Question 1

The purpose of antitrust policy is to:

Accepted Answer

A)  limit pollution. 
B)  provide access to affordable health care for uninsured Americans. 
C)  prevent the exercise of monopoly power. 
D)  control inflation and interest rates. 
A)  limit pollution. 
B)  provide access to affordable health care for uninsured Americans. 
C)  prevent the exercise of monopoly power. 
D)  control inflation and interest rates.

Question 2

Collusive agreements are typically difficult for cartels to maintain because each firm can increase profits by:

Accepted Answer

A)  producing more than the quantity that maximizes joint profits. 
B)  producing less than the quantity that maximizes joint profits. 
C)  charging more than the price that maximizes joint cartel profits. 
D)  advertising less than will maximize joint cartel profits. 
A)  producing more than the quantity that maximizes joint profits. 
B)  producing less than the quantity that maximizes joint profits. 
C)  charging more than the price that maximizes joint cartel profits. 
D)  advertising less than will maximize joint cartel profits.

Question 3

Use the following to answer questions:
Figure: Prisoners' Dilemma for Thelma and Louise  
-(Figure: Prisoners' Dilemma for Thelma and Louise) Look at the Figure Prisoners' Dilemma for Thelma and Louise. Thelma and Louise are arrested and jailed for murder. Given the payoff matrix in the figure, the Nash equilibrium behavior is for Thelma _____ and Louise _____.

Accepted Answer

A)  to confess; not to confess 
B)  to confess; to confess 
C)  not to confess; to confess 
D)  not to confess; not to confess 
A)  to confess; not to confess 
B)  to confess; to confess 
C)  not to confess; to confess 
D)  not to confess; not to confess

Question 4

If the Baltimore furniture market had only a few sellers, it would be considered an oligopoly.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following Herfindahl-Hirschman indices is most likely to indicate a perfectly competitive market?

Accepted Answer

A)  100 
B)  1,800 
C)  10,000 
D)  100,000 
A)  100 
B)  1,800 
C)  10,000 
D)  100,000

Question 6

If rival solar roof panel manufacturers in Reno limit production and _____ prices in a way that increases their profits without meeting with one another in a formal way, they are engaging in _____ collusion.

Accepted Answer

A)  lower; tacit 
B)  raise; tacit 
C)  lower; explicit 
D)  raise; explicit 
A)  lower; tacit 
B)  raise; tacit 
C)  lower; explicit 
D)  raise; explicit

Question 7

Until recently most advanced countries except the United States did NOT have policies against price fixing.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is most likely to be observed when firms engage mainly in nonprice competition?

Accepted Answer

A)  actively encouraging the sale of generic as opposed to brand-name products 
B)  advertising and product differentiation 
C)  discounts offered through coupons 
D)  low interest rates for financing the purchase of big-ticket items 
A)  actively encouraging the sale of generic as opposed to brand-name products 
B)  advertising and product differentiation 
C)  discounts offered through coupons 
D)  low interest rates for financing the purchase of big-ticket items

Question 9

Use the following to answer questions:  
-(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets. The market for gadgets consists of two producers, Margaret and Ray. Each firm can produce gadgets with no marginal cost or fixed cost. Suppose that these two producers have formed a cartel, agreed to split production of output evenly and are maximizing total industry profits. Total industry output would be _____ gadgets.

Accepted Answer

A)  10 
B)  5 
C)  50 
D)  500 
A)  10 
B)  5 
C)  50 
D)  500

Question 10

The first trust in the United States was established by _____ in the _____ industry.

Accepted Answer

A)  AT&T; communications 
B)  Walt Disney; entertainment 
C)  Amtrak; transportation 
D)  Standard Oil; petroleum 
A)  AT&T; communications 
B)  Walt Disney; entertainment 
C)  Amtrak; transportation 
D)  Standard Oil; petroleum

Question 11

An industry that is dominated by a few firms, each of which recognizes that its own choices can affect the choices of its rivals and vice versa, is:

Accepted Answer

A)  a monopoly. 
B)  an oligopoly. 
C)  characterized by monopolistic competition. 
D)  characterized by perfect competition. 
A)  a monopoly. 
B)  an oligopoly. 
C)  characterized by monopolistic competition. 
D)  characterized by perfect competition.

Question 12

If Delta offers free drinks and snacks on its flights, and Southwest follows, they are engaging in price leadership.

Accepted Answer

A) True 
 B)False

Question 13

An industry characterized by a few interdependent firms and by barriers to entry is called:

Accepted Answer

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

Question 14

A well-known example of an international cartel is:

Accepted Answer

A)  Japan. 
B)  OPEC. 
C)  Exxon. 
D)  General Motors. 
A)  Japan. 
B)  OPEC. 
C)  Exxon. 
D)  General Motors.

The purpose of antitrust policy is to:

Collusive agreements are typically difficult for cartels to maintain because each firm can increase profits by:

If the Baltimore furniture market had only a few sellers, it would be considered an oligopoly.

Which of the following Herfindahl-Hirschman indices is most likely to indicate a perfectly competitive market?

If rival solar roof panel manufacturers in Reno limit production and _ prices in a way that increases their profits without meeting with one another in a formal way, they are engaging in _ collusion.

Until recently most advanced countries except the United States did NOT have policies against price fixing.

Which of the following is most likely to be observed when firms engage mainly in nonprice competition?

The first trust in the United States was established by _ in the _ industry.

An industry that is dominated by a few firms, each of which recognizes that its own choices can affect the choices of its rivals and vice versa, is:

If Delta offers free drinks and snacks on its flights, and Southwest follows, they are engaging in price leadership.

An industry characterized by a few interdependent firms and by barriers to entry is called:

A well-known example of an international cartel is:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 14: Oligopoly

The purpose of antitrust policy is to:

Collusive agreements are typically difficult for cartels to maintain because each firm can increase profits by:

If the Baltimore furniture market had only a few sellers, it would be considered an oligopoly.

Which of the following Herfindahl-Hirschman indices is most likely to indicate a perfectly competitive market?

If rival solar roof panel manufacturers in Reno limit production and _____ prices in a way that increases their profits without meeting with one another in a formal way, they are engaging in _____ collusion.

Until recently most advanced countries except the United States did NOT have policies against price fixing.

Which of the following is most likely to be observed when firms engage mainly in nonprice competition?

The first trust in the United States was established by _____ in the _____ industry.

An industry that is dominated by a few firms, each of which recognizes that its own choices can affect the choices of its rivals and vice versa, is:

If Delta offers free drinks and snacks on its flights, and Southwest follows, they are engaging in price leadership.

An industry characterized by a few interdependent firms and by barriers to entry is called:

A well-known example of an international cartel is:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

If rival solar roof panel manufacturers in Reno limit production and _ prices in a way that increases their profits without meeting with one another in a formal way, they are engaging in _ collusion.

The first trust in the United States was established by _ in the _ industry.