Question 1

Game theory is distinctive in that its elements are

Accepted Answer

A)  costs, prices, and profits. 
B)  revenues, elasticity, and profits. 
C)  rules, strategies, payoffs, and outcomes. 
D)  patents, copyrights, and barriers to entry. 
A)  costs, prices, and profits. 
B)  revenues, elasticity, and profits. 
C)  rules, strategies, payoffs, and outcomes. 
D)  patents, copyrights, and barriers to entry.

Question 2

Game theory is applicable to oligopoly behavior because oligopolists

Accepted Answer

A)  use strategic behavior. 
B)  ignore rival firms. 
C)  are price takers. 
D)  can only be profitable if they collude. 
A)  use strategic behavior. 
B)  ignore rival firms. 
C)  are price takers. 
D)  can only be profitable if they collude.

Question 3

Russia, Iran and Qatar made the first serious moves in October 2008 toward forming an OPEC-style cartel on natural gas. Each of the countries can comply with the cartel agreement or to cheat on the cartel agreement. If all countries comply, the economic profit for each will be $140 million. If one country cheats, that country earns $200 million in economic profit and the other countries will have economic losses of $10 million. If all countries cheat, they break even. What are the strategies in this game?

Accepted Answer

A)  Comply with the cartel agreement or to cheat on the cartel agreement. 
B)  Comply with the agreement and earn $140 million in profit. 
C)  Cheat on the cartel agreement and earn -$10 million in profits. 
D)  Earn between $140 and $200 million in profits. 
A)  Comply with the cartel agreement or to cheat on the cartel agreement. 
B)  Comply with the agreement and earn $140 million in profit. 
C)  Cheat on the cartel agreement and earn -$10 million in profits. 
D)  Earn between $140 and $200 million in profits.

Question 4

In game theory, strategies include ________.

Accepted Answer

A)  all possible actions of each player 
B)  only the winning action of each player 
C)  all possible actions and payoffs of each player 
D)  the payoff matrix 
A)  all possible actions of each player 
B)  only the winning action of each player 
C)  all possible actions and payoffs of each player 
D)  the payoff matrix

Question 5

Player A  
-The table above shows the payoff matrix for a prisoners' dilemma game. The Nash equilibrium is that

Accepted Answer

A)  both prisoners do not confess. 
B)  both prisoners confess. 
C)  prisoner A confesses while prisoner B does not confess. 
D)  prisoner A does not confess while prisoner B confesses. 
A)  both prisoners do not confess. 
B)  both prisoners confess. 
C)  prisoner A confesses while prisoner B does not confess. 
D)  prisoner A does not confess while prisoner B confesses.

Question 6

Oligopoly is

Accepted Answer

A)  like monopoly because there are barriers to entry. 
B)  like perfect competition because oligopoly firms all sell homogeneous goods. 
C)  like monopolistic competition because oligopoly firms all sell differentiated goods. 
D)  like perfect competition because there are many firms in the industry. 
A)  like monopoly because there are barriers to entry. 
B)  like perfect competition because oligopoly firms all sell homogeneous goods. 
C)  like monopolistic competition because oligopoly firms all sell differentiated goods. 
D)  like perfect competition because there are many firms in the industry.

Question 7

Game theory is a tool for studying ________.

Accepted Answer

A)  Nash behavior 
B)  payoff dilemmas 
C)  rational dilemmas 
D)  strategic behavior 
A)  Nash behavior 
B)  payoff dilemmas 
C)  rational dilemmas 
D)  strategic behavior

Question 8

When producers agree to restrict output, raise the price, and increase profits, the agreement is called ________.

Accepted Answer

A)  a pricing agreement 
B)  an oligopoly agreement 
C)  a collusive agreement 
D)  a monopoly agreement 
A)  a pricing agreement 
B)  an oligopoly agreement 
C)  a collusive agreement 
D)  a monopoly agreement

Question 9

In the oligopoly price-fixing game, the payoffs are the

Accepted Answer

A)  profits of the firms. 
B)  market shares of the firms. 
C)  sales of the firms. 
D)  reputations of the firms. 
A)  profits of the firms. 
B)  market shares of the firms. 
C)  sales of the firms. 
D)  reputations of the firms.

Question 10

A contestable market is one in which there are

Accepted Answer

A)  one or a few firms, and entry into the market is costly. 
B)  one or a few firms, and entry into the market is not costly. 
C)  many firms, and entry into the market is costly. 
D)  many firms, and entry into the market is not costly. 
A)  one or a few firms, and entry into the market is costly. 
B)  one or a few firms, and entry into the market is not costly. 
C)  many firms, and entry into the market is costly. 
D)  many firms, and entry into the market is not costly.

Question 11

A strategy of setting price below the monopoly profit-maximizing price but at the highest level that will still result in a loss for a potential entrant into the market is known as

Accepted Answer

A)  entry pricing. 
B)  contestable pricing. 
C)  limit pricing. 
D)  unlimited pricing. 
A)  entry pricing. 
B)  contestable pricing. 
C)  limit pricing. 
D)  unlimited pricing.

Question 12

A strategy called "limit pricing" sets the price

Accepted Answer

A)  below the competitive level. 
B)  at the monopoly level. 
C)  at the lowest level that inflicts a loss on the entrant. 
D)  at the highest level that inflicts a loss on the entrant. 
A)  below the competitive level. 
B)  at the monopoly level. 
C)  at the lowest level that inflicts a loss on the entrant. 
D)  at the highest level that inflicts a loss on the entrant.

Question 13

What are the current merger guidelines as developed and administered by the Federal Trade Commission?

Accepted Answer

The current merger guidelines are based

Question 14

The beginning of antitrust law is found in the

Accepted Answer

A)  1914 Clayton Act. 
B)  1890 Sherman Act. 
C)  1947 Taft-Hartley Act. 
D)  1950 Cellar-Kefauver Act. 
A)  1914 Clayton Act. 
B)  1890 Sherman Act. 
C)  1947 Taft-Hartley Act. 
D)  1950 Cellar-Kefauver Act.

Question 15

The Sherman Act

Accepted Answer

A)  was the first federal tariff. 
B)  prohibited attempts to monopolize. 
C)  outlawed natural monopolies. 
D)  abolished tariffs. 
A)  was the first federal tariff. 
B)  prohibited attempts to monopolize. 
C)  outlawed natural monopolies. 
D)  abolished tariffs.

Question 16

In ________ market structure, a firm's output depends ________.

Accepted Answer

A)  an oligopoly; only on its own marginal revenue and marginal cost curves 
B)  a monopolistically competitive; in part on its competitors' price and quantity decisions 
C)  an oligopoly; in part on its competitors' price and quantity decisions 
D)  a monopolistically competitive; only on its marginal revenue curve 
A)  an oligopoly; only on its own marginal revenue and marginal cost curves 
B)  a monopolistically competitive; in part on its competitors' price and quantity decisions 
C)  an oligopoly; in part on its competitors' price and quantity decisions 
D)  a monopolistically competitive; only on its marginal revenue curve

Question 17

The iPhone 5 no longer comes pre-loaded with Google Maps and uses the Apple map application instead. Regulators might be concerned with this requirement because they might see it as an example of

Accepted Answer

A)  resale price maintenance. 
B)  a tying arrangement. 
C)  predatory pricing. 
D)  collusion to create a monopoly. 
A)  resale price maintenance. 
B)  a tying arrangement. 
C)  predatory pricing. 
D)  collusion to create a monopoly.

Question 18

Kellogg's and General Mills are two of the dominant breakfast cereal manufactures in the U.S. Each firm can either sign or not sign an exclusive contract with an Olympian gold-medal athlete to appear on the cover of a cereal box. If both companies sign an athlete, they will each make $5 million in economic profit. If only firm signs, they earn $8 million in economic profit and the other firm incurs an economic loss of $1 million. If neither firm signs, they break even. What are the strategies in this game?

Accepted Answer

A)  Do not sign exclusive contract with an Olympian gold-medal athlete to appear on the cover of a cereal box and make $8 million in profit 
B)  Sign an exclusive contract with an Olympian gold-medal athlete to appear on the cover of a cereal box and do not sign exclusive contract with an Olympian gold-medal athlete to appear on the cover of a cereal box 
C)  Sign an exclusive contract with an Olympian gold-medal athlete to appear on the cover of a cereal box and make $8 million in profit 
D)  Make $5 million or $8 million in profit 
A)  Do not sign exclusive contract with an Olympian gold-medal athlete to appear on the cover of a cereal box and make $8 million in profit 
B)  Sign an exclusive contract with an Olympian gold-medal athlete to appear on the cover of a cereal box and do not sign exclusive contract with an Olympian gold-medal athlete to appear on the cover of a cereal box 
C)  Sign an exclusive contract with an Olympian gold-medal athlete to appear on the cover of a cereal box and make $8 million in profit 
D)  Make $5 million or $8 million in profit

Question 19

Which of the following business practices, if proven to exist, is always illegal under U.S. antitrust law?

Accepted Answer

A)  tying arrangements 
B)  price fixing among competitors 
C)  exclusive dealing 
D)  all of the above 
A)  tying arrangements 
B)  price fixing among competitors 
C)  exclusive dealing 
D)  all of the above

Question 20

Which of the following is a distinguishing characteristic of oligopoly?

Accepted Answer

A)  A large number of firms compete. 
B)  Each firm's actions influence the profits of all the other firms. 
C)  Firms are free to enter and exit the industry. 
D)  Natural barriers cannot prevent the entry of new firms. 
A)  A large number of firms compete. 
B)  Each firm's actions influence the profits of all the other firms. 
C)  Firms are free to enter and exit the industry. 
D)  Natural barriers cannot prevent the entry of new firms.

Exam 15: Oligopoly

Game theory is distinctive in that its elements are

Game theory is applicable to oligopoly behavior because oligopolists

In game theory, strategies include ________.

Player A -The table above shows the payoff matrix for a prisoners' dilemma game. The Nash equilibrium is that

Oligopoly is

Game theory is a tool for studying ________.

When producers agree to restrict output, raise the price, and increase profits, the agreement is called ________.

In the oligopoly price-fixing game, the payoffs are the

A contestable market is one in which there are

A strategy of setting price below the monopoly profit-maximizing price but at the highest level that will still result in a loss for a potential entrant into the market is known as

A strategy called "limit pricing" sets the price

What are the current merger guidelines as developed and administered by the Federal Trade Commission?

The beginning of antitrust law is found in the

The Sherman Act

In ________ market structure, a firm's output depends ________.

The iPhone 5 no longer comes pre-loaded with Google Maps and uses the Apple map application instead. Regulators might be concerned with this requirement because they might see it as an example of

Which of the following business practices, if proven to exist, is always illegal under U.S. antitrust law?

Which of the following is a distinguishing characteristic of oligopoly?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

In market structure, a firm's output depends .