Question 1

It is easiest for new firms to enter a

Accepted Answer

A) Perfectly competitive market. 
B) Duopoly market. 
C) Oligopoly market. 
D) Monopoly market. 
A) Perfectly competitive market. 
B) Duopoly market. 
C) Oligopoly market. 
D) Monopoly market.

Question 2

Price leadership

Accepted Answer

A) Results in inflexible prices. 
B) Accounts for kinked oligopoly behavior. 
C) Helps achieve monopoly profit for the market. 
D) Results in predatory pricing. 
A) Results in inflexible prices. 
B) Accounts for kinked oligopoly behavior. 
C) Helps achieve monopoly profit for the market. 
D) Results in predatory pricing.

Question 3

In an effort to maximize profits,oligopolists could participate in all of the following but

Accepted Answer

A) Price leadership. 
B) Price-fixing. 
C) Cartels. 
D) Game theory. 
A) Price leadership. 
B) Price-fixing. 
C) Cartels. 
D) Game theory.

Question 4

For an oligopoly,a few firms cannot dominate in the long run unless

Accepted Answer

A) A cartel is formed. 
B) A firm has a high concentration ratio. 
C) Barriers to entry exist. 
D) The market is contestable. 
A) A cartel is formed. 
B) A firm has a high concentration ratio. 
C) Barriers to entry exist. 
D) The market is contestable.

Question 5

Product differentiation

Accepted Answer

A) Involves charging different prices to different customers. 
B) Is commonly practiced in perfect competition and monopoly markets. 
C) Involves advertising unique product features. 
D) Is a rarely successful advertising campaign. 
A) Involves charging different prices to different customers. 
B) Is commonly practiced in perfect competition and monopoly markets. 
C) Involves advertising unique product features. 
D) Is a rarely successful advertising campaign.

Question 6

Oligopolies can be characterized as a strategic game among rival companies.

Accepted Answer

A) True 
 B)False

Question 7

The demand curve facing an oligopoly firm is kinked because

Accepted Answer

A) Its competitors will match only price hikes. 
B) It is most likely that rivals will match price cuts but not price increases. 
C) The demand curve that is most inelastic is the most probable situation facing the company. 
D) It is most likely that competitors will match price hikes as they practice price leadership. 
A) Its competitors will match only price hikes. 
B) It is most likely that rivals will match price cuts but not price increases. 
C) The demand curve that is most inelastic is the most probable situation facing the company. 
D) It is most likely that competitors will match price hikes as they practice price leadership.

Question 8

One type of explicit price-fixing is known as price leadership.

Accepted Answer

A) True 
 B)False

Question 9

The pricing strategy in which one firm is allowed by its rivals to establish the market price for all firms in the market is called

Accepted Answer

A) Overt collusion. 
B) Price leadership. 
C) Pattern pricing. 
D) Price-fixing. 
A) Overt collusion. 
B) Price leadership. 
C) Pattern pricing. 
D) Price-fixing.

Question 10

According to "Oil Spikes On OPEC Pact," OPEC wants to behave like a monopoly,choosing a rate of industry output that maximizes total industry profit.The challenges for all cartels,OPEC in particular,include all of the following except

Accepted Answer

A) Preventing some members from decreasing production. 
B) Allocating market share. 
C) Coordination. 
D) Replicating monopoly outcomes. 
A) Preventing some members from decreasing production. 
B) Allocating market share. 
C) Coordination. 
D) Replicating monopoly outcomes.

Question 11

An increase in the market share of one oligopolist will not affect the market share of the other firms in the industry.

Accepted Answer

A) True 
 B)False

Question 12

A high concentration ratio is the only way to achieve market power.

Accepted Answer

A) True 
 B)False

Question 13

Market share is the percentage of total output produced by a single firm.

Accepted Answer

A) True 
 B)False

Question 14

If an oligopoly market is contestable and new firms enter,the

Accepted Answer

A) Market power of the former oligopolists will be reduced. 
B) Number of firms in the industry will decrease. 
C) Former oligopolists will raise their prices. 
D) Profitability of the industry will increase. 
A) Market power of the former oligopolists will be reduced. 
B) Number of firms in the industry will decrease. 
C) Former oligopolists will raise their prices. 
D) Profitability of the industry will increase.

Question 15

When oligopoly firms collude to raise prices,

Accepted Answer

A) Each firm benefits,but society loses. 
B) Both the colluding firms and society benefit. 
C) Everyone is eventually a loser. 
D) Only the price leader benefits while other firms and society lose. 
A) Each firm benefits,but society loses. 
B) Both the colluding firms and society benefit. 
C) Everyone is eventually a loser. 
D) Only the price leader benefits while other firms and society lose.

Question 16

The concentration ratio computed nationally tends to understate the market power in local markets.

Accepted Answer

A) True 
 B)False

Question 17

Price leadership is a method by which oligopolies can

Accepted Answer

A) Increase prices without explicit price-fixing. 
B) Illegally raise prices. 
C) Maintain the "kink" in their demand curves. 
D) Encourage competition. 
A) Increase prices without explicit price-fixing. 
B) Illegally raise prices. 
C) Maintain the "kink" in their demand curves. 
D) Encourage competition.

Question 18

If a firm is producing at the kink in its demand curve and it decides to decrease its price,according to the kinked demand model

Accepted Answer

A) It will gain market share. 
B) It will lose market share to the firms that do not follow the price decrease. 
C) Its market share will not be affected. 
D) It will lose market share,but its profits will decrease. 
A) It will gain market share. 
B) It will lose market share to the firms that do not follow the price decrease. 
C) Its market share will not be affected. 
D) It will lose market share,but its profits will decrease.

Question 19

There are many corn farmers,each of whom produces the same product.The corn market can best be classified as

Accepted Answer

A) Monopolistic competition. 
B) Perfect competition. 
C) Oligopoly. 
D) Monopoly. 
A) Monopolistic competition. 
B) Perfect competition. 
C) Oligopoly. 
D) Monopoly.

Question 20

If oligopolists start cutting prices to capture a larger market share,the result will be a

Accepted Answer

A) Movement up the market demand curve. 
B) Movement down the market demand curve. 
C) Leftward shift of the market demand curve. 
D) Rightward shift of the market demand curve. 
A) Movement up the market demand curve. 
B) Movement down the market demand curve. 
C) Leftward shift of the market demand curve. 
D) Rightward shift of the market demand curve.

Exam 25: Oligopoly

It is easiest for new firms to enter a

Price leadership

In an effort to maximize profits,oligopolists could participate in all of the following but

For an oligopoly,a few firms cannot dominate in the long run unless

Product differentiation

Oligopolies can be characterized as a strategic game among rival companies.

The demand curve facing an oligopoly firm is kinked because

One type of explicit price-fixing is known as price leadership.

The pricing strategy in which one firm is allowed by its rivals to establish the market price for all firms in the market is called

According to "Oil Spikes On OPEC Pact," OPEC wants to behave like a monopoly,choosing a rate of industry output that maximizes total industry profit.The challenges for all cartels,OPEC in particular,include all of the following except

An increase in the market share of one oligopolist will not affect the market share of the other firms in the industry.

A high concentration ratio is the only way to achieve market power.

Market share is the percentage of total output produced by a single firm.

If an oligopoly market is contestable and new firms enter,the

When oligopoly firms collude to raise prices,

The concentration ratio computed nationally tends to understate the market power in local markets.

Price leadership is a method by which oligopolies can

If a firm is producing at the kink in its demand curve and it decides to decrease its price,according to the kinked demand model

There are many corn farmers,each of whom produces the same product.The corn market can best be classified as

If oligopolists start cutting prices to capture a larger market share,the result will be a

Economics: the Core Issues

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