Question 1

Which of the following has not contributed to the development of oligopolies in the U.S.economy?

Accepted Answer

A) mergers 
B) patents 
C) economies of scale 
D) interindustry competition 
A) mergers 
B) patents 
C) economies of scale 
D) interindustry competition

Question 2

Suppose that total sales in an industry in a particular year are $600 million and sales by the top four sellers are $200 million, $150 million, $100 million, and $50 million, respectively.We can conclude that

Accepted Answer

A) price leadership exists in this industry. 
B) the concentration ratio is more than 80 percent. 
C) this industry is a differentiated oligopoly. 
D) the firms in this industry face a kinked demand curve. 
A) price leadership exists in this industry. 
B) the concentration ratio is more than 80 percent. 
C) this industry is a differentiated oligopoly. 
D) the firms in this industry face a kinked demand curve.

Question 3

The consumer Wi-Fi-service providers' market is best described as a

Accepted Answer

A) monopolistic competition. 
B) monopoly. 
C) differentiated oligopoly. 
D) homogeneous oligopoly. 
A) monopolistic competition. 
B) monopoly. 
C) differentiated oligopoly. 
D) homogeneous oligopoly.

Question 4

Two characteristics of oligopoly pricing that have frequently been observed are that

Accepted Answer

A) oligopolistic prices tend to be "sticky" or inflexible, and when the firms do change their prices, they tend to do so together. 
B) oligopolistic firms' prices tend to fluctuate a lot, and these prices tend to move together with each other. 
C) oligopolists tend to practice a lot of price discrimination, and there tends to be a wide variance in oligopoly pricing. 
D) oligopolistic firms' prices tend to fluctuate a lot, and there tends to be a wide variance in oligopoly pricing. 
A) oligopolistic prices tend to be "sticky" or inflexible, and when the firms do change their prices, they tend to do so together. 
B) oligopolistic firms' prices tend to fluctuate a lot, and these prices tend to move together with each other. 
C) oligopolists tend to practice a lot of price discrimination, and there tends to be a wide variance in oligopoly pricing. 
D) oligopolistic firms' prices tend to fluctuate a lot, and there tends to be a wide variance in oligopoly pricing.

Question 5

Repeated games may involve either simultaneous or sequential decision making.

Accepted Answer

A) True 
 B)False

Question 6

Homogeneous oligopolists tend to advertise more than do differentiated oligopolists.

Accepted Answer

A) True 
 B)False

Question 7

The kinked-demand curve model applies to a noncollusive oligopoly situation.

Accepted Answer

A) True 
 B)False

Question 8

The kinked-demand curve model of oligopoly is useful in explaining

Accepted Answer

A) the way that collusion works. 
B) why oligopolistic prices and outputs are extremely sensitive to changes in marginal cost. 
C) why oligopolistic prices might change infrequently. 
D) the process by which oligopolists merge with one another. 
A) the way that collusion works. 
B) why oligopolistic prices and outputs are extremely sensitive to changes in marginal cost. 
C) why oligopolistic prices might change infrequently. 
D) the process by which oligopolists merge with one another.

Question 9

If a product such as cement or bricks is costly to ship and, therefore, markets are very localized, the national concentration ratio for that industry

Accepted Answer

A) will be greater than 50 percent. 
B) may understate the degree of monopoly. 
C) may overstate the degree of monopoly. 
D) will yield an accurate impression of the degree of monopoly. 
A) will be greater than 50 percent. 
B) may understate the degree of monopoly. 
C) may overstate the degree of monopoly. 
D) will yield an accurate impression of the degree of monopoly.

Question 10

Informal collusion to restrict output and increase prices is sometimes referred to as a

Accepted Answer

A) merger. 
B) cartel. 
C) tacit understanding. 
D) kinked-demand oligopoly. 
A) merger. 
B) cartel. 
C) tacit understanding. 
D) kinked-demand oligopoly.

Question 11

A statement of coercion by one firm is

Accepted Answer

A) an empty threat if it is believed by the other firm. 
B) a credible threat if it is not believed by the other firm. 
C) always a credible threat whether or not it is believed by the other firm. 
D) a credible threat if it is believed by the other firm. 
A) an empty threat if it is believed by the other firm. 
B) a credible threat if it is not believed by the other firm. 
C) always a credible threat whether or not it is believed by the other firm. 
D) a credible threat if it is believed by the other firm.

Question 12

A homogeneous oligopoly means that the few firms in the industry have identical cost and demand curves.

Accepted Answer

A) True 
 B)False

Question 13

Unlike a monopoly, an oligopoly tends to achieve allocative efficiency due to the rivalry among several firms.

Accepted Answer

A) True 
 B)False

Question 14

A Stackelberg duopoly (or leader-follower) game may occur in a

Accepted Answer

A) repeated game with reciprocity. 
B) repeated game without reciprocity. 
C) sequential game with preemption of entry. 
D) sequential game without preemption of entry. 
A) repeated game with reciprocity. 
B) repeated game without reciprocity. 
C) sequential game with preemption of entry. 
D) sequential game without preemption of entry.

Question 15

If neither player has an incentive to deviate from the outcome of a game, the outcome is a Nash equilibrium.

Accepted Answer

A) True 
 B)False

Question 16

Which constitutes an obstacle to collusion among oligopolists?

Accepted Answer

A) a standardized product 
B) a large number of firms 
C) prosperous economic conditions 
D) trademarks and copyrights 
A) a standardized product 
B) a large number of firms 
C) prosperous economic conditions 
D) trademarks and copyrights

Question 17

The Herfindahl index for the industry described in this table is

Accepted Answer

A) 80. 
B) 1,800. 
C) greater than it would be if there were only four firms in the industry. 
D) 1,600. 
A) 80. 
B) 1,800. 
C) greater than it would be if there were only four firms in the industry. 
D) 1,600.

Question 18

Obstacles to collusion among oligopolists include the following, except

Accepted Answer

A) demand and costs differences among firms. 
B) long-lasting economic recession and poor industry performance. 
C) potential new entrants into the market. 
D) "gentlemen's agreements" among the firms. 
A) demand and costs differences among firms. 
B) long-lasting economic recession and poor industry performance. 
C) potential new entrants into the market. 
D) "gentlemen's agreements" among the firms.

Question 19

If an oligopolist's several rivals exactly match any price changes it initiates, the demand curve will be less elastic than if its price changes are ignored by its rivals.

Accepted Answer

A) True 
 B)False

Question 20

In which of these continuums of degrees of competition (lowest to highest) is oligopoly properly placed?

Accepted Answer

A) pure monopoly, monopolistic competition, oligopoly, pure competition 
B) oligopoly, pure competition, monopolistic competition, pure monopoly 
C) monopolistic competition, pure competition, pure monopoly, oligopoly 
D) pure monopoly, oligopoly, monopolistic competition, pure competition 
A) pure monopoly, monopolistic competition, oligopoly, pure competition 
B) oligopoly, pure competition, monopolistic competition, pure monopoly 
C) monopolistic competition, pure competition, pure monopoly, oligopoly 
D) pure monopoly, oligopoly, monopolistic competition, pure competition

Exam 14: Oligopoly and Strategic Behavior

Which of the following has not contributed to the development of oligopolies in the U.S.economy?

Suppose that total sales in an industry in a particular year are $600 million and sales by the top four sellers are $200 million, $150 million, $100 million, and $50 million, respectively.We can conclude that

The consumer Wi-Fi-service providers' market is best described as a

Two characteristics of oligopoly pricing that have frequently been observed are that

Repeated games may involve either simultaneous or sequential decision making.

Homogeneous oligopolists tend to advertise more than do differentiated oligopolists.

The kinked-demand curve model applies to a noncollusive oligopoly situation.

The kinked-demand curve model of oligopoly is useful in explaining

If a product such as cement or bricks is costly to ship and, therefore, markets are very localized, the national concentration ratio for that industry

Informal collusion to restrict output and increase prices is sometimes referred to as a

A statement of coercion by one firm is

A homogeneous oligopoly means that the few firms in the industry have identical cost and demand curves.

Unlike a monopoly, an oligopoly tends to achieve allocative efficiency due to the rivalry among several firms.

A Stackelberg duopoly (or leader-follower) game may occur in a

If neither player has an incentive to deviate from the outcome of a game, the outcome is a Nash equilibrium.

Which constitutes an obstacle to collusion among oligopolists?

The Herfindahl index for the industry described in this table is

Obstacles to collusion among oligopolists include the following, except

If an oligopolist's several rivals exactly match any price changes it initiates, the demand curve will be less elastic than if its price changes are ignored by its rivals.

In which of these continuums of degrees of competition (lowest to highest) is oligopoly properly placed?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

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Immigration

An Introduction to Macroeconomics

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Basic Macroeconomic Relationships

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Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

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The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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