Question 1

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. A

Question 2

According to the contestable market model, if there are no barriers to entry or exit, the price an oligopolist sets will provide no economic profits in the long run.

Accepted Answer

A) True 
 B)False  True

Question 3

A firm could be guilty of antitrust violations using the judgment by structure criteria despite:

Accepted Answer

A) pricing goods above the competitive price. 
B) producing the best product it could at the lowest possible cost. 
C) controlling only 10 percent of the market. 
D) restraining trade through cartels. 
A) pricing goods above the competitive price. 
B) producing the best product it could at the lowest possible cost. 
C) controlling only 10 percent of the market. 
D) restraining trade through cartels. B

Question 4

(a)For each of the following calculate the four-firm concentration ratio and the Herfindahl index.
Industry 1: 44 firms in the industry.The four largest firms each have a 15% market share,the remaining firms each have a 1% market share.
Industry 2: 7 firms in the industry.The six largest firms each have a 15% market share,the remaining firm has a 10% market share.
(b)Is it possible to state with certainty which industry is more competitive? Explain your answer by using your calculations from (a)in your explanation.

Accepted Answer

(a)Industry 1: Four-firm concentration r

Question 5

Judgment by performance means that the competitiveness of a market is determined by:

Accepted Answer

A) the actual behavior of firms in the market. 
B) the structure of the industry. 
C) the number of firms in the market. 
D) technological considerations. 
A) the actual behavior of firms in the market. 
B) the structure of the industry. 
C) the number of firms in the market. 
D) technological considerations.

Question 6

From society's perspective, a possible benefit of a cartel is that it could:

Accepted Answer

A) provide incentives for firms to cooperate in setting price and output. 
B) not earn economic profits. 
C) minimize average total costs. 
D) provide incentives for the introduction of superior products by competitors. 
A) provide incentives for firms to cooperate in setting price and output. 
B) not earn economic profits. 
C) minimize average total costs. 
D) provide incentives for the introduction of superior products by competitors.

Question 7

Consider two industries described by the data below.Should we use a structural analysis of markets approach or a contestable market approach to analyze the competitiveness of each industry? Analyze the industries using the correct approach and explain what information we need to use the other approach. $$\begin{array} { c c c } 
\text { Industry } & \begin{array} { c } 
\text {value } \
\text { Herfindahl index }
\end{array}& \begin{array} { c } 
\text { Four-firm } \
\text { concentration ratio }
\end{array} \
\text { A } & 7,500 & 80 \
\text { B } & 1,000 & 20
\end{array}$$

Accepted Answer

Using a structural analysis of markets a

Question 8

Given the market share information in the table below,calculate the four firm concentration ratio and the Herfindahl index. $$\begin{array} { | c | c | } 
\hline \text { Firm Number } & \text { Market Share (\%) } \
\hline 1 & 35 \
\hline 2 & 25 \
\hline 3 & 15 \
\hline 4 & 15 \
\hline 5 & 10 \
\hline
\end{array}$$

Accepted Answer

The four firm concentration ra

Question 9

In Industry 1,Firm A,B,C,D and E each has 20 percent of the market.In Industry 2,Firm A has 75 percent of the market,Firm B has 2 percent,Firm C has 2 percent,and Firm D and 20 other firms all have 1 percent each.Which of these two industries do you consider likely to be more competitive,and why?

Accepted Answer

Industry 1 is likely more competitive.It

Question 10

According to the contestable market model, if there are no barriers to entry or exit, the price an oligopolist sets will be equivalent to average total cost.

Accepted Answer

A) True 
 B)False

Question 11

ALCOA was found guilty of violating the antitrust statutes in 1945 because it:

Accepted Answer

A) had engaged in unfair pricing practices. 
B) forced competing firms out of business with unfair business practices. 
C) exploited its monopoly power to charge high prices. 
D) used its knowledge of the market to expand its capacity before any competitors had a chance to enter the market. 
A) had engaged in unfair pricing practices. 
B) forced competing firms out of business with unfair business practices. 
C) exploited its monopoly power to charge high prices. 
D) used its knowledge of the market to expand its capacity before any competitors had a chance to enter the market.

Question 12

Why is competition in platform monopolies ususally connected to technological change?

Accepted Answer

Platform monopolies tend to be natural m

Question 13

In 1996, Archer Daniels Midland Company was found guilty of fixing the price of lysine. This is an example of:

Accepted Answer

A) judgment by performance. 
B) judgment by structure. 
C) judgment by design. 
D) judgment that is not part of U.S. antitrust policy. 
A) judgment by performance. 
B) judgment by structure. 
C) judgment by design. 
D) judgment that is not part of U.S. antitrust policy.

Question 14

There is only one firm in the market. The economist analyzing that market has said she would expect the price to equal the firm's average total costs.

Accepted Answer

A) She must be analyzing this market using a contestable market model. 
B) She must be analyzing this market using a game theory model. 
C) She must be analyzing this market using a cartel model. 
D) She must not be an economist, because that answer is clearly wrong. 
A) She must be analyzing this market using a contestable market model. 
B) She must be analyzing this market using a game theory model. 
C) She must be analyzing this market using a cartel model. 
D) She must not be an economist, because that answer is clearly wrong.

Question 15

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 16

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 17

Why is allocation of market share such a central feature in determining the decisions of firms in the cartel model of oligopoly and what is the central feature determining the decisions of firms in the contestable market model of oligopoly?

Accepted Answer

In the cartel model of oligopoly,firms a

Question 18

Platform businesses such as Google and Facebook:

Accepted Answer

A) do not face competition. 
B) use data to retain market power. 
C) are highly regulated. 
D) are public utilities. 
A) do not face competition. 
B) use data to retain market power. 
C) are highly regulated. 
D) are public utilities.

Question 19

Cartels are organizations that:

Accepted Answer

A) keep markets contestable. 
B) encourage price wars. 
C) coordinate the output and pricing decisions of a group of firms. 
D) use predatory pricing to monopolize industries. 
A) keep markets contestable. 
B) encourage price wars. 
C) coordinate the output and pricing decisions of a group of firms. 
D) use predatory pricing to monopolize industries.

Question 20

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

Accepted Answer

A) antitrust laws have been preemptively effective. 
B) the market is more competitive. 
C) foreign goods comprise a larger share of goods purchased. 
D) union workers have gained more power. 
A) antitrust laws have been preemptively effective. 
B) the market is more competitive. 
C) foreign goods comprise a larger share of goods purchased. 
D) union workers have gained more power.

Exam 15: Oligopoly and Antitrust Policy

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

According to the contestable market model, if there are no barriers to entry or exit, the price an oligopolist sets will provide no economic profits in the long run.

A firm could be guilty of antitrust violations using the judgment by structure criteria despite:

Judgment by performance means that the competitiveness of a market is determined by:

From society's perspective, a possible benefit of a cartel is that it could:

Given the market share information in the table below,calculate the four firm concentration ratio and the Herfindahl index. Firm Number Market Share (\%) 1 35 2 25 3 15 4 15 5 10

In Industry 1,Firm A,B,C,D and E each has 20 percent of the market.In Industry 2,Firm A has 75 percent of the market,Firm B has 2 percent,Firm C has 2 percent,and Firm D and 20 other firms all have 1 percent each.Which of these two industries do you consider likely to be more competitive,and why?

According to the contestable market model, if there are no barriers to entry or exit, the price an oligopolist sets will be equivalent to average total cost.

ALCOA was found guilty of violating the antitrust statutes in 1945 because it:

Why is competition in platform monopolies ususally connected to technological change?

In 1996, Archer Daniels Midland Company was found guilty of fixing the price of lysine. This is an example of:

There is only one firm in the market. The economist analyzing that market has said she would expect the price to equal the firm's average total costs.

The Herfindahl index is calculated by:

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

Why is allocation of market share such a central feature in determining the decisions of firms in the cartel model of oligopoly and what is the central feature determining the decisions of firms in the contestable market model of oligopoly?

Platform businesses such as Google and Facebook:

Cartels are organizations that:

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

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

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Thinking Like a Modern Economist

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Microeconomic Policy, Economic Reasoning, and Beyond

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Macro Policy in a Global Setting

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