Question 1

Oligopolistic industries are characterized by a few dominant firms.

Accepted Answer

A) True 
 B)False

Question 2

Tit-for-tat is a ________ game strategy in which a player ________ an opponent's play.

Accepted Answer

A)  repeated; ignores 
B)  repeated; responds in kind to 
C)  single; ignores 
D)  single; responds in kind to 
A)  repeated; ignores 
B)  repeated; responds in kind to 
C)  single; ignores 
D)  single; responds in kind to

Question 3

Tacit collusion occurs when price- and quantity-fixing agreements among producers

Accepted Answer

A)  are implicit. 
B)  are explicit. 
C)  are nonexistent. 
D)  are legal. 
A)  are implicit. 
B)  are explicit. 
C)  are nonexistent. 
D)  are legal.

Question 4

Industry A has four firms that each control 25 percent of the market. Industry B has six firms, where one firm controls 50 percent of the market and the other five firms control 10 percent of the market each. According to the HHI, which industry is more concentrated?

Accepted Answer

A)  Industry A 
B)  Industry B 
C)  Both industries are equally concentrated. 
D)  indeterminate from the given information. 
A)  Industry A 
B)  Industry B 
C)  Both industries are equally concentrated. 
D)  indeterminate from the given information.

Question 5

Which of the following is an assumption of the Cournot model?

Accepted Answer

A)  There is only one firm in an industry. 
B)  Each firm takes the output of the other firm as given. 
C)  The firms behave so as to maximize their revenues. 
D)  Firms collude to fix prices and quantities. 
A)  There is only one firm in an industry. 
B)  Each firm takes the output of the other firm as given. 
C)  The firms behave so as to maximize their revenues. 
D)  Firms collude to fix prices and quantities.

Question 6

The market structure in which the behavior of any given firm depends on the behavior of the other firms in the industry is

Accepted Answer

A)  perfect competition. 
B)  monopoly. 
C)  monopolistic competition. 
D)  oligopoly. 
A)  perfect competition. 
B)  monopoly. 
C)  monopolistic competition. 
D)  oligopoly.

Question 7

All models of oligopoly involve pricing above marginal cost and output levels above the competitive level.

Accepted Answer

A) True 
 B)False

Question 8

Oligopoly is ________ to analyze because of the interdependence that usually exists among oligopolistic firms.

Accepted Answer

A)  very easy 
B)  difficult 
C)  fairly easy 
D)  impossible 
A)  very easy 
B)  difficult 
C)  fairly easy 
D)  impossible

Question 9

Oligopolists compete on price but not quality.

Accepted Answer

A) True 
 B)False

Question 10

Refer to the information provided in Figure 14.1 below to answer the question(s) that follow.   Figure 14.1
-Refer to Figure 14.1. Four firms that produce chewing gum form a cartel. The cartel faces the market demand curve given by D. At the profit-maximizing output, the total cost for the cartel is

Accepted Answer

A)  $3,000. 
B)  $3,720. 
C)  $4,800. 
D)  $5,600. 
A)  $3,000. 
B)  $3,720. 
C)  $4,800. 
D)  $5,600.

Question 11

Refer to the information provided in Figure 14.1 below to answer the question(s) that follow.   Figure 14.1
-Refer to Figure 14.1. Four chewing gum producing firms form a cartel. The firms have identical cost structures. If the cartel produces the profit-maximizing output level, each firm should produce

Accepted Answer

A)  3,000 packs of chewing gum. 
B)  4,000 packs of chewing gum. 
C)  12,000 packs of chewing gum. 
D)  indeterminate output levels from this information. 
A)  3,000 packs of chewing gum. 
B)  4,000 packs of chewing gum. 
C)  12,000 packs of chewing gum. 
D)  indeterminate output levels from this information.

Question 12

Markets in which entry and exit are difficult are known as contestable markets.

Accepted Answer

A) True 
 B)False

Question 13

In the Cournot model, each firm's reaction function shows the firm's ________ as it depends on its rival's output.

Accepted Answer

A)  break-even output 
B)  optimal, profit-maximizing output 
C)  minimum cost 
D)  marginal revenue 
A)  break-even output 
B)  optimal, profit-maximizing output 
C)  minimum cost 
D)  marginal revenue

Question 14

What is the maximum value the HHI can take on?

Accepted Answer

A)  1,000 
B)  5,000 
C)  10,000 
D)  100,000 
A)  1,000 
B)  5,000 
C)  10,000 
D)  100,000

Question 15

Predatory pricing

Accepted Answer

A)  is often an inexpensive way for a large firm to drive smaller firms out of a market. 
B)  is usually quite effective at driving smaller firms out of a market. 
C)  is illegal under antitrust laws. 
D)  is a form of price leadership. 
A)  is often an inexpensive way for a large firm to drive smaller firms out of a market. 
B)  is usually quite effective at driving smaller firms out of a market. 
C)  is illegal under antitrust laws. 
D)  is a form of price leadership.

Question 16

Industries may be oligopolistic due to barriers to entry.

Accepted Answer

A) True 
 B)False

Question 17

Refer to the information provided in Figure 14.1 below to answer the question(s) that follow.   Figure 14.1
-Refer to Figure 14.1. Six chewing gum producing firms form a cartel. The firms have identical cost structures. If the cartel produces the profit-maximizing output level, each firm should produce

Accepted Answer

A)  2,000 packs of chewing gum. 
B)  6,000 packs of chewing gum. 
C)  12,000 packs of chewing gum. 
D)  indeterminate output levels from this information. 
A)  2,000 packs of chewing gum. 
B)  6,000 packs of chewing gum. 
C)  12,000 packs of chewing gum. 
D)  indeterminate output levels from this information.

Question 18

The share of ________ by the top firms is known as the concentration ratio.

Accepted Answer

A)  industry output in sales or employment accounted for 
B)  resources used in production 
C)  the labor force employed 
D)  outstanding shares of stock issued 
A)  industry output in sales or employment accounted for 
B)  resources used in production 
C)  the labor force employed 
D)  outstanding shares of stock issued

Question 19

The "high-tech revolution" grew out of many tiny start-up operations. This is an argument that more technological change occurs in ________ market structures.

Accepted Answer

A)  oligopolistic 
B)  monopoly 
C)  duopoly 
D)  more competitive 
A)  oligopolistic 
B)  monopoly 
C)  duopoly 
D)  more competitive

Question 20

The government uses the HHI as a guideline to determine which proposed mergers are acceptable.

Accepted Answer

A) True 
 B)False

Oligopolistic industries are characterized by a few dominant firms.

Tit-for-tat is a game strategy in which a player an opponent's play.

Tacit collusion occurs when price- and quantity-fixing agreements among producers

Industry A has four firms that each control 25 percent of the market. Industry B has six firms, where one firm controls 50 percent of the market and the other five firms control 10 percent of the market each. According to the HHI, which industry is more concentrated?

Which of the following is an assumption of the Cournot model?

The market structure in which the behavior of any given firm depends on the behavior of the other firms in the industry is

All models of oligopoly involve pricing above marginal cost and output levels above the competitive level.

Oligopoly is ________ to analyze because of the interdependence that usually exists among oligopolistic firms.

Oligopolists compete on price but not quality.

Refer to the information provided in Figure 14.1 below to answer the question(s) that follow. Figure 14.1 -Refer to Figure 14.1. Four firms that produce chewing gum form a cartel. The cartel faces the market demand curve given by D. At the profit-maximizing output, the total cost for the cartel is

Markets in which entry and exit are difficult are known as contestable markets.

In the Cournot model, each firm's reaction function shows the firm's ________ as it depends on its rival's output.

What is the maximum value the HHI can take on?

Predatory pricing

Industries may be oligopolistic due to barriers to entry.

The share of ________ by the top firms is known as the concentration ratio.

The "high-tech revolution" grew out of many tiny start-up operations. This is an argument that more technological change occurs in ________ market structures.

The government uses the HHI as a guideline to determine which proposed mergers are acceptable.

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

Exam 14: Oligopoly

Oligopolistic industries are characterized by a few dominant firms.

Tit-for-tat is a ________ game strategy in which a player ________ an opponent's play.

Tacit collusion occurs when price- and quantity-fixing agreements among producers

Industry A has four firms that each control 25 percent of the market. Industry B has six firms, where one firm controls 50 percent of the market and the other five firms control 10 percent of the market each. According to the HHI, which industry is more concentrated?

Which of the following is an assumption of the Cournot model?

The market structure in which the behavior of any given firm depends on the behavior of the other firms in the industry is

All models of oligopoly involve pricing above marginal cost and output levels above the competitive level.

Oligopoly is ________ to analyze because of the interdependence that usually exists among oligopolistic firms.

Oligopolists compete on price but not quality.

Refer to the information provided in Figure 14.1 below to answer the question(s) that follow. Figure 14.1 -Refer to Figure 14.1. Four firms that produce chewing gum form a cartel. The cartel faces the market demand curve given by D. At the profit-maximizing output, the total cost for the cartel is

Markets in which entry and exit are difficult are known as contestable markets.

In the Cournot model, each firm's reaction function shows the firm's ________ as it depends on its rival's output.

What is the maximum value the HHI can take on?

Predatory pricing

Industries may be oligopolistic due to barriers to entry.

The share of ________ by the top firms is known as the concentration ratio.

The "high-tech revolution" grew out of many tiny start-up operations. This is an argument that more technological change occurs in ________ market structures.

The government uses the HHI as a guideline to determine which proposed mergers are acceptable.

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

Tit-for-tat is a game strategy in which a player an opponent's play.