Question 1

Game theory is

Accepted Answer

A) The study of price-fixing and collusion. 
B) The study of decision making in situations where strategic interaction occurs between rivals. 
C) An explanation of how oligopolists become monopolists. 
D) Practiced by perfectly competitive firms. 
A) The study of price-fixing and collusion. 
B) The study of decision making in situations where strategic interaction occurs between rivals. 
C) An explanation of how oligopolists become monopolists. 
D) Practiced by perfectly competitive firms.

Question 2

The most common form of nonprice competition is

Accepted Answer

A) Collusion. 
B) Advertising. 
C) Patents. 
D) Predatory pricing. 
A) Collusion. 
B) Advertising. 
C) Patents. 
D) Predatory pricing.

Question 3

Which of the following may not characterize an oligopoly?

Accepted Answer

A) A few firms. 
B) Substantial market power. 
C) High barriers to entry. 
D) Many firms. 
A) A few firms. 
B) Substantial market power. 
C) High barriers to entry. 
D) Many firms.

Question 4

Price-fixing is an explicit agreement among producers to sell a good at a particular price.

Accepted Answer

A) True 
 B)False

Question 5

AT&T argued that the merger with T-Mobile should be approved by the Justice Department because

Accepted Answer

A) It will result in higher prices for consumers. 
B) There are many wireless providers available for consumer. 
C) AT&T will gain additional wireless towers from T-Mobile. 
D) The merger will lead to efficiencies because a larger firm can enjoy economies of scale and can keep prices low. 
A) It will result in higher prices for consumers. 
B) There are many wireless providers available for consumer. 
C) AT&T will gain additional wireless towers from T-Mobile. 
D) The merger will lead to efficiencies because a larger firm can enjoy economies of scale and can keep prices low.

Question 6

An In the News article titled "Eliminating the Competition with Low Prices" indicates that,in order to protect their prices and profits,the major carriers operating at the Washington,DC,Dulles airport

Accepted Answer

A) Used patents. 
B) Permanently reduced their prices. 
C) Acquired smaller carriers. 
D) Practiced predatory pricing. 
A) Used patents. 
B) Permanently reduced their prices. 
C) Acquired smaller carriers. 
D) Practiced predatory pricing.

Question 7

If a market changes from oligopoly to perfect competition,then as a result

Accepted Answer

A) Output should increase in the long run. 
B) Fewer resources will be allocated to the market. 
C) Profitability should rise in the long run. 
D) Prices should rise in the long run. 
A) Output should increase in the long run. 
B) Fewer resources will be allocated to the market. 
C) Profitability should rise in the long run. 
D) Prices should rise in the long run.

Question 8

It is most difficult for new firms to enter

Accepted Answer

A) A perfectly competitive market. 
B) An oligopolistic market. 
C) A monopolistically competitive market. 
D) A perfectly contestable market. 
A) A perfectly competitive market. 
B) An oligopolistic market. 
C) A monopolistically competitive market. 
D) A perfectly contestable market.

Question 9

Mergers and acquisitions can act as a barrier to entry.

Accepted Answer

A) True 
 B)False

Question 10

An imperfection in the market mechanism that prevents optimal outcomes is called

Accepted Answer

A) Antitrust behavior. 
B) Collusion. 
C) Market failure. 
D) Price leadership. 
A) Antitrust behavior. 
B) Collusion. 
C) Market failure. 
D) Price leadership.

Question 11

The kinked demand curve is really a composite of two separate demand curves.

Accepted Answer

A) True 
 B)False

Question 12

How might an oligopolist increase total revenue without changing price?

Accepted Answer

A) Reduce output. 
B) Reduce marketing efforts. 
C) Through nonprice competition. 
D) Reduce costs. 
A) Reduce output. 
B) Reduce marketing efforts. 
C) Through nonprice competition. 
D) Reduce costs.

Question 13

Distribution control can be accomplished through all but which one of the following methods?

Accepted Answer

A) Long-term supply contracts. 
B) Expensive gifts at Christmas. 
C) Selective discounts. 
D) Predatory pricing. 
A) Long-term supply contracts. 
B) Expensive gifts at Christmas. 
C) Selective discounts. 
D) Predatory pricing.

Question 14

A demand curve will be kinked if rivals match price reductions but not price increases.

Accepted Answer

A) True 
 B)False

Question 15

Explain the behavioral and structural approaches to government antitrust policy.Identify one practical problem with each approach.

Accepted Answer

Two approaches to identifying potential

Question 16

Which of the following is true about the kink in the demand curve?

Accepted Answer

A) It is the result of different rival responses to price increases and reductions. 
B) It leads to an explanation of price flexibility. 
C) It occurs because rivals do not respond to price reductions. 
D) It occurs because rivals match price increases. 
A) It is the result of different rival responses to price increases and reductions. 
B) It leads to an explanation of price flexibility. 
C) It occurs because rivals do not respond to price reductions. 
D) It occurs because rivals match price increases.

Question 17

A cartel is a group of firms with an implicit,informal agreement to fix prices and output shares in a particular market.

Accepted Answer

A) True 
 B)False

Question 18

According to an In The News article titled "Rivals Match Southwest's Flash Sale,"

Accepted Answer

A) Airlines often match their rivals' fares rather than risk losing price-sensitive passengers. 
B) Airlines will match their rivals' fares but are often slow to react because the firms prefer to sell at the higher price. 
C) Rival airlines put pressure on Southwest to retreat back to higher prices. 
D) American Airlines,Continental Airlines,and United Airlines matched Southwest's fare cuts,but US Airways,JetBlue Airways,and Delta Air Lines did not. 
A) Airlines often match their rivals' fares rather than risk losing price-sensitive passengers. 
B) Airlines will match their rivals' fares but are often slow to react because the firms prefer to sell at the higher price. 
C) Rival airlines put pressure on Southwest to retreat back to higher prices. 
D) American Airlines,Continental Airlines,and United Airlines matched Southwest's fare cuts,but US Airways,JetBlue Airways,and Delta Air Lines did not.

Question 19

Often antitrust enforcers

Accepted Answer

A) Lack the resources to prosecute anticompetitive behavior. 
B) Prefer to break up companies that violate antitrust laws. 
C) Lack a legal structure to prosecute companies for monopoly behavior. 
D) Cannot measure market concentration. 
A) Lack the resources to prosecute anticompetitive behavior. 
B) Prefer to break up companies that violate antitrust laws. 
C) Lack a legal structure to prosecute companies for monopoly behavior. 
D) Cannot measure market concentration.

Question 20

All of the following are arguments to have less antitrust enforcement except for

Accepted Answer

A) Global competitors put pressure on U.S.oligopoly industries. 
B) There is always a chance that new innovators will replace oligopoly firms. 
C) Oligopolies can lead to less output and higher prices. 
D) Companies become large because they are successful in satisfying consumer demand. 
A) Global competitors put pressure on U.S.oligopoly industries. 
B) There is always a chance that new innovators will replace oligopoly firms. 
C) Oligopolies can lead to less output and higher prices. 
D) Companies become large because they are successful in satisfying consumer demand.

Exam 25: Oligopoly

Game theory is

The most common form of nonprice competition is

Which of the following may not characterize an oligopoly?

Price-fixing is an explicit agreement among producers to sell a good at a particular price.

AT&T argued that the merger with T-Mobile should be approved by the Justice Department because

An In the News article titled "Eliminating the Competition with Low Prices" indicates that,in order to protect their prices and profits,the major carriers operating at the Washington,DC,Dulles airport

If a market changes from oligopoly to perfect competition,then as a result

It is most difficult for new firms to enter

Mergers and acquisitions can act as a barrier to entry.

An imperfection in the market mechanism that prevents optimal outcomes is called

The kinked demand curve is really a composite of two separate demand curves.

How might an oligopolist increase total revenue without changing price?

Distribution control can be accomplished through all but which one of the following methods?

A demand curve will be kinked if rivals match price reductions but not price increases.

Explain the behavioral and structural approaches to government antitrust policy.Identify one practical problem with each approach.

Which of the following is true about the kink in the demand curve?

A cartel is a group of firms with an implicit,informal agreement to fix prices and output shares in a particular market.

According to an In The News article titled "Rivals Match Southwest's Flash Sale,"

Often antitrust enforcers

All of the following are arguments to have less antitrust enforcement except for

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty

Filters