Question 1

"The Clayton Act repealed the Sherman Act so that only the Clayton Act remains in force." Is the previous statement correct or incorrect?

Accepted Answer

The statement is inc

Question 2

In a prisoners' dilemma game, which of the following strategies gives the best outcome for both taken together prisoners?

Accepted Answer

A)  Both deny. 
B)  Both confess. 
C)  One confesses while the other denies. 
D)  All outcomes are the same value. 
A)  Both deny. 
B)  Both confess. 
C)  One confesses while the other denies. 
D)  All outcomes are the same value.

Question 3

Game theory is most useful for determining the outcome when

Accepted Answer

A)  the market structure is oligopoly. 
B)  monopolistic competition exists. 
C)  prison terms are involved. 
D)  the market is dominated by a monopoly. 
A)  the market structure is oligopoly. 
B)  monopolistic competition exists. 
C)  prison terms are involved. 
D)  the market is dominated by a monopoly.

Question 4

In a collusive agreement between two duopolists in an oligopoly, each firm has an incentive to cheat on the agreement because the firm's price

Accepted Answer

A)  exceeds its marginal cost. 
B)  exceeds its marginal revenue. 
C)  is less than its average total cost. 
D)  None of the above answers is correct. 
A)  exceeds its marginal cost. 
B)  exceeds its marginal revenue. 
C)  is less than its average total cost. 
D)  None of the above answers is correct.

Question 5

Game theory is used to explain firms' decisions in

Accepted Answer

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

Question 6

What is the best outcome for society: when firms in an oligopoly enter into a collusive agreement to operate as a monopoly or when they act as perfect competitors? Briefly explain your answer.

Accepted Answer

The best outcome for society is when the

Question 7

When a cartel maximizes its profit

Accepted Answer

A)  each firm necessarily produces the same amount. 
B)  the industry level of output is efficient. 
C)  industry marginal revenue equals industry marginal cost at the level of total output. 
D)  total output is greater than it would be without collusion. 
A)  each firm necessarily produces the same amount. 
B)  the industry level of output is efficient. 
C)  industry marginal revenue equals industry marginal cost at the level of total output. 
D)  total output is greater than it would be without collusion.

Question 8

Of the following market structures, which has the fewest number of firms competing against each other?

Accepted Answer

A)  monopolistic competition 
B)  oligopoly 
C)  perfect competition 
D)  Both answers A and C are correct. 
A)  monopolistic competition 
B)  oligopoly 
C)  perfect competition 
D)  Both answers A and C are correct.

Question 9

In the scenario above, if both firms cheat on the agreement, producing more than the agreed amount, then

Accepted Answer

A)  each firm makes zero economic profit. 
B)  the outcome is identical to a monopoly. 
C)  the industry's economic profit is the maximum profit that can be made by the duopoly. 
D)  each firm makes a greater economic profit than it would make if it complied with the agreement. 
A)  each firm makes zero economic profit. 
B)  the outcome is identical to a monopoly. 
C)  the industry's economic profit is the maximum profit that can be made by the duopoly. 
D)  each firm makes a greater economic profit than it would make if it complied with the agreement.

Question 10

A cooperative equilibrium is most likely to arise in a

Accepted Answer

A)  single-play game with a large number of players. 
B)  single-play game without communication. 
C)  repeated game with a large number of players. 
D)  repeated game with a small number of players. 
A)  single-play game with a large number of players. 
B)  single-play game without communication. 
C)  repeated game with a large number of players. 
D)  repeated game with a small number of players.

Question 11

If the Herfindahl-Hirschman Index (HHI) among the firms in the long distance telecommunications market is equal to 855, when would the Federal Trade Commission probably challenge a proposed merger between any two of the firms?

Accepted Answer

A)  It would challenge if the HHI would increase by more than 50 points. 
B)  It would challenge if the HHI would increase by more than 100 points. 
C)  It would challenge no matter what happened to the HHI because the market has so few firms. 
D)  It would not challenge because the HHI is less than 1500. 
A)  It would challenge if the HHI would increase by more than 50 points. 
B)  It would challenge if the HHI would increase by more than 100 points. 
C)  It would challenge no matter what happened to the HHI because the market has so few firms. 
D)  It would not challenge because the HHI is less than 1500.

Question 12

What is a cartel?

Accepted Answer

A cartel is a group of firms acting toge

Question 13

In 2008, a former Intel engineer has been charged with stealing trade secrets worth $1 billion. Intel owns 90 percent of the worldwide market for microprocessors, AMD has the rest. Conducting R&D is very expensive so suppose that each of these firms can either steal R&D or develop their own R&D. If both firms develop their own R&D, economic profit will be $50 million each. If one company steals R&D, that firm earns $100 million in economic profit while the other firm earns $10 million. If both firms steal R&D, each firm breaks even. What is NOT true about this game?

Accepted Answer

A)  The outcome will not be a dominant strategy equilibrium. 
B)  A strategy is to steal R&D. 
C)  A firm will make more profit if it steals R&D. 
D)  A strategy is to conduct R&D. 
A)  The outcome will not be a dominant strategy equilibrium. 
B)  A strategy is to steal R&D. 
C)  A firm will make more profit if it steals R&D. 
D)  A strategy is to conduct R&D.

Question 14

Which of the following is characteristic of oligopoly, but NOT of monopolistic competition?

Accepted Answer

A)  The choices made by one firm have a significant effect on other firms. 
B)  Each firm faces a downward-sloping demand curve. 
C)  Firms are profit-maximizers. 
D)  There is more than one firm in the industry. 
A)  The choices made by one firm have a significant effect on other firms. 
B)  Each firm faces a downward-sloping demand curve. 
C)  Firms are profit-maximizers. 
D)  There is more than one firm in the industry.

Question 15

Oligopoly is

Accepted Answer

A)  like monopoly because there are barriers to entry. 
B)  like perfect competition because oligopoly firms all sell homogeneous goods. 
C)  like monopolistic competition because oligopoly firms all sell differentiated goods. 
D)  like perfect competition because there are many firms in the industry. 
A)  like monopoly because there are barriers to entry. 
B)  like perfect competition because oligopoly firms all sell homogeneous goods. 
C)  like monopolistic competition because oligopoly firms all sell differentiated goods. 
D)  like perfect competition because there are many firms in the industry.

Question 16

Why would a profit maximizing monopolist in a contestable market set its price at a level below that which maximizes short run profits?

Accepted Answer

A firm in a contestable market is not pr

Question 17

An oligopoly is a market structure in which there are

Accepted Answer

A)  only a few buyers but many sellers. 
B)  only a few sellers selling either an identical or differentiated product. 
C)  many sellers selling a differentiated product. 
D)  a few products sold by many sellers. 
A)  only a few buyers but many sellers. 
B)  only a few sellers selling either an identical or differentiated product. 
C)  many sellers selling a differentiated product. 
D)  a few products sold by many sellers.

Question 18

In the prisoners' dilemma game, each player

Accepted Answer

A)  has only one possible strategy. 
B)  can choose from two strategies. 
C)  can choose from three strategies. 
D)  can choose from four strategies. 
A)  has only one possible strategy. 
B)  can choose from two strategies. 
C)  can choose from three strategies. 
D)  can choose from four strategies.

Question 19

Market share in the Widget industry
  
-In the table above, the Herfindahl-Hirschman Index in the widget industry is

Accepted Answer

A)  100 points. 
B)  742 points. 
C)  2842 points. 
D)  4182 points. 
A)  100 points. 
B)  742 points. 
C)  2842 points. 
D)  4182 points.

Question 20

The prisoners' dilemma has an equilibrium in which

Accepted Answer

A)  both players deny. 
B)  both players confess. 
C)  the player who confesses wins. 
D)  the player who denies wins. 
A)  both players deny. 
B)  both players confess. 
C)  the player who confesses wins. 
D)  the player who denies wins.

"The Clayton Act repealed the Sherman Act so that only the Clayton Act remains in force." Is the previous statement correct or incorrect?

In a prisoners' dilemma game, which of the following strategies gives the best outcome for both taken together prisoners?

Game theory is most useful for determining the outcome when

In a collusive agreement between two duopolists in an oligopoly, each firm has an incentive to cheat on the agreement because the firm's price

Game theory is used to explain firms' decisions in

What is the best outcome for society: when firms in an oligopoly enter into a collusive agreement to operate as a monopoly or when they act as perfect competitors? Briefly explain your answer.

When a cartel maximizes its profit

Of the following market structures, which has the fewest number of firms competing against each other?

In the scenario above, if both firms cheat on the agreement, producing more than the agreed amount, then

A cooperative equilibrium is most likely to arise in a

If the Herfindahl-Hirschman Index (HHI) among the firms in the long distance telecommunications market is equal to 855, when would the Federal Trade Commission probably challenge a proposed merger between any two of the firms?

What is a cartel?

Which of the following is characteristic of oligopoly, but NOT of monopolistic competition?

Oligopoly is

Why would a profit maximizing monopolist in a contestable market set its price at a level below that which maximizes short run profits?

An oligopoly is a market structure in which there are

In the prisoners' dilemma game, each player

Market share in the Widget industry -In the table above, the Herfindahl-Hirschman Index in the widget industry is

The prisoners' dilemma has an equilibrium in which

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 15: Oligopoly

"The Clayton Act repealed the Sherman Act so that only the Clayton Act remains in force." Is the previous statement correct or incorrect?

In a prisoners' dilemma game, which of the following strategies gives the best outcome for both taken together prisoners?

Game theory is most useful for determining the outcome when

In a collusive agreement between two duopolists in an oligopoly, each firm has an incentive to cheat on the agreement because the firm's price

Game theory is used to explain firms' decisions in

What is the best outcome for society: when firms in an oligopoly enter into a collusive agreement to operate as a monopoly or when they act as perfect competitors? Briefly explain your answer.

When a cartel maximizes its profit

Of the following market structures, which has the fewest number of firms competing against each other?

In the scenario above, if both firms cheat on the agreement, producing more than the agreed amount, then

A cooperative equilibrium is most likely to arise in a

If the Herfindahl-Hirschman Index (HHI) among the firms in the long distance telecommunications market is equal to 855, when would the Federal Trade Commission probably challenge a proposed merger between any two of the firms?

What is a cartel?

Which of the following is characteristic of oligopoly, but NOT of monopolistic competition?

Oligopoly is

Why would a profit maximizing monopolist in a contestable market set its price at a level below that which maximizes short run profits?

An oligopoly is a market structure in which there are

In the prisoners' dilemma game, each player

Market share in the Widget industry -In the table above, the Herfindahl-Hirschman Index in the widget industry is

The prisoners' dilemma has an equilibrium in which

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters