Question 1

In the contestable market model, an oligopoly with no barriers to entry sets a:

Accepted Answer

A)  monopoly price. 
B)  price that significantly exceeds average total cost. 
C)  price that is equal to average total cost. 
D)  collusive price. 
A)  monopoly price. 
B)  price that significantly exceeds average total cost. 
C)  price that is equal to average total cost. 
D)  collusive price.

Question 2

If individuals were fully rational, financing services such as social networks and search engines by selling data collected on consumers would be:

Accepted Answer

A)  less of a problem than otherwise because consumers would not be inappropriately influenced by advertising. 
B)  more of a problem than otherwise because consumers would not be inappropriately influenced by government. 
C)  less of a problem than otherwise because consumers would not be inappropriately influenced by government. 
D)  more of a problem than otherwise because consumers would not be inappropriately influenced by advertising. 
A)  less of a problem than otherwise because consumers would not be inappropriately influenced by advertising. 
B)  more of a problem than otherwise because consumers would not be inappropriately influenced by government. 
C)  less of a problem than otherwise because consumers would not be inappropriately influenced by government. 
D)  more of a problem than otherwise because consumers would not be inappropriately influenced by advertising.

Question 3

When the FTC investigated whether firms conspired to fix prices of computer memory called dynamic random-access memory (DRAM) chips, Samsung, Micron Technology, Hynix Semiconductor, and Infineon controlled more than 75 percent of the market for DRAM chips. The market for these chips is most likely:

Accepted Answer

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

Question 4

Refer to the graph shown. If a firm operating as if it were faced with a kinked demand curve believes that if it raises price from P2 to P1, its rival will not go along, then:

Accepted Answer

A)  the demand curve used by the firm for decision making is highly inelastic. 
B)  it probably won't raise price, since doing so would cause sales to drop from Q3 to Q1. 
C)  it probably will raise price, since lower output means lower costs and greater profit. 
D)  D2 is the relevant demand curve. 
A)  the demand curve used by the firm for decision making is highly inelastic. 
B)  it probably won't raise price, since doing so would cause sales to drop from Q3 to Q1. 
C)  it probably will raise price, since lower output means lower costs and greater profit. 
D)  D2 is the relevant demand curve.

Question 5

The Herfindahl index and the concentration ratio fail to give a complete picture of an economy's competitiveness because:

Accepted Answer

A)  they measure each firm's share of sales rather than each firm's share of profits. 
B)  many corporations are conglomerates, spanning a variety of different industries. 
C)  they don't account for mergers within an industry. 
D)  they are based on market share, not market size. 
A)  they measure each firm's share of sales rather than each firm's share of profits. 
B)  many corporations are conglomerates, spanning a variety of different industries. 
C)  they don't account for mergers within an industry. 
D)  they are based on market share, not market size.

Question 6

Which of the following market structures does not have predictable price and output decisions at which the firms will arrive rationally?

Accepted Answer

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

Question 7

Firms base decisions on the decisions of other firms in the market in:

Accepted Answer

A)  a monopolistic industry. 
B)  an oligopolistic industry. 
C)  a monopolistically competitive industry. 
D)  a perfectly competitive industry. 
A)  a monopolistic industry. 
B)  an oligopolistic industry. 
C)  a monopolistically competitive industry. 
D)  a perfectly competitive industry.

Question 8

The basis of judgment for the Standard Oil case was ________, whereas the basis of judgment for the ALCOA case was ________:

Accepted Answer

A)  market structure; market performance. 
B)  unfair business practices; price discrimination. 
C)  monopolistic abuses; market structure. 
D)  market concentration; interlocking directorships. 
A)  market structure; market performance. 
B)  unfair business practices; price discrimination. 
C)  monopolistic abuses; market structure. 
D)  market concentration; interlocking directorships.

Question 9

One reason fewer antitrust cases have been brought before the courts is:

Accepted Answer

A)  more and more firms are platform businesses. 
B)  globalization has changed the competitive landscape. 
C)  goods prices have declined. 
D)  consumers have lost political power. 
A)  more and more firms are platform businesses. 
B)  globalization has changed the competitive landscape. 
C)  goods prices have declined. 
D)  consumers have lost political power.

Question 10

Analyzing each action of a firm on a case-by-case basis to determine if it is in violation of the antitrust laws is generally called judgment by:

Accepted Answer

A)  structure. 
B)  comparison. 
C)  case-by-case. 
D)  performance. 
A)  structure. 
B)  comparison. 
C)  case-by-case. 
D)  performance.

Question 11

The central characteristic of oligopolistic industries is:

Accepted Answer

A)  interdependent pricing decisions. 
B)  flexible prices. 
C)  price competition. 
D)  few or no economies of scale. 
A)  interdependent pricing decisions. 
B)  flexible prices. 
C)  price competition. 
D)  few or no economies of scale.

Question 12

Competition in markets defined as platform monopolies is most likely to come from:

Accepted Answer

A)  foreign firms. 
B)  government. 
C)  small competitors. 
D)  new technologies. 
A)  foreign firms. 
B)  government. 
C)  small competitors. 
D)  new technologies.

Question 13

The contestable market model of oligopoly bases pricing and output decisions on:

Accepted Answer

A)  the threat of new entrants into the market. 
B)  market structure. 
C)  the degree of product differentiation. 
D)  market share. 
A)  the threat of new entrants into the market. 
B)  market structure. 
C)  the degree of product differentiation. 
D)  market share.

Question 14

When judging the competitiveness of markets by the size and number of firms in that market, one is using the:

Accepted Answer

A)  "judgment by performance" criteria. 
B)  "judgment by structure" criteria. 
C)  "judgment by merger" criteria. 
D)  "judgment by antitrust" criteria. 
A)  "judgment by performance" criteria. 
B)  "judgment by structure" criteria. 
C)  "judgment by merger" criteria. 
D)  "judgment by antitrust" criteria.

Question 15

In the North American Industry Classification System (NAICS) classification system, the broadest classification would be:

Accepted Answer

A)  a two-digit industry. 
B)  a three-digit industry. 
C)  a four-digit industry. 
D)  a five-digit industry. 
A)  a two-digit industry. 
B)  a three-digit industry. 
C)  a four-digit industry. 
D)  a five-digit industry.

Question 16

The Herfindahl index is calculated by:

Accepted Answer

A)  adding the squared value of the market shares of all the firms in the industry. 
B)  multiplying the squared value of the market shares of all the firms in the industry. 
C)  adding the percentage of industry output produced by the largest four firms. 
D)  adding the percentage of industry output produced by the largest eight firms. 
A)  adding the squared value of the market shares of all the firms in the industry. 
B)  multiplying the squared value of the market shares of all the firms in the industry. 
C)  adding the percentage of industry output produced by the largest four firms. 
D)  adding the percentage of industry output produced by the largest eight firms.

Question 17

The Sherman Antitrust Act of 1890 was passed primarily because of:

Accepted Answer

A)  the practices of various trusts in the railroad, steel, tobacco, and oil industries. 
B)  the popularity and political influence of John D. Rockefeller. 
C)  multiple examples of false and misleading advertising. 
D)  the monopoly abuses committed by ALCOA. 
A)  the practices of various trusts in the railroad, steel, tobacco, and oil industries. 
B)  the popularity and political influence of John D. Rockefeller. 
C)  multiple examples of false and misleading advertising. 
D)  the monopoly abuses committed by ALCOA.

Question 18

Oligopoly is characterized by:

Accepted Answer

A)  no barriers to entry. 
B)  low market concentration. 
C)  inability to set price. 
D)  few sellers. 
A)  no barriers to entry. 
B)  low market concentration. 
C)  inability to set price. 
D)  few sellers.

Question 19

In economics, the purpose of competition is to:

Accepted Answer

A)  ensure that every firm survives. 
B)  motivate firms to make the highest possible profit. 
C)  motivate firms to make better goods at lower cost. 
D)  prevent unemployment. 
A)  ensure that every firm survives. 
B)  motivate firms to make the highest possible profit. 
C)  motivate firms to make better goods at lower cost. 
D)  prevent unemployment.

Question 20

If a profit-maximizing oligopolist has a kinked demand curve, a downward shift in its marginal cost curve:

Accepted Answer

A)  may not affect output or price. 
B)  increases output or price but not both. 
C)  reduces both output and price. 
D)  reduces output but not price. 
A)  may not affect output or price. 
B)  increases output or price but not both. 
C)  reduces both output and price. 
D)  reduces output but not price.

Exam 15: Oligopoly and Antitrust Policy

In the contestable market model, an oligopoly with no barriers to entry sets a:

If individuals were fully rational, financing services such as social networks and search engines by selling data collected on consumers would be:

When the FTC investigated whether firms conspired to fix prices of computer memory called dynamic random-access memory (DRAM) chips, Samsung, Micron Technology, Hynix Semiconductor, and Infineon controlled more than 75 percent of the market for DRAM chips. The market for these chips is most likely:

Refer to the graph shown. If a firm operating as if it were faced with a kinked demand curve believes that if it raises price from P2 to P1, its rival will not go along, then:

The Herfindahl index and the concentration ratio fail to give a complete picture of an economy's competitiveness because:

Which of the following market structures does not have predictable price and output decisions at which the firms will arrive rationally?

Firms base decisions on the decisions of other firms in the market in:

The basis of judgment for the Standard Oil case was ________, whereas the basis of judgment for the ALCOA case was ________:

One reason fewer antitrust cases have been brought before the courts is:

Analyzing each action of a firm on a case-by-case basis to determine if it is in violation of the antitrust laws is generally called judgment by:

The central characteristic of oligopolistic industries is:

Competition in markets defined as platform monopolies is most likely to come from:

The contestable market model of oligopoly bases pricing and output decisions on:

When judging the competitiveness of markets by the size and number of firms in that market, one is using the:

In the North American Industry Classification System (NAICS) classification system, the broadest classification would be:

The Herfindahl index is calculated by:

The Sherman Antitrust Act of 1890 was passed primarily because of:

Oligopoly is characterized by:

In economics, the purpose of competition is to:

If a profit-maximizing oligopolist has a kinked demand curve, a downward shift in its marginal cost curve:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Filters

Refer to the graph shown. If a firm operating as if it were faced with a kinked demand curve believes that if it raises price from P₂ to P₁, its rival will not go along, then:

The basis of judgment for the Standard Oil case was , whereas the basis of judgment for the ALCOA case was :