Exam 15: Oligopoly

The beginning of antitrust law is found in the

Which of the following is a distinguishing characteristic of oligopoly?

The EU's antitrust chief in November 2008 fined car glass producers Asahi, Pilkington, Saint-Gobain and Soliver more than 1.3 billion euros ($1.66 billion) for price-fixing, the largest sum ever levied by the EU for a cartel. Cartels tend to arise in ________ markets.

Iran called on OPEC in November 2008 to cut production by a further 1 million to 1.5 million barrels per day when it meets in Cairo later this month. Why would OPEC, a cartel, restrict production?

-A market has ten firms, whose market shares are given in the table above. a) If firms I and J wanted to merge, according to the Department of Justice guidelines, would the Department of Justice challenge the merger? b) If firms A and B wanted to merge, according to the Department of Justice guidelines, would the Department of Justice challenge the merger?

In a small town the level of demand is capable of supporting only two gas stations. This market is

Antitrust law is the law that regulates ________ and prevents them from becoming ________.

Which of the following is TRUE regarding a collusive agreement? I. It is illegal in the United States. II) Two or more producers agree to restrict output or raise prices. III) Firms' profits are never maximized under this sort of agreement.

-Suppose the industry for washing machines has only four firms. The market shares are: Firm A, 40 percent; Firm B, 20 percent; Firm C 20, percent; and Firm D, 20 percent. a) What is the Herfindahl-Hirschman Index (HHI)? b) If Firms C and D were to announce a merger, would the Department of Justice oppose the merger?

In an oligopoly with a collusive agreement, the total industry profits will be smallest when

A market structure in which a small number of firms compete is called

When producers agree to restrict output, raise the price, and increase profits, the agreement is called

When two firms collude to maximize profit the total quantity produced by both firms taken together is determined at the quantity where

A firm might be tempted to cheat on a collusive price-fixing agreement by setting a ________ price and producing ________ than agreed upon.

-Disney and Fox must decide when to release their next films. The revenues received by each studio depend in part on when the other studio releases its film. Each studio can release its film at Thanksgiving or at Christmas. The revenues received by each studio, in millions of dollars, are depicted in the payoff matrix above. Which of the following statements CORRECTLY describes Fox's strategy given what Disney's release choice may be?

From the social perspective, a major criticism of oligopolies is that