Question 1

An oligopolistic industry is characterized by

Accepted Answer

A)  one dominant firm in the industry. 
B)  having no market power. 
C)  free entry and exit. 
D)  strategic behavior. 
A)  one dominant firm in the industry. 
B)  having no market power. 
C)  free entry and exit. 
D)  strategic behavior.

Question 2

In most oligopolistic industries, positive profits attract new firms and thus increase production.

Accepted Answer

A) True 
 B)False

Question 3

Refer to the information provided in Table 14.3 below to answer the question that follows.
Table 14.3
B's Strategy
 $$\begin{array} { l l l l } 
\hline & &  { \text { Advertise } } & { \text { Don't Advertise } } \
\hline & & & \text { A's profit } \$ 200 \
& & \text { A's profit } \$ 75 \text { million million } \
 & \text { Advertise } & \text { B's profit } \$ 75 \text { million } \text { B's profit } \$ 50 \text { million } \
\text { A's Strategy }  & & & \
& & \text { A's profit } \$ 50 & \text { A's profit } \$ 100 \
& \text { Don't } & \text { million } & \text { million } \
& & \text { B's profit } \$ 200 & \text { B'sprofit } \$ 100 \
& \text { Advertise } & \text { million } & \text { million }
\end{array}$$
-Refer to Table 14.3. Firm A?s dominant strategy is

Accepted Answer

A)  to advertise. 
B)  to not advertise. 
C)  dependent on what Firm B does. 
D)  indeterminate from this information, as no information is provided on Firm A?s risk preference. 
A)  to advertise. 
B)  to not advertise. 
C)  dependent on what Firm B does. 
D)  indeterminate from this information, as no information is provided on Firm A?s risk preference.

Question 4

A(n) ________ industry is characterized by strategic behavior.

Accepted Answer

A)  perfectly competitive 
B)  monopolistic 
C)  monopolistically competitive 
D)  oligopolistic 
A)  perfectly competitive 
B)  monopolistic 
C)  monopolistically competitive 
D)  oligopolistic

Question 5

You read that 25 firms that grow and export peanuts to the United States decide to form a cartel. The cartel aims to raise the price of peanuts and reduce output to increase profits for the peanut growers. You predict that this cartel will probably

Accepted Answer

A)  not be successful because the number of firms is unmanageable and there are a number of good substitutes for peanuts. 
B)  not be successful because there are too few firms that are trying to organize the cartel. 
C)  be successful because the demand for peanuts is very elastic. 
D)  be successful because it will be very easy to enforce the rules among only 25 firms. 
A)  not be successful because the number of firms is unmanageable and there are a number of good substitutes for peanuts. 
B)  not be successful because there are too few firms that are trying to organize the cartel. 
C)  be successful because the demand for peanuts is very elastic. 
D)  be successful because it will be very easy to enforce the rules among only 25 firms.

Question 6

In the contestable market oligopoly model, firms ________ produce where price exceeds marginal cost.

Accepted Answer

A)  always 
B)  never 
C)  do not always 
D)  are not legally allowed to 
A)  always 
B)  never 
C)  do not always 
D)  are not legally allowed to

Question 7

Products produced in oligopoly markets are always differentiated.

Accepted Answer

A) True 
 B)False

Question 8

Of the following, ________ is the best example of an oligopolistic industry.

Accepted Answer

A)  retail grocery 
B)  automobiles production 
C)  electric power 
D)  soybean farming 
A)  retail grocery 
B)  automobiles production 
C)  electric power 
D)  soybean farming

Question 9

The four largest firms account for approximately 95% of U.S. cigarette sales. The U.S. cigarette industry would be best classified as a(n)

Accepted Answer

A)  perfectly competitive industry. 
B)  monopolistically competitive industry. 
C)  oligopoly. 
D)  monopoly. 
A)  perfectly competitive industry. 
B)  monopolistically competitive industry. 
C)  oligopoly. 
D)  monopoly.

Question 10

In order to calculate the HHI, the government must first define the relevant market.

Accepted Answer

A) True 
 B)False

Question 11

Product variety and innovation are ________ associated with the oligopoly model.

Accepted Answer

A)  rarely 
B)  benefits 
C)  never 
D)  only 
A)  rarely 
B)  benefits 
C)  never 
D)  only

Question 12

A ________ occurs if all players in a game play their best strategies given what their competitors do.

Accepted Answer

A)  dominant strategy 
B)  Nash equilibrium 
C)  prisoners' dilemma 
D)  tit-for-tat strategy 
A)  dominant strategy 
B)  Nash equilibrium 
C)  prisoners' dilemma 
D)  tit-for-tat strategy

Question 13

In the oligopoly market structure, the behavior of any given firm ________ the behavior of the other firms in the industry.

Accepted Answer

A)  is independent of 
B)  must be different from 
C)  must be the same as 
D)  depends on 
A)  is independent of 
B)  must be different from 
C)  must be the same as 
D)  depends on

Question 14

Refer to the information provided in Table 14.5 below to answer the question that follows.
Table 14.5
B's Strategy
 $$\begin{array} { l l l l } 
\hline & & \text { Advertise } & \text { Don't Advertise } \
\hline & & \text { A's profit } \$ 200 & \text { A's profit } \$ 400 \
& & \text { million } & \text { million } \
& & \text { B's profit } \$ 200 & \text { B's profit } \$ 100 \
& \text { Advertise } & \text { million } & \text { million } \
\text { A's Strategy }  & & & \
& & \text { A's profit } \$ 100 & \text { A's profit } \$ 150 \
& \text { Don't } & \text { million } & \text { million } \
& & \text { B'sprofit } \$ 400 & \text { B's profit } \$ 150 \
& \text { Advertise } & \text { million } & \text { million }
\end{array}$$
-Refer to Table 14.5. Firm A's dominant strategy is to not advertise.

Accepted Answer

A) True 
 B)False

Question 15

Evidence shows that firms in more highly concentrated industries spend more on R&D than firms in less concentrated industries.

Accepted Answer

A) True 
 B)False

Question 16

Refer to the information provided in Table 14.3 below to answer the question that follows.
Table 14.3
B's Strategy
 $$\begin{array} { l l l l } 
\hline & &  { \text { Advertise } } & { \text { Don't Advertise } } \
\hline & & & \text { A's profit } \$ 200 \
& & \text { A's profit } \$ 75 \text { million million } \
 & \text { Advertise } & \text { B's profit } \$ 75 \text { million } \text { B's profit } \$ 50 \text { million } \
\text { A's Strategy }  & & & \
& & \text { A's profit } \$ 50 & \text { A's profit } \$ 100 \
& \text { Don't } & \text { million } & \text { million } \
& & \text { B's profit } \$ 200 & \text { B'sprofit } \$ 100 \
& \text { Advertise } & \text { million } & \text { million }
\end{array}$$
-Refer to Table 14.3. The result of this game is known as a

Accepted Answer

A)  prisoners' dilemma. 
B)  collusive outcome. 
C)  repeated strategy. 
D)  tit-for-tat outcome. 
A)  prisoners' dilemma. 
B)  collusive outcome. 
C)  repeated strategy. 
D)  tit-for-tat outcome.

Question 17

The Cournot model is based on two firms that produce identical products and collude to set prices.

Accepted Answer

A) True 
 B)False

Question 18

Even when faced with a relatively powerful seller, some buyers can still exert bargaining power.

Accepted Answer

A) True 
 B)False

Question 19

The Celler-Kefauver Act of 1950

Accepted Answer

A)  declared every contract or conspiracy to restrain trade illegal. 
B)  outlawed specific monopolistic behaviors such as tying contracts, price discrimination, and unlimited mergers. 
C)  extended the language of the Federal Trade Commission Act to include "deceptive" as well as "unfair" competition methods. 
D)  extended the government's authority to ban vertical and conglomerate mergers. 
A)  declared every contract or conspiracy to restrain trade illegal. 
B)  outlawed specific monopolistic behaviors such as tying contracts, price discrimination, and unlimited mergers. 
C)  extended the language of the Federal Trade Commission Act to include "deceptive" as well as "unfair" competition methods. 
D)  extended the government's authority to ban vertical and conglomerate mergers.

Question 20

A duopoly is

Accepted Answer

A)  a two-firm oligopoly. 
B)  a two-firm monopoly. 
C)  an identical pair of perfectly competitive industries. 
D)  An illegal, price-fixing cartel. 
A)  a two-firm oligopoly. 
B)  a two-firm monopoly. 
C)  an identical pair of perfectly competitive industries. 
D)  An illegal, price-fixing cartel.

An oligopolistic industry is characterized by

In most oligopolistic industries, positive profits attract new firms and thus increase production.

A(n) ________ industry is characterized by strategic behavior.

You read that 25 firms that grow and export peanuts to the United States decide to form a cartel. The cartel aims to raise the price of peanuts and reduce output to increase profits for the peanut growers. You predict that this cartel will probably

In the contestable market oligopoly model, firms ________ produce where price exceeds marginal cost.

Products produced in oligopoly markets are always differentiated.

Of the following, ________ is the best example of an oligopolistic industry.

The four largest firms account for approximately 95% of U.S. cigarette sales. The U.S. cigarette industry would be best classified as a(n)

In order to calculate the HHI, the government must first define the relevant market.

Product variety and innovation are ________ associated with the oligopoly model.

A ________ occurs if all players in a game play their best strategies given what their competitors do.

In the oligopoly market structure, the behavior of any given firm ________ the behavior of the other firms in the industry.

Evidence shows that firms in more highly concentrated industries spend more on R&D than firms in less concentrated industries.

The Cournot model is based on two firms that produce identical products and collude to set prices.

Even when faced with a relatively powerful seller, some buyers can still exert bargaining power.

The Celler-Kefauver Act of 1950

A duopoly is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

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Exam 14: Oligopoly

An oligopolistic industry is characterized by

In most oligopolistic industries, positive profits attract new firms and thus increase production.

A(n) ________ industry is characterized by strategic behavior.

You read that 25 firms that grow and export peanuts to the United States decide to form a cartel. The cartel aims to raise the price of peanuts and reduce output to increase profits for the peanut growers. You predict that this cartel will probably

In the contestable market oligopoly model, firms ________ produce where price exceeds marginal cost.

Products produced in oligopoly markets are always differentiated.

Of the following, ________ is the best example of an oligopolistic industry.

The four largest firms account for approximately 95% of U.S. cigarette sales. The U.S. cigarette industry would be best classified as a(n)

In order to calculate the HHI, the government must first define the relevant market.

Product variety and innovation are ________ associated with the oligopoly model.

A ________ occurs if all players in a game play their best strategies given what their competitors do.

In the oligopoly market structure, the behavior of any given firm ________ the behavior of the other firms in the industry.

Evidence shows that firms in more highly concentrated industries spend more on R&D than firms in less concentrated industries.

The Cournot model is based on two firms that produce identical products and collude to set prices.

Even when faced with a relatively powerful seller, some buyers can still exert bargaining power.

The Celler-Kefauver Act of 1950

A duopoly is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters