Question 1

As the number of firms in an oligopoly increases,

Accepted Answer

A)  each seller becomes more concerned about its impact on the market price. 
B)  the output effect decreases. 
C)  the total quantity of output produced by firms in the market gets closer to the socially efficient quantity. 
D)  the oligopoly has more market power and firms earn a greater profit. 
A)  each seller becomes more concerned about its impact on the market price. 
B)  the output effect decreases. 
C)  the total quantity of output produced by firms in the market gets closer to the socially efficient quantity. 
D)  the oligopoly has more market power and firms earn a greater profit.

Question 2

Table 17-10
The table shows the town of Driveaway's demand schedule for gasoline. Assume the town's gasoline seller(s) incurs a cost of $2 for each gallon sold, with no fixed cost.
  
-Refer to Table 17-10.Suppose there are exactly two sellers of gasoline in Driveaway: Amogo and Spilmerica.If Amogo sells 150 gallons and Spilmerica sells 100 gallons,then

Accepted Answer

A)  Amogo's profit is $150 and Spilmerica's profit is $100. 
B)  Amogo's profit is $100 and Spilmerica's profit is $66.67. 
C)  Amogo's profit is $75 and Spilmerica's profit is $50. 
D)  there is an excess supply of gasoline in Driveaway. 
A)  Amogo's profit is $150 and Spilmerica's profit is $100. 
B)  Amogo's profit is $100 and Spilmerica's profit is $66.67. 
C)  Amogo's profit is $75 and Spilmerica's profit is $50. 
D)  there is an excess supply of gasoline in Driveaway.

Question 3

Table 17-10
The table shows the town of Driveaway's demand schedule for gasoline. Assume the town's gasoline seller(s) incurs a cost of $2 for each gallon sold, with no fixed cost.
  
-Refer to Table 17-10.Suppose we observe that the price of a gallon of gasoline in Driveaway is $2.Given this observation,which of the following scenarios is most likely?

Accepted Answer

A)  There is one seller of gasoline in Driveaway. 
B)  There are two sellers of gasoline in Driveaway. 
C)  There are a few sellers of gasoline in Driveaway, but the number of sellers exceeds two. 
D)  There are many sellers of gasoline in Driveaway. 
A)  There is one seller of gasoline in Driveaway. 
B)  There are two sellers of gasoline in Driveaway. 
C)  There are a few sellers of gasoline in Driveaway, but the number of sellers exceeds two. 
D)  There are many sellers of gasoline in Driveaway.

Question 4

Table 17-9
Only two firms, Acme and Pinnacle, sell a particular product. The table below shows the demand curve for their product. Each firm has the same constant marginal cost of $10 and zero fixed cost.
  
-Refer to Table 17-9.If this market were perfectly competitive instead of oligopolistic,what would the price be?

Accepted Answer

A)  $15 
B)  $10 
C)  $5 
D)  $0 
A)  $15 
B)  $10 
C)  $5 
D)  $0

Question 5

Oligopolies can end up looking like competitive markets if the number of firms is

Accepted Answer

A)  large and they all cooperate. 
B)  large and they do not cooperate. 
C)  small and they all cooperate. 
D)  small and they do not cooperate. 
A)  large and they all cooperate. 
B)  large and they do not cooperate. 
C)  small and they all cooperate. 
D)  small and they do not cooperate.

Question 6

Table 17-18
This table shows a game played between two firms, Firm A and Firm B. In this game each firm must decide how much output (Q) to produce: 10 units or 12 units. The profit for each firm is given in the table as (Profit for Firm A, Profit for Firm B).
  
-Refer to Table 17-18.The Nash equilibrium for this game is

Accepted Answer

A)  10 units of output for Firm A and 10 units of output for Firm B. 
B)  10 units of output for Firm A and 12 units of output for Firm B. 
C)  12 units of output for Firm A and 10 units of output for Firm B. 
D)  12 units of output for Firm A and 12 units of output for Firm B. 
A)  10 units of output for Firm A and 10 units of output for Firm B. 
B)  10 units of output for Firm A and 12 units of output for Firm B. 
C)  12 units of output for Firm A and 10 units of output for Firm B. 
D)  12 units of output for Firm A and 12 units of output for Firm B.

Question 7

Table 17-2. The table shows the town of Pittsville's demand schedule for gasoline. For simplicity, assume the town's gasoline seller(s) incur no costs in selling gasoline.
  
-Refer to Table 17-2.If there are exactly two sellers of gasoline in Pittsville and if they collude,then which of the following outcomes is most likely?

Accepted Answer

A)  Each seller will sell 500 gallons and charge a price of $5. 
B)  Each seller will sell 250 gallons and charge a price of $2.50. 
C)  Each seller will sell 350 gallons and charge a price of $3. 
D)  Each seller will sell 250 gallons and charge a price of $5. 
A)  Each seller will sell 500 gallons and charge a price of $5. 
B)  Each seller will sell 250 gallons and charge a price of $2.50. 
C)  Each seller will sell 350 gallons and charge a price of $3. 
D)  Each seller will sell 250 gallons and charge a price of $5.

Question 8

Scenario 17-5
Assume that a local bank sells two services, checking accounts and ATM card services. The bank's only two customers are Mr. Donethat and Ms. Beenthere. Mr. Donethat is willing to pay $8 a month for the bank to service his checking account and $2 a month for unlimited use of his ATM card. Ms. Beenthere is willing to pay only $5 for a checking account, but is willing to pay $9 for unlimited use of her ATM card. Assume that the bank can provide each of these services at zero marginal cost.
-Refer to Scenario 17-5.If the bank is unable to use tying,what is the profit-maximizing price to charge for a checking account?

Accepted Answer

A)  $13 
B)  $9 
C)  $8 
D)  $5 
A)  $13 
B)  $9 
C)  $8 
D)  $5

Question 9

Antitrust laws in general are used to

Accepted Answer

A)  prevent oligopolists from acting in ways that make markets less competitive. 
B)  encourage oligopolists to pursue cooperative-interest at the expense of self-interest. 
C)  encourage frivolous lawsuits among competitive firms. 
D)  encourage all firms to cut production levels and cut prices. 
A)  prevent oligopolists from acting in ways that make markets less competitive. 
B)  encourage oligopolists to pursue cooperative-interest at the expense of self-interest. 
C)  encourage frivolous lawsuits among competitive firms. 
D)  encourage all firms to cut production levels and cut prices.

Question 10

A distinguishing feature of an oligopolistic industry is the tension between

Accepted Answer

A)  profit maximization and cost minimization. 
B)  cooperation and self interest. 
C)  producing a small amount of output and charging a price above marginal cost. 
D)  short-run decisions and long-run decisions. 
A)  profit maximization and cost minimization. 
B)  cooperation and self interest. 
C)  producing a small amount of output and charging a price above marginal cost. 
D)  short-run decisions and long-run decisions.

Question 11

We know that people tend to overuse common resources.This problem can be viewed as an example of

Accepted Answer

A)  a game in which the players succeed in reaching the cooperative outcome. 
B)  the prisoners' dilemma. 
C)  a situation to which game theory does not apply because of a lack of strategic thinking. 
D)  a situation to which game theory does not apply because of too many decision-makers. 
A)  a game in which the players succeed in reaching the cooperative outcome. 
B)  the prisoners' dilemma. 
C)  a situation to which game theory does not apply because of a lack of strategic thinking. 
D)  a situation to which game theory does not apply because of too many decision-makers.

Question 12

When individuals are damaged by an illegal arrangement to restrain trade,which law allows them to pursue civil action and recover up to three times the damages sustained?

Accepted Answer

A)  Trade Damage Act 
B)  Clayton Act 
C)  Sherman Act 
D)  No law allows individuals to pursue civil action and recover up to three times the damages sustained. 
A)  Trade Damage Act 
B)  Clayton Act 
C)  Sherman Act 
D)  No law allows individuals to pursue civil action and recover up to three times the damages sustained.

Question 13

Table 17-19
Consider a small town that has two grocery stores from which residents can choose to buy a gallon of milk. The store owners each must make a decision to set a high milk price or a low milk price. The payoff table, showing profit per week, is provided below. The profit in each cell is shown as (Store 1, Store 2).
  
-Refer to Table 17-19.If grocery store 2 sets a high price,what price should grocery store 1 set? And what will grocery store 1's payoff equal?

Accepted Answer

A)  Low price, $800 
B)  High price, $650 
C)  Low price, $100 
D)  High price, $800 
A)  Low price, $800 
B)  High price, $650 
C)  Low price, $100 
D)  High price, $800

Question 14

Regardless of the firm's behavior,Google should face antitrust legislation because it generates a dominant share of the revenue in its market.

Accepted Answer

A) True 
 B)False

Question 15

Table 17-2. The table shows the town of Pittsville's demand schedule for gasoline. For simplicity, assume the town's gasoline seller(s) incur no costs in selling gasoline.
  
-Refer to Table 17-2.If the market for gasoline in Pittsville is perfectly competitive,then the equilibrium price of gasoline is

Accepted Answer

A)  $8 and the equilibrium quantity is 200 gallons. 
B)  $5 and the equilibrium quantity is 500 gallons. 
C)  $2 and the equilibrium quantity is 800 gallons. 
D)  $0 and the equilibrium quantity is 1,000 gallons. 
A)  $8 and the equilibrium quantity is 200 gallons. 
B)  $5 and the equilibrium quantity is 500 gallons. 
C)  $2 and the equilibrium quantity is 800 gallons. 
D)  $0 and the equilibrium quantity is 1,000 gallons.

Question 16

Scenario 17-2. Imagine that two oil companies, Mobile and Cargo, own adjacent oil fields. Under the fields is a common pool of oil worth $96 million. Drilling a well to recover oil costs $3 million per well. If each company drills one well, each will get half of the oil and earn a $45 million profit ($48 million in revenue - $3 million in costs). Assume that having X percent of the total wells means that a company will collect X percent of the total revenue.
-Refer to Scenario 17-2.If Mobile and Cargo are able to successfully collude to maximize their joint profits,Mobile will earn

Accepted Answer

A)  $29 million and Cargo will earn $58 million. 
B)  $42 million and Cargo will earn $42 million. 
C)  $45 million and Cargo will earn $45 million. 
D)  $58 million and Cargo will earn $29 million. 
A)  $29 million and Cargo will earn $58 million. 
B)  $42 million and Cargo will earn $42 million. 
C)  $45 million and Cargo will earn $45 million. 
D)  $58 million and Cargo will earn $29 million.

Question 17

Resale price maintenance prevents retailers from competing on price.

Accepted Answer

A) True 
 B)False

Question 18

When all firms choose their best strategy given the strategies that all the other firms have chosen,the result is a Nash equilibrium.

Accepted Answer

A) True 
 B)False

Question 19

The Sherman Antitrust Act was passed in

Accepted Answer

A)  1836. 
B)  1890. 
C)  1914. 
D)  1946. 
A)  1836. 
B)  1890. 
C)  1914. 
D)  1946.

Question 20

As the number of firms in an oligopoly increases,the

Accepted Answer

A)  price approaches marginal cost, and the quantity approaches the socially efficient level. 
B)  price and quantity approach the monopoly levels. 
C)  price effect exceeds the output effect. 
D)  individual firms' profits increase. 
A)  price approaches marginal cost, and the quantity approaches the socially efficient level. 
B)  price and quantity approach the monopoly levels. 
C)  price effect exceeds the output effect. 
D)  individual firms' profits increase.

As the number of firms in an oligopoly increases,

Oligopolies can end up looking like competitive markets if the number of firms is

Antitrust laws in general are used to

A distinguishing feature of an oligopolistic industry is the tension between

We know that people tend to overuse common resources.This problem can be viewed as an example of

When individuals are damaged by an illegal arrangement to restrain trade,which law allows them to pursue civil action and recover up to three times the damages sustained?

Regardless of the firm's behavior,Google should face antitrust legislation because it generates a dominant share of the revenue in its market.

Table 17-2. The table shows the town of Pittsville's demand schedule for gasoline. For simplicity, assume the town's gasoline seller(s) incur no costs in selling gasoline. -Refer to Table 17-2.If the market for gasoline in Pittsville is perfectly competitive,then the equilibrium price of gasoline is

Resale price maintenance prevents retailers from competing on price.

When all firms choose their best strategy given the strategies that all the other firms have chosen,the result is a Nash equilibrium.

The Sherman Antitrust Act was passed in

As the number of firms in an oligopoly increases,the

Ten Principles of Economics.

Thinking Like an Economist.

Interdependence and the Gains from Trade.

The Market Forces of Supply and Demand.

Elasticity and Its Application

Supply, Demand, And Government Policies.

Consumers, Producers, and the Efficiency of Markets.

Application: The Costs of Taxation.

Application: International Trade.

Externalities.

Public Goods and Common Resources.

The Design of the Tax System.

The Costs of Production.

Firms in Competitive Markets.

Monopoly.

Monopolistic Competition.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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Exam 17: Oligopoly.

As the number of firms in an oligopoly increases,

Oligopolies can end up looking like competitive markets if the number of firms is

Antitrust laws in general are used to

A distinguishing feature of an oligopolistic industry is the tension between

We know that people tend to overuse common resources.This problem can be viewed as an example of

When individuals are damaged by an illegal arrangement to restrain trade,which law allows them to pursue civil action and recover up to three times the damages sustained?

Regardless of the firm's behavior,Google should face antitrust legislation because it generates a dominant share of the revenue in its market.

Resale price maintenance prevents retailers from competing on price.

When all firms choose their best strategy given the strategies that all the other firms have chosen,the result is a Nash equilibrium.

The Sherman Antitrust Act was passed in

As the number of firms in an oligopoly increases,the

Ten Principles of Economics.

Thinking Like an Economist.

Interdependence and the Gains from Trade.

The Market Forces of Supply and Demand.

Elasticity and Its Application

Supply, Demand, And Government Policies.

Consumers, Producers, and the Efficiency of Markets.

Application: The Costs of Taxation.

Application: International Trade.

Externalities.

Public Goods and Common Resources.

The Design of the Tax System.

The Costs of Production.

Firms in Competitive Markets.

Monopoly.

Monopolistic Competition.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

Filters