Question 1

In a duopoly if the firms have agreed to jointly maximize profits, then each firm can increase its current individual profits by producing more.

Accepted Answer

A) True 
 B)False

Question 2

The practice of requiring someone to buy two or more items together, rather than separately, is called

Accepted Answer

A) resale maintenance. 
B) product fixing. 
C) tying. 
D) free-riding. 
A) resale maintenance. 
B) product fixing. 
C) tying. 
D) free-riding.

Question 3

The more firms an oligopoly has,

Accepted Answer

A) the more likely it is to earn monopoly profits. 
B) the higher the price of the product. 
C) the farther the equilibrium quantity will be from the socially efficient quantity. 
D) the more likely the firms will charge a price close to the perfectly competitive price. 
A) the more likely it is to earn monopoly profits. 
B) the higher the price of the product. 
C) the farther the equilibrium quantity will be from the socially efficient quantity. 
D) the more likely the firms will charge a price close to the perfectly competitive price.

Question 4

In a game, a dominant strategy is

Accepted Answer

A) the best strategy for a player to follow only if other players are cooperative. 
B) the best strategy for a player to follow, regardless of the strategies followed by other players. 
C) a strategy that must appear in every game. 
D) a strategy that leads to one player's interests dominating the interests of the other players. 
A) the best strategy for a player to follow only if other players are cooperative. 
B) the best strategy for a player to follow, regardless of the strategies followed by other players. 
C) a strategy that must appear in every game. 
D) a strategy that leads to one player's interests dominating the interests of the other players.

Question 5

Game theory is necessary to understand which kinds of markets? (i)
Perfectly competitive
(ii)
Monopolistically competitive
(iii)
Oligopoly
(iv)
Duopoly
(v)
Monopoly

Accepted Answer

A) (i) and (ii) only 
B) (iii), (iv), and (v) only 
C) (iii) and (iv) only 
D) (i), (ii), (iii), (iv), and (v) 
A) (i) and (ii) only 
B) (iii), (iv), and (v) only 
C) (iii) and (iv) only 
D) (i), (ii), (iii), (iv), and (v)

Question 6

Which of the following groups or entities has the authority to initiate legal suits to enforce antitrust laws?

Accepted Answer

A) the U.S. Justice Department 
B) private citizens 
C) corporations 
D) All of the above are correct. 
A) the U.S. Justice Department 
B) private citizens 
C) corporations 
D) All of the above are correct.

Question 7

Game theory is necessary to understand which kinds of markets? (i)
Perfectly competitive
(ii)
Monopolistically competitive
(iii)
Oligopoly
(iv)
Duopoly
(v)
Monopoly

Accepted Answer

A) (i) and (ii) only 
B) (iii), (iv), and (v) only 
C) (iii) and (iv) only 
D) (i), (ii), (iii), (iv), and (v) 
A) (i) and (ii) only 
B) (iii), (iv), and (v) only 
C) (iii) and (iv) only 
D) (i), (ii), (iii), (iv), and (v)

Question 8

Table 17-27
Each year the United States considers renewal of Most Favored Nation (MFN) trading status with Farland (a mythical nation). Historically, legislators have made threats of not renewing MFN status because of human rights abuses in Farland. The non-renewal of MFN trading status is likely to involve some retaliatory measures by Farland. The payoff table below shows the potential economic gains associated with a game in which Farland may impose trade sanctions against U.S. firms and the United States may not renew MFN status with Farland. The table contains the dollar value of all trade-flow benefits to the United States and Farland.  
-Refer to Table 17-27. Pursuing its own best interests, the U.S. will renew MFN status with Farland

Accepted Answer

A) only if Farland does not impose trade sanctions against U.S. firms. 
B) only if Farland imposes trade sanctions against U.S. firms. 
C) regardless of whether Farland imposes trade sanctions against U.S. firms. 
D) None of the above is correct. In pursuing its own best interests, the United States will in no case renew MFN status with Farland. 
A) only if Farland does not impose trade sanctions against U.S. firms. 
B) only if Farland imposes trade sanctions against U.S. firms. 
C) regardless of whether Farland imposes trade sanctions against U.S. firms. 
D) None of the above is correct. In pursuing its own best interests, the United States will in no case renew MFN status with Farland.

Question 9

When firms form a cartel in an oligopoly market, the total output is always the same as if the market were perfectly competitive.​

Accepted Answer

A) True 
 B)False

Question 10

Whenever a cartel in a duopoly breaks down,​

Accepted Answer

A) ​both firms obtain higher profits. 
B) ​total output in the market will rise. 
C) ​price in the market will rise. 
D) ​the socially optimal output will be produced. 
A) ​both firms obtain higher profits. 
B) ​total output in the market will rise. 
C) ​price in the market will rise. 
D) ​the socially optimal output will be produced.

Question 11

Policymakers should be aggressive in using their powers to place limits on firm behavior, because business practices that appear to reduce competition never have any legitimate purposes.

Accepted Answer

A) True 
 B)False

Question 12

As the number of sellers in an oligopoly becomes very large,

Accepted Answer

A) the quantity of output approaches the socially efficient quantity. 
B) the price approaches marginal cost. 
C) the price effect is diminished. 
D) All of the above are correct. 
A) the quantity of output approaches the socially efficient quantity. 
B) the price approaches marginal cost. 
C) the price effect is diminished. 
D) All of the above are correct.

Question 13

Table 17-24
Two firms are considering going out of business and selling their assets. Each considers what happens if the other goes out of business. The payoff matrix below shows the net gain or loss to each firm.  
-Refer to Table 17-24. Which firm's dominant strategy is to sell?

Accepted Answer

A) firm A's and firm B's 
B) firm A's but not firm B's 
C) firm B's but not firm A's 
D) neither firm A's nor firm B's 
A) firm A's and firm B's 
B) firm A's but not firm B's 
C) firm B's but not firm A's 
D) neither firm A's nor firm B's

Question 14

The Clayton Act of 1914 allowed a person who successfully sued a company for damages caused by an illegal arrangement to restrain trade to recover __________ damages.

Accepted Answer

The answer of The Clayton Act of 1914 allowed a...

Question 15

Acme Computer Co. sells computers to retail stores for $400. If Acme requires the retailers to charge customers $500 for the computers, then it is engaging in

Accepted Answer

A) resale price maintenance. 
B) predatory pricing. 
C) tying. 
D) monopolistic competition. 
A) resale price maintenance. 
B) predatory pricing. 
C) tying. 
D) monopolistic competition.

Question 16

Table 17-25
There are just two producers of a certain product. Each is considering offering promotional discounts.  
-Refer to Table 17-25. The dominant strategy

Accepted Answer

A) for both firms is to offer the discount. 
B) for both firms is to not offer the discount. 
C) for firm A is to offer the discount. The dominant strategy for firm B is to not offer the discount. 
D) for firm A is to not offer the discount. The dominant strategy for firm B is to offer the discount. 
A) for both firms is to offer the discount. 
B) for both firms is to not offer the discount. 
C) for firm A is to offer the discount. The dominant strategy for firm B is to not offer the discount. 
D) for firm A is to not offer the discount. The dominant strategy for firm B is to offer the discount.

Question 17

The decisions of the US and Soviet Union to build nuclear weapons is much like the prisoners' dilemma.

Accepted Answer

A) True 
 B)False

Question 18

The paradoxical nature of oligopoly can be demonstrated by the fact that, even though the monopoly outcome is best for the oligopolists,

Accepted Answer

A) they collude to set the output level equal to the Nash equilibrium level of output. 
B) they have incentives to increase production above the monopoly outcome. 
C) they do not behave as profit maximizers. 
D) self-interest juxtaposes the profits earned at the Nash equilibrium. 
A) they collude to set the output level equal to the Nash equilibrium level of output. 
B) they have incentives to increase production above the monopoly outcome. 
C) they do not behave as profit maximizers. 
D) self-interest juxtaposes the profits earned at the Nash equilibrium.

Question 19

A tit-for-tat strategy, in a repeated game, is one in which a player starts by cooperating and then does whatever the other player did last time.

Accepted Answer

A) True 
 B)False

Question 20

Why are the actions of the firms in an oligopoly interdependent?

Accepted Answer

because there are on

Exam 17: Oligopoly

In a duopoly if the firms have agreed to jointly maximize profits, then each firm can increase its current individual profits by producing more.

The practice of requiring someone to buy two or more items together, rather than separately, is called

The more firms an oligopoly has,

In a game, a dominant strategy is

Game theory is necessary to understand which kinds of markets? (i) Perfectly competitive (ii) Monopolistically competitive (iii) Oligopoly (iv) Duopoly (v) Monopoly

Which of the following groups or entities has the authority to initiate legal suits to enforce antitrust laws?

Game theory is necessary to understand which kinds of markets? (i) Perfectly competitive (ii) Monopolistically competitive (iii) Oligopoly (iv) Duopoly (v) Monopoly

When firms form a cartel in an oligopoly market, the total output is always the same as if the market were perfectly competitive.​

Whenever a cartel in a duopoly breaks down,​

Policymakers should be aggressive in using their powers to place limits on firm behavior, because business practices that appear to reduce competition never have any legitimate purposes.

As the number of sellers in an oligopoly becomes very large,

Table 17-24 Two firms are considering going out of business and selling their assets. Each considers what happens if the other goes out of business. The payoff matrix below shows the net gain or loss to each firm. -Refer to Table 17-24. Which firm's dominant strategy is to sell?

The Clayton Act of 1914 allowed a person who successfully sued a company for damages caused by an illegal arrangement to restrain trade to recover __________ damages.

Acme Computer Co. sells computers to retail stores for $400. If Acme requires the retailers to charge customers $500 for the computers, then it is engaging in

Table 17-25 There are just two producers of a certain product. Each is considering offering promotional discounts. -Refer to Table 17-25. The dominant strategy

The decisions of the US and Soviet Union to build nuclear weapons is much like the prisoners' dilemma.

The paradoxical nature of oligopoly can be demonstrated by the fact that, even though the monopoly outcome is best for the oligopolists,

A tit-for-tat strategy, in a repeated game, is one in which a player starts by cooperating and then does whatever the other player did last time.

Why are the actions of the firms in an oligopoly interdependent?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

When firms form a cartel in an oligopoly market, the total output is always the same as if the market were perfectly competitive.

Whenever a cartel in a duopoly breaks down,