Question 1

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 2

In the cartel model of oligopoly, the firms would decide how much to produce where:

Accepted Answer

A) marginal cost equals marginal revenue. 
B) marginal cost equals price. 
C) marginal cost equals average total cost. 
D) the kink in the demand curve is. 
A) marginal cost equals marginal revenue. 
B) marginal cost equals price. 
C) marginal cost equals average total cost. 
D) the kink in the demand curve is.

Question 3

Concluding that a company is in violation of antitrust laws because it controls over 90 percent of the market is an application of judgment by:

Accepted Answer

A) performance. 
B) structure. 
C) design. 
D) comparative advantage. 
A) performance. 
B) structure. 
C) design. 
D) comparative advantage.

Question 4

Strategic decision making is most important in:

Accepted Answer

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

Question 5

An attorney for a firm that is arguing that its market is competitive rather than monopolistic would be most likely to argue that the relevant market is shown by a:

Accepted Answer

A) three-digit North American Industry Classification System (NAICS)industry. 
B) four-digit North American Industry Classification System (NAICS)industry. 
C) five-digit North American Industry Classification System (NAICS)industry. 
D) six-digit North American Industry Classification System (NAICS)industry. 
A) three-digit North American Industry Classification System (NAICS)industry. 
B) four-digit North American Industry Classification System (NAICS)industry. 
C) five-digit North American Industry Classification System (NAICS)industry. 
D) six-digit North American Industry Classification System (NAICS)industry.

Question 6

In the Standard Oil antitrust case in 1911, the Court ruled that the:

Accepted Answer

A) company had a monopolistic structure and therefore should be broken up. 
B) company was guilty of unfair business practices and therefore should be broken up. 
C) Sherman Antitrust Act did not apply. 
D) company had to be disbanded. 
A) company had a monopolistic structure and therefore should be broken up. 
B) company was guilty of unfair business practices and therefore should be broken up. 
C) Sherman Antitrust Act did not apply. 
D) company had to be disbanded.

Question 7

One advantage of the Herfindahl index over the concentration ratio is that it:

Accepted Answer

A) takes into account only the leading firms in an industry. 
B) gives extra weight to firms that are especially large. 
C) tells about only the top 50 firms in an industry. 
D) is easier to calculate. 
A) takes into account only the leading firms in an industry. 
B) gives extra weight to firms that are especially large. 
C) tells about only the top 50 firms in an industry. 
D) is easier to calculate.

Question 8

An important law in the U.S. regulation of markets is the:

Accepted Answer

A) Standard Oil Antitrust Act of 1890. 
B) Sherman Antitrust Act of 1890. 
C) Alcoa Antitrust Act of 1890. 
D) Lincoln Antitrust Act of 1890. 
A) Standard Oil Antitrust Act of 1890. 
B) Sherman Antitrust Act of 1890. 
C) Alcoa Antitrust Act of 1890. 
D) Lincoln Antitrust Act of 1890.

Question 9

The cartel model of oligopoly assumes that firms jointly behave as a monopolist in order to maximize joint profits.

Accepted Answer

A) True 
 B)False

Question 10

Refer to the graph shown. The oligopolist shown currently charges a price P1. It believes that rival firms will:

Accepted Answer

A) gain market share if it lowers price. 
B) lose market share if it lowers price. 
C) raise price if it raises price. 
D) lower price if it lowers price. 
A) gain market share if it lowers price. 
B) lose market share if it lowers price. 
C) raise price if it raises price. 
D) lower price if it lowers price.

Question 11

A problem with using the judgment by performance criterion is that:

Accepted Answer

A) it is difficult to determine the relevant market. 
B) it is difficult to determine the relevant industry. 
C) each action of a firm must be analyzed separately and within a particular context. 
D) the court must decide whether to use concentration ratios or the Herfindahl index. 
A) it is difficult to determine the relevant market. 
B) it is difficult to determine the relevant industry. 
C) each action of a firm must be analyzed separately and within a particular context. 
D) the court must decide whether to use concentration ratios or the Herfindahl index.

Question 12

A market has the following characteristics: There is strategic pricing, output is somewhat restricted, there is interdependent decision making, and some long-run economic profits are possible. This market is:

Accepted Answer

A) a monopoly. 
B) an oligopoly. 
C) monopolistically competitive. 
D) perfectly competitive. 
A) a monopoly. 
B) an oligopoly. 
C) monopolistically competitive. 
D) perfectly competitive.

Question 13

What was the outcome in the following cases and were they decided by the standard of structure or performance? The cases are: (a)The Standard Oil case (b)The ALCOA case (c)The U.S.Steel case.

Accepted Answer

(a)Standard Oil was found guilty of viol

Question 14

Suppose an industry has a four-firm concentration ratio of 20 percent and a Herfindahl index of 600. According to the cartel model, the industry would be more likely to have:

Accepted Answer

A) a monopolistic price. 
B) a competitive price. 
C) either a monopolistic or a competitive price, depending on barriers to entry and exit. 
D) a price war. 
A) a monopolistic price. 
B) a competitive price. 
C) either a monopolistic or a competitive price, depending on barriers to entry and exit. 
D) a price war.

Question 15

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 16

When judging the competitiveness of markets by the behavior 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

If the four-firm concentration ratio is 80,what is the highest Herfindahl index that industry could have? What is the lowest?

Accepted Answer

The highest Herfindahl index would occur

Question 18

Platform monopolies initially make large losses because they:

Accepted Answer

A) receive subsidies from government. 
B) receive subsidies from other businesses. 
C) are trying to gain market share as quickly as possible. 
D) have to hire high-salary tech employees. 
A) receive subsidies from government. 
B) receive subsidies from other businesses. 
C) are trying to gain market share as quickly as possible. 
D) have to hire high-salary tech employees.

Question 19

A four-firm concentration ratio of 75 tells you that the top:

Accepted Answer

A) firm in the industry produces 75 percent of the industry's output. 
B) four firms in the industry produce 75 percent of the industry's output. 
C) four firms in the industry produce 25 percent of the industry's output. 
D) four firms in the industry earn 75 percent of the industry's profits. 
A) firm in the industry produces 75 percent of the industry's output. 
B) four firms in the industry produce 75 percent of the industry's output. 
C) four firms in the industry produce 25 percent of the industry's output. 
D) four firms in the industry earn 75 percent of the industry's profits.

Question 20

One advantage of the Herfindahl index over the concentration ratio is that the:

Accepted Answer

A) Herfindahl index ignores the small firms that always exist on the fringes of any industry. 
B) Herfindahl index is easier to compute. 
C) Herfindahl index takes into account all firms in an industry. 
D) concentration ratio excludes the largest firms in an industry. 
A) Herfindahl index ignores the small firms that always exist on the fringes of any industry. 
B) Herfindahl index is easier to compute. 
C) Herfindahl index takes into account all firms in an industry. 
D) concentration ratio excludes the largest firms in an industry.

Exam 15: Oligopoly and Antitrust Policy

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

In the cartel model of oligopoly, the firms would decide how much to produce where:

Concluding that a company is in violation of antitrust laws because it controls over 90 percent of the market is an application of judgment by:

Strategic decision making is most important in:

An attorney for a firm that is arguing that its market is competitive rather than monopolistic would be most likely to argue that the relevant market is shown by a:

In the Standard Oil antitrust case in 1911, the Court ruled that the:

One advantage of the Herfindahl index over the concentration ratio is that it:

An important law in the U.S. regulation of markets is the:

The cartel model of oligopoly assumes that firms jointly behave as a monopolist in order to maximize joint profits.

Refer to the graph shown. The oligopolist shown currently charges a price P1. It believes that rival firms will:

A problem with using the judgment by performance criterion is that:

A market has the following characteristics: There is strategic pricing, output is somewhat restricted, there is interdependent decision making, and some long-run economic profits are possible. This market is:

What was the outcome in the following cases and were they decided by the standard of structure or performance? The cases are: (a)The Standard Oil case (b)The ALCOA case (c)The U.S.Steel case.

Suppose an industry has a four-firm concentration ratio of 20 percent and a Herfindahl index of 600. According to the cartel model, the industry would be more likely to have:

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

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

If the four-firm concentration ratio is 80,what is the highest Herfindahl index that industry could have? What is the lowest?

Platform monopolies initially make large losses because they:

A four-firm concentration ratio of 75 tells you that the top:

One advantage of the Herfindahl index over the concentration ratio is that the:

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

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

Filters

Refer to the graph shown. The oligopolist shown currently charges a price P₁. It believes that rival firms will: