Assuming that firms do not collude,compare the market outcome under oligopoly with the outcome under monopoly.

Accepted Answer

An oligopoly market will produce an outp

Question 11

According to one rule of thumb,a four-firm concentration ratio of greater than 40 percent for the industry is considered to be an oligopoly.

Accepted Answer

A) True 
 B)False

Question 12

A payoff matrix shows each possible outcome of a game and the consequences for each player.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following firms will find it most useful to engage in advertising?

Accepted Answer

A) perfectly competitive firms 
B) monopolistically competitive firms 
C) monopolies 
D) members of a cartel 
A) perfectly competitive firms 
B) monopolistically competitive firms 
C) monopolies 
D) members of a cartel

Question 14

Suppose that Sun beach only has three movie theaters.One movie theater decreases its movie ticket price and later that same day,the other two do the same.Which of the following is true?

Accepted Answer

A) This is illegal because the movie theater are colluding. 
B) This is an example of explicit price fixing. 
C) The first movie theater to lower price is probably the implicit price leader. 
D) All of the above are true. 
A) This is illegal because the movie theater are colluding. 
B) This is an example of explicit price fixing. 
C) The first movie theater to lower price is probably the implicit price leader. 
D) All of the above are true.

Question 15

In a two-person,repeated game,a grim-trigger strategy results in:

Accepted Answer

A) each firm following its own self-interest choice. 
B) each firm earning economic profits. 
C) one firm choosing a price so low that no firm earns an economic profit. 
D) one firm earning economic profits while the other does not. 
A) each firm following its own self-interest choice. 
B) each firm earning economic profits. 
C) one firm choosing a price so low that no firm earns an economic profit. 
D) one firm earning economic profits while the other does not.

Question 16

-Refer to Figure 12.8.If both firms follow their dominant strategies,Firm B will earn profits equal to:

Accepted Answer

A) $500. 
B) $700. 
C) $200. 
D) $100. 
A) $500. 
B) $700. 
C) $200. 
D) $100.

Question 17

-Refer to Figure 12.7 The numerical data show daily profits for each of the two firms when they choose a specific pricing strategy.In the Nash equilibrium:

Accepted Answer

A) both firms would a high price. 
B) both firms would charge a low price. 
C) only Zeta would charge a low price. 
D) only Omega would charge a low price. 
A) both firms would a high price. 
B) both firms would charge a low price. 
C) only Zeta would charge a low price. 
D) only Omega would charge a low price.

Question 18

-Refer to Figure 12.6.The segment of the demand curve from $9 to $12 is:

Accepted Answer

A) relatively inelastic. 
B) positively sloped. 
C) relatively elastic. 
D) not realistic. 
A) relatively inelastic. 
B) positively sloped. 
C) relatively elastic. 
D) not realistic.

Question 19

Many cartels exist in the U.S.because cartels and price-fixing are legal under United States law.

Accepted Answer

A) True 
 B)False

Question 20

Firms participating in implicit price leadership openly discuss their pricing strategies with one another.

Accepted Answer

A) True 
 B)False

-Refer to Figure 12.6.Assume the firm represented is selling its product at $12.It could increase its revenue by:

A dominant strategy exists when a firm's choice is the best regardless of other firms' decisions.

Recall the application about Microsoft having a virtual monopoly in the market for personal-computer operating systems and business software.Which of the following best represents the way Microsoft keeps other firms from entering the market?

In an oligopolistic market,the government may limit the number of firms in a market by issuing patents.

-Refer to Figure 12.1.Assume the firms have formed a cartel.If the cartel is maximizing profits,the cartel's profits are:

If one duopolist chooses the highest price it will maximize its profit.

Under price leadership,when firm A suddenly drops its price what could its competitors interpret by the drop in price?

-Refer to Figure 12.8.Which of the following would be a Nash equilibrium?

When a company increases output and accepts a lower price to keep new companies from entering the market,it is engaging in:

Assuming that firms do not collude,compare the market outcome under oligopoly with the outcome under monopoly.

According to one rule of thumb,a four-firm concentration ratio of greater than 40 percent for the industry is considered to be an oligopoly.

A payoff matrix shows each possible outcome of a game and the consequences for each player.

Which of the following firms will find it most useful to engage in advertising?

Suppose that Sun beach only has three movie theaters.One movie theater decreases its movie ticket price and later that same day,the other two do the same.Which of the following is true?

In a two-person,repeated game,a grim-trigger strategy results in:

-Refer to Figure 12.8.If both firms follow their dominant strategies,Firm B will earn profits equal to:

-Refer to Figure 12.7 The numerical data show daily profits for each of the two firms when they choose a specific pricing strategy.In the Nash equilibrium:

-Refer to Figure 12.6.The segment of the demand curve from $9 to $12 is:

Many cartels exist in the U.S.because cartels and price-fixing are legal under United States law.

Firms participating in implicit price leadership openly discuss their pricing strategies with one another.

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

-Refer to Figure 12.6.Assume the firm represented is selling its product at $12.It could increase its revenue by:

A dominant strategy exists when a firm's choice is the best regardless of other firms' decisions.

Recall the application about Microsoft having a virtual monopoly in the market for personal-computer operating systems and business software.Which of the following best represents the way Microsoft keeps other firms from entering the market?

In an oligopolistic market,the government may limit the number of firms in a market by issuing patents.

-Refer to Figure 12.1.Assume the firms have formed a cartel.If the cartel is maximizing profits,the cartel's profits are:

If one duopolist chooses the highest price it will maximize its profit.

Under price leadership,when firm A suddenly drops its price what could its competitors interpret by the drop in price?

-Refer to Figure 12.8.Which of the following would be a Nash equilibrium?

When a company increases output and accepts a lower price to keep new companies from entering the market,it is engaging in:

Assuming that firms do not collude,compare the market outcome under oligopoly with the outcome under monopoly.

According to one rule of thumb,a four-firm concentration ratio of greater than 40 percent for the industry is considered to be an oligopoly.

A payoff matrix shows each possible outcome of a game and the consequences for each player.

Which of the following firms will find it most useful to engage in advertising?

Suppose that Sun beach only has three movie theaters.One movie theater decreases its movie ticket price and later that same day,the other two do the same.Which of the following is true?

In a two-person,repeated game,a grim-trigger strategy results in:

-Refer to Figure 12.8.If both firms follow their dominant strategies,Firm B will earn profits equal to:

-Refer to Figure 12.7 The numerical data show daily profits for each of the two firms when they choose a specific pricing strategy.In the Nash equilibrium:

-Refer to Figure 12.6.The segment of the demand curve from $9 to $12 is:

Many cartels exist in the U.S.because cartels and price-fixing are legal under United States law.

Firms participating in implicit price leadership openly discuss their pricing strategies with one another.

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