Question 1

Canada's anti-combine law is enforced by

Accepted Answer

A) a Competition Tribunal. 
B) the courts. 
C) Parliament. 
D) A and B. 
E) A and C. 
A) a Competition Tribunal. 
B) the courts. 
C) Parliament. 
D) A and B. 
E) A and C.

Question 2

The equilibrium strategy for each firm in a duopolist's dilemma is to ________.Firms ________ succeed in raising price and profits because each firm ________.

Accepted Answer

A) comply;do not;makes a smaller economic profit if it complies with the agreement, but complying with the agreement is in the social interest, and most firms support the social interest 
B) comply;do;makes greater economic profit if it complies with the agreement, regardless of how the other firm acts 
C) cheat;do not;makes greater economic profit if it cheats on the agreement, regardless of how the other firm acts 
D) cheats;do;makes greater economic profit if it cheats on the agreement, regardless of how the other firm acts 
E) cheat;do;refuses to sell at any price below the monopoly price 
A) comply;do not;makes a smaller economic profit if it complies with the agreement, but complying with the agreement is in the social interest, and most firms support the social interest 
B) comply;do;makes greater economic profit if it complies with the agreement, regardless of how the other firm acts 
C) cheat;do not;makes greater economic profit if it cheats on the agreement, regardless of how the other firm acts 
D) cheats;do;makes greater economic profit if it cheats on the agreement, regardless of how the other firm acts 
E) cheat;do;refuses to sell at any price below the monopoly price

Question 3

Which one of the following is not a feature common to all games?

Accepted Answer

A) rules 
B) collusion 
C) strategies 
D) payoffs 
E) an outcome 
A) rules 
B) collusion 
C) strategies 
D) payoffs 
E) an outcome

Question 4

Which of the following statements is TRUE about contestable markets?

Accepted Answer

A) There are significant barriers to entry. 
B) Firms earn large economic profits. 
C) Each firm faces a perfectly elastic demand. 
D) There are few firms in the industry. 
E) None of the above. 
A) There are significant barriers to entry. 
B) Firms earn large economic profits. 
C) Each firm faces a perfectly elastic demand. 
D) There are few firms in the industry. 
E) None of the above.

Question 5

An oligopoly is a market structure in which there

Accepted Answer

A) are a few buyers but many sellers. 
B) are no barriers to entry. 
C) are many independent sellers. 
D) are a few goods sold by many sellers. 
E) is a temptation to collude. 
A) are a few buyers but many sellers. 
B) are no barriers to entry. 
C) are many independent sellers. 
D) are a few goods sold by many sellers. 
E) is a temptation to collude.

Question 6

Suppose that industry A consists of four firms who collectively control 96 percent of total sales in the market.We can conclude that industry A is

Accepted Answer

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

Question 7

In a contestable market the Herfindahl-Hirschman Index is ________ and the market behaves as if it is ________.

Accepted Answer

A) low;perfectly competitive 
B) low;a monopoly 
C) high;perfectly competitive 
D) high;a monopoly 
E) zero;perfectly competitive 
A) low;perfectly competitive 
B) low;a monopoly 
C) high;perfectly competitive 
D) high;a monopoly 
E) zero;perfectly competitive

Question 8

When a firm cooperates if the other cooperates,but plays the Nash equilibrium strategy forever if the other cheats,the strategy is a

Accepted Answer

A) dominant strategy. 
B) trigger strategy. 
C) tit-for-tat strategy. 
D) wimp's strategy. 
E) cooperative strategy. 
A) dominant strategy. 
B) trigger strategy. 
C) tit-for-tat strategy. 
D) wimp's strategy. 
E) cooperative strategy.

Question 9

Use the table below to answer the following questions.
Table 15.2.2
  
-Table 15.2.2 gives the payoff matrix in terms of economic profit for firms A and B when there are two strategies facing each firm: (1)charge a low price,or (2)charge a high price.The equilibrium in this game (played once)will be a dominant strategy equilibrium because

Accepted Answer

A) firm B will reduce profit by more than A if both charge a lower price. 
B) firm B is the dominant firm. 
C) the best strategy for each firm does not depend on the strategy chosen by the other firm. 
D) there is no credible threat by either firm to "punish" the other if it breaks the agreement. 
E) all of the above. 
A) firm B will reduce profit by more than A if both charge a lower price. 
B) firm B is the dominant firm. 
C) the best strategy for each firm does not depend on the strategy chosen by the other firm. 
D) there is no credible threat by either firm to "punish" the other if it breaks the agreement. 
E) all of the above.

Question 10

The act of parliament that provides our anti-combine law is ________.

Accepted Answer

A) the Anti-Combine Act of 1986 
B) the Anti-Combine Act of 1889 
C) the Competition Act of 1986 
D) the Competition Act of 1889 
E) the Competition Act of 1967 
A) the Anti-Combine Act of 1986 
B) the Anti-Combine Act of 1889 
C) the Competition Act of 1986 
D) the Competition Act of 1889 
E) the Competition Act of 1967

Question 11

In a repeated game,punishments that result in heavy damages are an incentive for players to adopt the strategies that result in a ________ equilibrium.

Accepted Answer

A) contestable 
B) strategic 
C) complementary 
D) cooperative 
E) satisfying 
A) contestable 
B) strategic 
C) complementary 
D) cooperative 
E) satisfying

Question 12

Consider a "prisoners' dilemma" game consisting of two firms in collusion to maximize profit.However,the game is repeated indefinitely and each player employs a tit-for-tat strategy.The equilibrium described here is called a

Accepted Answer

A) credible strategy equilibrium. 
B) dominant player equilibrium. 
C) duopoly equilibrium. 
D) trigger strategy equilibrium. 
E) cooperative equilibrium. 
A) credible strategy equilibrium. 
B) dominant player equilibrium. 
C) duopoly equilibrium. 
D) trigger strategy equilibrium. 
E) cooperative equilibrium.

Question 13

It is difficult to maintain a cartel for a long period of time.Which one of the following is the most important reason?

Accepted Answer

A) Each firm has an incentive to collude. 
B) Other firms will enter the industry. 
C) Firms in the cartel will want to raise the price. 
D) Consumers will eventually decide not to buy the cartel's output. 
E) Each firm has an incentive to cheat. 
A) Each firm has an incentive to collude. 
B) Other firms will enter the industry. 
C) Firms in the cartel will want to raise the price. 
D) Consumers will eventually decide not to buy the cartel's output. 
E) Each firm has an incentive to cheat.

Question 14

Refer to Table 15.2.8.Libertyville has two optometrists,Dr.Smith and Dr.Jones.Each optometrist can choose to advertise his service or not.The incomes of each optometrist,in thousands of dollars,are given in the payoff matrix above.Which of the following statements correctly categorizes the Nash equilibrium for the game?

Accepted Answer

A) The game has a Nash equilibrium in which both optometrists advertise. 
B) The game has a Nash equilibrium in which both optometrists do not advertise. 
C) The game has a Nash equilibrium in which Dr.Smith advertises and Dr.Jones does not advertise. 
D) The game has a Nash equilibrium in which Dr.Smith does not advertise and Dr.Jones does advertise. 
E) The game has no Nash equilibrium. 
A) The game has a Nash equilibrium in which both optometrists advertise. 
B) The game has a Nash equilibrium in which both optometrists do not advertise. 
C) The game has a Nash equilibrium in which Dr.Smith advertises and Dr.Jones does not advertise. 
D) The game has a Nash equilibrium in which Dr.Smith does not advertise and Dr.Jones does advertise. 
E) The game has no Nash equilibrium.

Question 15

A merger is unlikely to be approved if ________.

Accepted Answer

A) there are fewer than 6 firms in a market 
B) it prevents or substantially lessens competition 
C) the good produced in the market has been deemed a necessity 
D) the industry is government regulated 
E) All of the above. 
A) there are fewer than 6 firms in a market 
B) it prevents or substantially lessens competition 
C) the good produced in the market has been deemed a necessity 
D) the industry is government regulated 
E) All of the above.

Question 16

Table 15.2.6
   
Refer to the table below to answer the following question.
-Refer to Table 15.2.6.Firms A and B can conduct research and development (R&D)or not conduct it.R&D is costly but can increase the quality of the product and increase sales.The payoff matrix is the economic profits of the two firms and is given above,where the numbers are millions of dollars.A's best strategy is to

Accepted Answer

A) conduct R&D regardless of what B does. 
B) not conduct R&D regardless of what B does. 
C) conduct R&D only if B conducts R&D. 
D) conduct R&D only if B does not conduct R&D. 
E) not conduct R&D only if B does not conduct R&D. 
A) conduct R&D regardless of what B does. 
B) not conduct R&D regardless of what B does. 
C) conduct R&D only if B conducts R&D. 
D) conduct R&D only if B does not conduct R&D. 
E) not conduct R&D only if B does not conduct R&D.

Question 17

Canada's anti-combine law dates back to the

Accepted Answer

A) 1880s. 
B) 1910s. 
C) 1930s. 
D) 1960s. 
E) 1980s. 
A) 1880s. 
B) 1910s. 
C) 1930s. 
D) 1960s. 
E) 1980s.

Question 18

Refer to Table 15.2.8.Libertyville has two optometrists,Dr.Smith and Dr.Jones.Each optometrist can choose to advertise his service or not.The incomes of each optometrist,in thousands of dollars,are given in the payoff matrix above.Which of the following statements correctly describes Dr.Jones' strategy given what Dr.Smith may do?

Accepted Answer

A) Dr.Jones advertises no matter what Dr.Smith does. 
B) Dr.Jones does not advertise no matter what Dr.Smith does. 
C) Dr.Jones advertises only if Dr.Smith doesn't advertise. 
D) Dr.Jones advertises only if Dr.Smith advertises. 
E) Dr.Jones does not advertise if Dr.Smith advertises. 
A) Dr.Jones advertises no matter what Dr.Smith does. 
B) Dr.Jones does not advertise no matter what Dr.Smith does. 
C) Dr.Jones advertises only if Dr.Smith doesn't advertise. 
D) Dr.Jones advertises only if Dr.Smith advertises. 
E) Dr.Jones does not advertise if Dr.Smith advertises.

Question 19

If the efficient scale of production only allows three firms to supply a market,the market is a

Accepted Answer

A) three-firm monopoly. 
B) cost-based oligopoly. 
C) natural oligopolgy. 
D) monopolistic competition. 
E) competitive monopoly. 
A) three-firm monopoly. 
B) cost-based oligopoly. 
C) natural oligopolgy. 
D) monopolistic competition. 
E) competitive monopoly.

Question 20

There exists an incentive to cheat on a collusive agreement as long as

Accepted Answer

A) price equals marginal cost. 
B) price equals marginal revenue. 
C) price exceeds marginal cost. 
D) price is above minimum average total cost. 
E) none of the above. 
A) price equals marginal cost. 
B) price equals marginal revenue. 
C) price exceeds marginal cost. 
D) price is above minimum average total cost. 
E) none of the above.

Exam 15: Oligopoly

Canada's anti-combine law is enforced by

The equilibrium strategy for each firm in a duopolist's dilemma is to ________.Firms ________ succeed in raising price and profits because each firm ________.

Which one of the following is not a feature common to all games?

Which of the following statements is TRUE about contestable markets?

An oligopoly is a market structure in which there

Suppose that industry A consists of four firms who collectively control 96 percent of total sales in the market.We can conclude that industry A is

In a contestable market the Herfindahl-Hirschman Index is ________ and the market behaves as if it is ________.

When a firm cooperates if the other cooperates,but plays the Nash equilibrium strategy forever if the other cheats,the strategy is a

The act of parliament that provides our anti-combine law is ________.

In a repeated game,punishments that result in heavy damages are an incentive for players to adopt the strategies that result in a ________ equilibrium.

Consider a "prisoners' dilemma" game consisting of two firms in collusion to maximize profit.However,the game is repeated indefinitely and each player employs a tit-for-tat strategy.The equilibrium described here is called a

It is difficult to maintain a cartel for a long period of time.Which one of the following is the most important reason?

A merger is unlikely to be approved if ________.

Canada's anti-combine law dates back to the

If the efficient scale of production only allows three firms to supply a market,the market is a

There exists an incentive to cheat on a collusive agreement as long as

What Is Economics?

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The equilibrium strategy for each firm in a duopolist's dilemma is to .Firms succeed in raising price and profits because each firm .

In a contestable market the Herfindahl-Hirschman Index is and the market behaves as if it is .