Question 1

A market structure in which a small number of producers compete against each other is

Accepted Answer

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

Question 2

A contestable market is similar to a perfectly competitive market in that there

Accepted Answer

A)  are barriers to entry. 
B)  are no barriers to entry. 
C)  can be only one firm in the market. 
D)  will be no entry if the existing firm earns an economic profit. 
A)  are barriers to entry. 
B)  are no barriers to entry. 
C)  can be only one firm in the market. 
D)  will be no entry if the existing firm earns an economic profit.

Question 3

Which group of features is shared by all games?

Accepted Answer

A)  rules, strategies, payoffs, outcome 
B)  rules, profit, payoffs, outcome 
C)  profit, strategies, payoffs, cheating 
D)  rules, cheating, payoffs, outcome 
A)  rules, strategies, payoffs, outcome 
B)  rules, profit, payoffs, outcome 
C)  profit, strategies, payoffs, cheating 
D)  rules, cheating, payoffs, outcome

Question 4

-The table above displays the possible outcomes for Bob and Joe, who have been arrested for armed robbery and car theft. Which of the following is TRUE?

Accepted Answer

A)  If Joe confesses, Bob should not confess. 
B)  If Bob confesses, Joe should confess. 
C)  The dominant equilibrium is that Joe and Bob both serve 2 years. 
D)  If Joe does not confess, Bob should not confess. 
A)  If Joe confesses, Bob should not confess. 
B)  If Bob confesses, Joe should confess. 
C)  The dominant equilibrium is that Joe and Bob both serve 2 years. 
D)  If Joe does not confess, Bob should not confess.

Question 5

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. 
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.

Question 6

-Refer to the payoffs in the table above. Sears and Wal-Mart must decide whether to lower their prices based on the profits shown in the table. This game has

Accepted Answer

A)  no Nash equilibrium. 
B)  a Nash equilibrium: Sears keeps its prices high and Wal-Mart lowers its prices. 
C)  a Nash equilibrium: both Sears and Wal-Mart keep prices high. 
D)  a Nash equilibrium: both Sears and Wal-Mart lower prices. 
A)  no Nash equilibrium. 
B)  a Nash equilibrium: Sears keeps its prices high and Wal-Mart lowers its prices. 
C)  a Nash equilibrium: both Sears and Wal-Mart keep prices high. 
D)  a Nash equilibrium: both Sears and Wal-Mart lower prices.

Question 7

Cartels are typically subject to cheating by their members because

Accepted Answer

A)  if the other firms stick to the agreement, a firm can increase its profits by cutting its price. 
B)  barriers to entry do not exist so new entrants will join. 
C)  the U.S. Justice Department will punish any cartel agreement before the cartel has had a chance to operate. 
D)  product differentiation allows the firms in the cartel to cheat. 
A)  if the other firms stick to the agreement, a firm can increase its profits by cutting its price. 
B)  barriers to entry do not exist so new entrants will join. 
C)  the U.S. Justice Department will punish any cartel agreement before the cartel has had a chance to operate. 
D)  product differentiation allows the firms in the cartel to cheat.

Question 8

Market share in the Widget industry
  
-Using the market shares in the table above, if Widgotech buys Widgette the HHI will

Accepted Answer

A)  stay the same. 
B)  rise by 1 point. 
C)  rise by 10 points. 
D)  rise by 18 points. 
A)  stay the same. 
B)  rise by 1 point. 
C)  rise by 10 points. 
D)  rise by 18 points.

Question 9

A strategy called "limit pricing" sets the price

Accepted Answer

A)  below the competitive level. 
B)  at the monopoly level. 
C)  at the lowest level that inflicts a loss on the entrant. 
D)  at the highest level that inflicts a loss on the entrant. 
A)  below the competitive level. 
B)  at the monopoly level. 
C)  at the lowest level that inflicts a loss on the entrant. 
D)  at the highest level that inflicts a loss on the entrant.

Question 10

"If an industry's Herfindahl-Hirschman Index is below 1,000, a merger between any two firms in that industry will be disallowed." Comment on the accuracy of the previous statement.

Accepted Answer

The statement is incorrect in at least t

Question 11

In game theory, a Nash equilibrium is the equilibrium that always yields the best result.

Accepted Answer

A) True 
 B)False

Question 12

________ is a group of firms that have colluded to limit their output and raise their price.

Accepted Answer

A)  A cartel 
B)  An oligopoly 
C)  A strategy 
D)  A duopoly 
A)  A cartel 
B)  An oligopoly 
C)  A strategy 
D)  A duopoly

Question 13

What is a Nash equilibrium? Is this equilibrium necessarily the best outcome for the players? Give an example.

Accepted Answer

John Nash proposed the concept of an equ

Question 14

If a duopolists' collusive price-fixing game can be played repeatedly

Accepted Answer

A)  one possible equilibrium is that both firms cheat. 
B)  players can signal their willingness to cooperate. 
C)  players can punish cheaters in the following game. 
D)  All of the above answers are correct. 
A)  one possible equilibrium is that both firms cheat. 
B)  players can signal their willingness to cooperate. 
C)  players can punish cheaters in the following game. 
D)  All of the above answers are correct.

Question 15

-Oscar and Felix are the only firms that clean offices in a large city. They agree to operate as a cartel. The payoff matrix above shows the economic profit that each firm can make. If the game is played only once, then

Accepted Answer

A)  Felix and Oscar will each make $10 million economic profit. 
B)  Felix will comply and Oscar will make $12 million economic profit. 
C)  Felix and Oscar will each make $1 million economic profit. 
D)  Felix will cheat and Oscar will make -$2 million economic profit. 
A)  Felix and Oscar will each make $10 million economic profit. 
B)  Felix will comply and Oscar will make $12 million economic profit. 
C)  Felix and Oscar will each make $1 million economic profit. 
D)  Felix will cheat and Oscar will make -$2 million economic profit.

Question 16

The prisoners' dilemma describes a single-play game that features

Accepted Answer

A)  an outcome in which the participants collude. 
B)  a large number of rivals cooperating with each other. 
C)  a situation in which one player has better odds than the other. 
D)  two players who are unable to communicate with each other. 
A)  an outcome in which the participants collude. 
B)  a large number of rivals cooperating with each other. 
C)  a situation in which one player has better odds than the other. 
D)  two players who are unable to communicate with each other.

Question 17

One of the reasons that concentration ratios are NOT a perfect measure of competitiveness is that they

Accepted Answer

A)  do not measure how high the industry's prices are. 
B)  cannot be measured. 
C)  ignore potential competition. 
D)  tell nothing about how high prices were in the past. 
A)  do not measure how high the industry's prices are. 
B)  cannot be measured. 
C)  ignore potential competition. 
D)  tell nothing about how high prices were in the past.

Question 18

The Federal Trade Commission is an agency charged with

Accepted Answer

A)  regulating interstate commerce. 
B)  enforcing product safety laws. 
C)  regulating international commerce. 
D)  enforcing antitrust laws. 
A)  regulating interstate commerce. 
B)  enforcing product safety laws. 
C)  regulating international commerce. 
D)  enforcing antitrust laws.

Question 19

Russia, Iran and Qatar made the first serious moves in October 2008 toward forming an OPEC-style cartel for natural gas. Each of the countries can comply with the cartel agreement or to cheat on the cartel agreement. If all countries comply, the economic profit for each will be $140 million. If one country cheats, that country earns $200 million in economic profit and the other countries will have economic losses of $10 million. If all countries cheat, they break even. What are the strategies in this game?

Accepted Answer

A)  Comply with the cartel agreement or to cheat on the cartel agreement. 
B)  Comply with the agreement and earn $140 million in profit. 
C)  Cheat on the cartel agreement and earn -$10 million in profits. 
D)  Earn between $140 and $200 million in profits. 
A)  Comply with the cartel agreement or to cheat on the cartel agreement. 
B)  Comply with the agreement and earn $140 million in profit. 
C)  Cheat on the cartel agreement and earn -$10 million in profits. 
D)  Earn between $140 and $200 million in profits.

Question 20

A cartel is an agreement

Accepted Answer

A)  among firms to flood the market and eliminate competition. 
B)  among firms to steal industrial processes from rival firms. 
C)  among firms to decrease output and raise price. 
D)  by the government to restrict imports. 
A)  among firms to flood the market and eliminate competition. 
B)  among firms to steal industrial processes from rival firms. 
C)  among firms to decrease output and raise price. 
D)  by the government to restrict imports.

A market structure in which a small number of producers compete against each other is

A contestable market is similar to a perfectly competitive market in that there

Which group of features is shared by all games?

-The table above displays the possible outcomes for Bob and Joe, who have been arrested for armed robbery and car theft. Which of the following is TRUE?

Which of the following statements is TRUE about contestable markets?

-Refer to the payoffs in the table above. Sears and Wal-Mart must decide whether to lower their prices based on the profits shown in the table. This game has

Cartels are typically subject to cheating by their members because

Market share in the Widget industry -Using the market shares in the table above, if Widgotech buys Widgette the HHI will

A strategy called "limit pricing" sets the price

"If an industry's Herfindahl-Hirschman Index is below 1,000, a merger between any two firms in that industry will be disallowed." Comment on the accuracy of the previous statement.

In game theory, a Nash equilibrium is the equilibrium that always yields the best result.

________ is a group of firms that have colluded to limit their output and raise their price.

What is a Nash equilibrium? Is this equilibrium necessarily the best outcome for the players? Give an example.

If a duopolists' collusive price-fixing game can be played repeatedly

-Oscar and Felix are the only firms that clean offices in a large city. They agree to operate as a cartel. The payoff matrix above shows the economic profit that each firm can make. If the game is played only once, then

The prisoners' dilemma describes a single-play game that features

One of the reasons that concentration ratios are NOT a perfect measure of competitiveness is that they

The Federal Trade Commission is an agency charged with

A cartel is an agreement

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

A market structure in which a small number of producers compete against each other is

A contestable market is similar to a perfectly competitive market in that there

Which group of features is shared by all games?

-The table above displays the possible outcomes for Bob and Joe, who have been arrested for armed robbery and car theft. Which of the following is TRUE?

Which of the following statements is TRUE about contestable markets?

-Refer to the payoffs in the table above. Sears and Wal-Mart must decide whether to lower their prices based on the profits shown in the table. This game has

Cartels are typically subject to cheating by their members because

Market share in the Widget industry -Using the market shares in the table above, if Widgotech buys Widgette the HHI will

A strategy called "limit pricing" sets the price

"If an industry's Herfindahl-Hirschman Index is below 1,000, a merger between any two firms in that industry will be disallowed." Comment on the accuracy of the previous statement.

In game theory, a Nash equilibrium is the equilibrium that always yields the best result.

________ is a group of firms that have colluded to limit their output and raise their price.

What is a Nash equilibrium? Is this equilibrium necessarily the best outcome for the players? Give an example.

If a duopolists' collusive price-fixing game can be played repeatedly

-Oscar and Felix are the only firms that clean offices in a large city. They agree to operate as a cartel. The payoff matrix above shows the economic profit that each firm can make. If the game is played only once, then

The prisoners' dilemma describes a single-play game that features

One of the reasons that concentration ratios are NOT a perfect measure of competitiveness is that they

The Federal Trade Commission is an agency charged with

A cartel is an agreement

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