Question 1

In which of the following models of firm behavior do firms make strategic pricing decisions and also charge a perfectly competitive price?

Accepted Answer

A) Cartel model of oligopoly 
B) Contestable market model of oligopoly 
C) Perfectly competitive model 
D) Monopoly model 
A) Cartel model of oligopoly 
B) Contestable market model of oligopoly 
C) Perfectly competitive model 
D) Monopoly model

Question 2

What are the differences between the ALCOA case and the Standard Oil and American Tobacco cases in terms of the Court's approach to antitrust law?

Accepted Answer

In the Standard Oil case,the Court relie

Question 3

If an industry has exactly 20 firms with identical sales, the Herfindahl index must be:

Accepted Answer

A) less than 100. 
B) greater than 100 but less than 200. 
C) greater than 200 but less than 400. 
D) greater than 400. 
A) less than 100. 
B) greater than 100 but less than 200. 
C) greater than 200 but less than 400. 
D) greater than 400.

Question 4

Predatory pricing is a pricing strategy by which firms keep their prices low to prevent potential entry by competition.Is it true that all firms that are found pricing their products low are in violation of antitrust policy?

Accepted Answer

The answer depends on whether the court

Question 5

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 6

The North American Industry Classification System (NAICS)categorizes firms by:

Accepted Answer

A) market structure, ranking them from perfectly competitive to monopoly. 
B) profits, since profits tend to be higher in more concentrated industries. 
C) type of economic activity, and groups firms with like production processes. 
D) market share, and groups firms with like market power. 
A) market structure, ranking them from perfectly competitive to monopoly. 
B) profits, since profits tend to be higher in more concentrated industries. 
C) type of economic activity, and groups firms with like production processes. 
D) market share, and groups firms with like market power.

Question 7

The only way to judge monopoly is to use both structure and performance criterion simultaneously.

Accepted Answer

A) True 
 B)False

Question 8

Platform monopolies can undermine competitive markets because they:

Accepted Answer

A) increase the amount of information available to the market. 
B) decrease the amount of information available to the market. 
C) asymmetrically increase the amount of information available to the market. 
D) symmetrically increase the amount of information available to the market. 
A) increase the amount of information available to the market. 
B) decrease the amount of information available to the market. 
C) asymmetrically increase the amount of information available to the market. 
D) symmetrically increase the amount of information available to the market.

Question 9

Use the kinked demand curve diagram to illustrate and describe why prices are often sticky in an oligopoly market.

Accepted Answer

In this model,firms believe that if they

Question 10

The cartel model of oligopoly assumes that:

Accepted Answer

A) monopolists sometimes act like oligopolists when they pit divisions of the same corporation against one other. 
B) oligopolies act as if they are perfectly competitive when there are no barriers to entry. 
C) oligopolies act as if they are monopolists by assigning output quotas to each member so that joint profits are maximized. 
D) oligopolies act as if they are monopolists by setting prices competitively for each member. 
A) monopolists sometimes act like oligopolists when they pit divisions of the same corporation against one other. 
B) oligopolies act as if they are perfectly competitive when there are no barriers to entry. 
C) oligopolies act as if they are monopolists by assigning output quotas to each member so that joint profits are maximized. 
D) oligopolies act as if they are monopolists by setting prices competitively for each member.

Question 11

What is the cartel model of oligopoly?

Accepted Answer

The cartel model of oligopoly is a model

Question 12

You are a manufacturer of fine fountain pens.The industry you are a part of consists of only a handful of companies (such as Mont Blanc,Pelican,Aurora,Parker,and Waterman).You are organizing a fountain pen association whose purpose is to coordinate activities with your fellow pen makers.What incentive can you offer to your competition to join your association? Why might some of them be reluctant to join?

Accepted Answer

You can explain to your fellow pen maker

Question 13

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 14

According to the contestable market model, the higher an industry's concentration ratio, the more profitable the industry.

Accepted Answer

A) True 
 B)False

Question 15

The central element of the oligopoly model is that each firm produces a differentiated product.

Accepted Answer

A) True 
 B)False

Question 16

What is the difference between the judgment by performance and the judgment by structure methods of assessing competition? What are the problems associated with applying each standard?

Accepted Answer

Judgment by performance means we should

Question 17

The top four firms in the industry have 10 percent, 8 percent, 8 percent, and 6 percent of the market. The four-firm concentration ratio of this market is:

Accepted Answer

A) 8. 
B) 32. 
C) 66. 
D) 264. 
A) 8. 
B) 32. 
C) 66. 
D) 264.

Question 18

What do economists mean by the term "market structure?"

Accepted Answer

Market structure refers to the

Question 19

A market structure in which there are a few interdependent firms is called:

Accepted Answer

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

Question 20

In the market for bank credit, a large bank sometimes announces a change in interest rates. After the changes in interest rates are announced, other banks in the industry usually react by changing their rates in the same way. This is an example of:

Accepted Answer

A) a cartel. 
B) monopolistic competition. 
C) implicit collusion. 
D) the kinked demand curve model. 
A) a cartel. 
B) monopolistic competition. 
C) implicit collusion. 
D) the kinked demand curve model.

Exam 15: Oligopoly and Antitrust Policy

In which of the following models of firm behavior do firms make strategic pricing decisions and also charge a perfectly competitive price?

What are the differences between the ALCOA case and the Standard Oil and American Tobacco cases in terms of the Court's approach to antitrust law?

If an industry has exactly 20 firms with identical sales, the Herfindahl index must be:

Predatory pricing is a pricing strategy by which firms keep their prices low to prevent potential entry by competition.Is it true that all firms that are found pricing their products low are in violation of antitrust policy?

In economics, the purpose of competition is to:

The North American Industry Classification System (NAICS)categorizes firms by:

The only way to judge monopoly is to use both structure and performance criterion simultaneously.

Platform monopolies can undermine competitive markets because they:

Use the kinked demand curve diagram to illustrate and describe why prices are often sticky in an oligopoly market.

The cartel model of oligopoly assumes that:

What is the cartel model of oligopoly?

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:

According to the contestable market model, the higher an industry's concentration ratio, the more profitable the industry.

The central element of the oligopoly model is that each firm produces a differentiated product.

What is the difference between the judgment by performance and the judgment by structure methods of assessing competition? What are the problems associated with applying each standard?

The top four firms in the industry have 10 percent, 8 percent, 8 percent, and 6 percent of the market. The four-firm concentration ratio of this market is:

What do economists mean by the term "market structure?"

A market structure in which there are a few interdependent firms is called:

In the market for bank credit, a large bank sometimes announces a change in interest rates. After the changes in interest rates are announced, other banks in the industry usually react by changing their rates in the same way. This is an example of:

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