Question 1

Platform monopolies are most likely:

Accepted Answer

A) natural monopolies. 
B) contestable monopolies. 
C) cartels. 
D) perfect competitors. 
A) natural monopolies. 
B) contestable monopolies. 
C) cartels. 
D) perfect competitors.

Question 2

A cartel is:

Accepted Answer

A) legal in the United States as long as collusion is explicit. 
B) a group of firms that collude to maximize group profits. 
C) found in monopolistically competitive industries. 
D) a group of fringe firms. 
A) legal in the United States as long as collusion is explicit. 
B) a group of firms that collude to maximize group profits. 
C) found in monopolistically competitive industries. 
D) a group of fringe firms.

Question 3

When government uses the judgment by structure criterion, a firm is considered a monopoly only if, for example, it charges excessive prices.

Accepted Answer

A) True 
 B)False

Question 4

In the 1945 ALCOA case, the court used company performance rather than the structure of the market to determine whether the company was in violation of antitrust laws.

Accepted Answer

A) True 
 B)False

Question 5

When OPEC reduces output to keep prices high, OPEC is acting as a:

Accepted Answer

A) cartel. 
B) price taker. 
C) producer in a contestable market. 
D) producer moving along a supply curve, cutting output as price falls. 
A) cartel. 
B) price taker. 
C) producer in a contestable market. 
D) producer moving along a supply curve, cutting output as price falls.

Question 6

What is the central characteristic of oligopoly?

Accepted Answer

The central characteristic of oligopoly

Question 7

Which of the following is a problem associated with judging competitiveness by structure?

Accepted Answer

A) It requires that each action of a firm be analyzed on a case-by-case basis, which is very time- consuming and expensive. 
B) Whether the actions of a firm can be considered appropriate competitive behavior depends on the circumstances. 
C) Structure can be a predictor of future performance. 
D) It is difficult to determine the relevant market and the relevant industry necessary to identify the structural competitiveness of any industry. 
A) It requires that each action of a firm be analyzed on a case-by-case basis, which is very time- consuming and expensive. 
B) Whether the actions of a firm can be considered appropriate competitive behavior depends on the circumstances. 
C) Structure can be a predictor of future performance. 
D) It is difficult to determine the relevant market and the relevant industry necessary to identify the structural competitiveness of any industry.

Question 8

A market has the following characteristics: There is strategic decision making, output is somewhat restricted, there are few firms, 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 9

Taking explicit account of a rival's expected response to a decision you are making is called:

Accepted Answer

A) economic decision making. 
B) monopolistic decision making. 
C) strategic decision making. 
D) competitive decision making. 
A) economic decision making. 
B) monopolistic decision making. 
C) strategic decision making. 
D) competitive decision making.

Question 10

What is the contestable market model?

Accepted Answer

The contestable market model i

Question 11

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 12

Which is the most likely solution to addressing the market power of new firms such as Google and Facebook?

Accepted Answer

A) Breaking up the firms 
B) Regulating their use of consumer data 
C) Setting a maximum price for their services 
D) Converting the firms to utilities 
A) Breaking up the firms 
B) Regulating their use of consumer data 
C) Setting a maximum price for their services 
D) Converting the firms to utilities

Question 13

Several firms are operating in a market where they take the other firms' response to their actions into account. This market is:

Accepted Answer

A) a competitive market. 
B) a monopolistically competitive market. 
C) an oligopolistic market. 
D) a monopoly. 
A) a competitive market. 
B) a monopolistically competitive market. 
C) an oligopolistic market. 
D) a monopoly.

Question 14

For a cartel to be successful in increasing economic profits for its members:

Accepted Answer

A) entry of new firms must be blocked. 
B) price must be set equal to marginal cost. 
C) individual firms must be encouraged to adjust output so as to maximize their own profits at the cartel price. 
D) price must be set equal to average total cost. 
A) entry of new firms must be blocked. 
B) price must be set equal to marginal cost. 
C) individual firms must be encouraged to adjust output so as to maximize their own profits at the cartel price. 
D) price must be set equal to average total cost.

Question 15

Which of the following is an argument in favor of judging competitiveness by performance rather than structure?

Accepted Answer

A) Judgment by performance requires that each action of a firm be analyzed on a case-by-case basis, which is very time-consuming and expensive. 
B) Under the judgment by structure criterion, a firm may be breaking the law if it does what it's supposed to be doing: producing the best product it can at the lowest cost. 
C) Courts know little economic theory. 
D) Structure can be a predictor of future performance. 
A) Judgment by performance requires that each action of a firm be analyzed on a case-by-case basis, which is very time-consuming and expensive. 
B) Under the judgment by structure criterion, a firm may be breaking the law if it does what it's supposed to be doing: producing the best product it can at the lowest cost. 
C) Courts know little economic theory. 
D) Structure can be a predictor of future performance.

Question 16

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 17

Which of the following is a reason why American ideology regarding antitrust policy has changed over the past few decades?

Accepted Answer

A) Fewer foreign firms face restrictions in their home countries. 
B) Fewer Americans are involved in the political process. 
C) More Americans are stockholders and benefit from monopolies. 
D) More foreign producers provide competition for domestic producers. 
A) Fewer foreign firms face restrictions in their home countries. 
B) Fewer Americans are involved in the political process. 
C) More Americans are stockholders and benefit from monopolies. 
D) More foreign producers provide competition for domestic producers.

Question 18

How does the contestable market model of oligopoly compare to the cartel model?

Accepted Answer

The cartel model depends on the ability

Question 19

What is antitrust policy? What does "trust" mean in this context?

Accepted Answer

Antitrust policy is the government's pol

Question 20

An important antitrust concern about new companies such as Google and Facebook is that they:

Accepted Answer

A) charge monopoly prices for their services. 
B) use data on their customers to direct ads. 
C) do not have incentives to innovate. 
D) benefit from first-mover advantage. 
A) charge monopoly prices for their services. 
B) use data on their customers to direct ads. 
C) do not have incentives to innovate. 
D) benefit from first-mover advantage.

Exam 15: Oligopoly and Antitrust Policy

Platform monopolies are most likely:

A cartel is:

When government uses the judgment by structure criterion, a firm is considered a monopoly only if, for example, it charges excessive prices.

In the 1945 ALCOA case, the court used company performance rather than the structure of the market to determine whether the company was in violation of antitrust laws.

When OPEC reduces output to keep prices high, OPEC is acting as a:

What is the central characteristic of oligopoly?

Which of the following is a problem associated with judging competitiveness by structure?

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

Taking explicit account of a rival's expected response to a decision you are making is called:

What is the contestable market model?

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:

Which is the most likely solution to addressing the market power of new firms such as Google and Facebook?

Several firms are operating in a market where they take the other firms' response to their actions into account. This market is:

For a cartel to be successful in increasing economic profits for its members:

Which of the following is an argument in favor of judging competitiveness by performance rather than structure?

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

Which of the following is a reason why American ideology regarding antitrust policy has changed over the past few decades?

How does the contestable market model of oligopoly compare to the cartel model?

What is antitrust policy? What does "trust" mean in this context?

An important antitrust concern about new companies such as Google and Facebook is that they:

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