Question 1

Sammy's Inc.competes with a few other firms because there are natural barriers to entry.Sammy's operates in

Accepted Answer

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

Question 2

The U.S.courts found Microsoft

Accepted Answer

A)  did not violate antitrust law. 
B)  violated the Sherman Act. 
C)  violated the Cellar-Kefauver Act. 
D)  engaged in predatory pricing. 
E)  violated the price discrimination clause of the Clayton Act. 
A)  did not violate antitrust law. 
B)  violated the Sherman Act. 
C)  violated the Cellar-Kefauver Act. 
D)  engaged in predatory pricing. 
E)  violated the price discrimination clause of the Clayton Act.

Question 3

If two duopolists can stick to a cartel agreement to boost their prices,then both

Accepted Answer

A)  make greater economic profits than if they did not collude. 
B)  price at marginal cost. 
C)  price below average total cost. 
D)  decrease their economic profits. 
E)  increase their production so that each produces more than if they did not collude. 
A)  make greater economic profits than if they did not collude. 
B)  price at marginal cost. 
C)  price below average total cost. 
D)  decrease their economic profits. 
E)  increase their production so that each produces more than if they did not collude.

Question 4

Firms operating in an oligopoly

Accepted Answer

A)  always compete on price. 
B)  always compete on price, product quality and marketing. 
C)  can make the same profit as a monopoly but there is no assurance that they will do so. 
D)  usually achieve the competitive outcome. 
E)  always make the same profit as a monopoly. 
A)  always compete on price. 
B)  always compete on price, product quality and marketing. 
C)  can make the same profit as a monopoly but there is no assurance that they will do so. 
D)  usually achieve the competitive outcome. 
E)  always make the same profit as a monopoly.

Question 5

Under the Clayton Act and its amendments,which of the following activities is illegal if it creates monopoly?

Accepted Answer

A)  exit of a firm from a market with 4 or fewer surviving firms 
B)  price hikes among competing firms 
C)  price discrimination 
D)  patents that result in price hikes 
E)  entry of a firm into a new market 
A)  exit of a firm from a market with 4 or fewer surviving firms 
B)  price hikes among competing firms 
C)  price discrimination 
D)  patents that result in price hikes 
E)  entry of a firm into a new market

Question 6

If the Herfindahl-Hirschman Index (HHI)for a market is between 1,000 and 1,800,the Federal Trade Commission will examine

Accepted Answer

A)  all mergers. 
B)  no mergers. 
C)  mergers that raise the HHI by 100 or more points. 
D)  mergers that raise the HHI by 100 or fewer point. 
E)  mergers that lower the HHI by 100 or more points. 
A)  all mergers. 
B)  no mergers. 
C)  mergers that raise the HHI by 100 or more points. 
D)  mergers that raise the HHI by 100 or fewer point. 
E)  mergers that lower the HHI by 100 or more points.

Question 7

A cartel is most likely to occur in

Accepted Answer

A)  perfect competition as firms compete by reducing cost. 
B)  oligopoly as firms act together to raise prices and increase profits. 
C)  monopolistic competition where firms collude to increase profits. 
D)  oligopoly as firms compete to lower price and increase their own profits. 
E)  monopoly because it faces no competition. 
A)  perfect competition as firms compete by reducing cost. 
B)  oligopoly as firms act together to raise prices and increase profits. 
C)  monopolistic competition where firms collude to increase profits. 
D)  oligopoly as firms compete to lower price and increase their own profits. 
E)  monopoly because it faces no competition.

Question 8

For a duopoly,the smallest total quantity is produced when the duopoly achieves

Accepted Answer

A)  the competitive outcome. 
B)  the monopoly outcome. 
C)  an outcome between the competitive outcome and the monopoly outcome. 
D)  its noncooperative Nash equilibrium. 
E)  Both answers A and D are correct because both refer to the same amount of output. 
A)  the competitive outcome. 
B)  the monopoly outcome. 
C)  an outcome between the competitive outcome and the monopoly outcome. 
D)  its noncooperative Nash equilibrium. 
E)  Both answers A and D are correct because both refer to the same amount of output.

Question 9

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,economies of scale limit the market to ________ firm(s).

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
E)  8 
A)  1 
B)  2 
C)  3 
D)  4 
E)  8

Question 10

-The above figure shows the market demand curve for long-distance land-based telephone calls.Suppose the marginal cost of a long-distance telephone call is 2¢ a minute for a call no matter how many minutes of calls are made and there are 3 firms in the industry.If the firms in the industry operate as a monopoly,there are ________ minutes of calls made per hour.

Accepted Answer

A)  between 0 and 3 million 
B)  more than 3 million and less than or equal to 5 million 
C)  more than 5 million and less than or equal to 7 million 
D)  more than 7 million and less than or equal to 9 million 
E)  more than 9 million 
A)  between 0 and 3 million 
B)  more than 3 million and less than or equal to 5 million 
C)  more than 5 million and less than or equal to 7 million 
D)  more than 7 million and less than or equal to 9 million 
E)  more than 9 million

Question 11

-Two competing firms in a duopoly must decide whether or not to offer consumers a coupon for their good.The payoff matrix above represents the daily profit available to the firms under the different coupon strategies.
a.What strategies and payoffs are represented by quadrant A?
b.What strategy will Firm 1 pursue if it believes that Firm 2 is offering a coupon?
c.What quadrant represents the equilibrium that will result if the firms act independently (compete)?
d.What quadrant represents the equilibrium that will result if the firms successfully collude?

Accepted Answer

a.In quadrant A,Firm 1 offers a coupon w

Question 12

The possible alternatives for an oligopoly range from the monopoly case with ________ to the perfectly competitive case with ________.

Accepted Answer

A)  high output; low output 
B)  low prices; high prices 
C)  low profits; high profits 
D)  low output; high output 
E)  no cooperation among the firms; much cooperation among the firms 
A)  high output; low output 
B)  low prices; high prices 
C)  low profits; high profits 
D)  low output; high output 
E)  no cooperation among the firms; much cooperation among the firms

Question 13

When the Federal Trade Commission decides whether to allow firms in an industry to merge,it uses the ________ to guide its decision.

Accepted Answer

A)  social interest theory 
B)  HHI 
C)  capture theory 
D)  Sherman Act 
E)  predatory pricing theory 
A)  social interest theory 
B)  HHI 
C)  capture theory 
D)  Sherman Act 
E)  predatory pricing theory

Question 14

When oligopolies seek to operate as a single-price monopoly,the firms produce at the point where

Accepted Answer

A)  P = MC. 
B)  MR = MC. 
C)  P < ATC. 
D)  P = MR. 
E)  MC = ATC. 
A)  P = MC. 
B)  MR = MC. 
C)  P < ATC. 
D)  P = MR. 
E)  MC = ATC.

Question 15

Suppose a duopoly had reached the monopoly outcome and then the first firm increased its production.If the second firm next increases its production,the second firm's profit ________ and the first firm's profit ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
E)  increases; does not change 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
E)  increases; does not change

Question 16

What market structures other than oligopoly have the characteristic of one firm's actions affecting the actions of its competitors? Explain your answer.

Accepted Answer

No other market structure has the charac

Question 17

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,the figure shows a ________ can profitably operate.

Accepted Answer

A)  natural monopoly in which 1 firm 
B)  natural oligopoly in which 2 firms 
C)  natural oligopoly in which 3 firms 
D)  natural oligopoly in which 4 firms 
E)  natural oligopoly in which 5 or more firms 
A)  natural monopoly in which 1 firm 
B)  natural oligopoly in which 2 firms 
C)  natural oligopoly in which 3 firms 
D)  natural oligopoly in which 4 firms 
E)  natural oligopoly in which 5 or more firms

Question 18

A cartel is

Accepted Answer

A)  a group of firms selling identical products but at slightly different prices. 
B)  an agreement among firms to limit output, raise prices, and increase economic profit. 
C)  the automobile producing industry. 
D)  the only firm selling a particular product. 
E)  an illegal agreement among firms which most often arises in monopolistically competitive markets. 
A)  a group of firms selling identical products but at slightly different prices. 
B)  an agreement among firms to limit output, raise prices, and increase economic profit. 
C)  the automobile producing industry. 
D)  the only firm selling a particular product. 
E)  an illegal agreement among firms which most often arises in monopolistically competitive markets.

Question 19

Even though four firms can profitably sell hotdogs downtown,the government licenses only two firms.This market is a

Accepted Answer

A)  natural duopoly. 
B)  legal duopoly. 
C)  natural monopoly. 
D)  legal monopoly. 
E)  market-limited oligopoly. 
A)  natural duopoly. 
B)  legal duopoly. 
C)  natural monopoly. 
D)  legal monopoly. 
E)  market-limited oligopoly.

Question 20

"A Nash equilibrium occurs when both parties to a game end up worse off as a result of the decisions that are made." Is the previous definition of a Nash equilibrium correct or incorrect?

Accepted Answer

The definition is incorrect.A

Sammy's Inc.competes with a few other firms because there are natural barriers to entry.Sammy's operates in

The U.S.courts found Microsoft

If two duopolists can stick to a cartel agreement to boost their prices,then both

Firms operating in an oligopoly

Under the Clayton Act and its amendments,which of the following activities is illegal if it creates monopoly?

If the Herfindahl-Hirschman Index (HHI)for a market is between 1,000 and 1,800,the Federal Trade Commission will examine

A cartel is most likely to occur in

For a duopoly,the smallest total quantity is produced when the duopoly achieves

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,economies of scale limit the market to ________ firm(s).

The possible alternatives for an oligopoly range from the monopoly case with to the perfectly competitive case with .

When the Federal Trade Commission decides whether to allow firms in an industry to merge,it uses the ________ to guide its decision.

When oligopolies seek to operate as a single-price monopoly,the firms produce at the point where

Suppose a duopoly had reached the monopoly outcome and then the first firm increased its production.If the second firm next increases its production,the second firm's profit and the first firm's profit .

What market structures other than oligopoly have the characteristic of one firm's actions affecting the actions of its competitors? Explain your answer.

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,the figure shows a ________ can profitably operate.

A cartel is

Even though four firms can profitably sell hotdogs downtown,the government licenses only two firms.This market is a

"A Nash equilibrium occurs when both parties to a game end up worse off as a result of the decisions that are made." Is the previous definition of a Nash equilibrium correct or incorrect?

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Markets for Factors of Production

Economic Inequality

Filters

Exam 18: Oligopoly

Sammy's Inc.competes with a few other firms because there are natural barriers to entry.Sammy's operates in

The U.S.courts found Microsoft

If two duopolists can stick to a cartel agreement to boost their prices,then both

Firms operating in an oligopoly

Under the Clayton Act and its amendments,which of the following activities is illegal if it creates monopoly?

If the Herfindahl-Hirschman Index (HHI)for a market is between 1,000 and 1,800,the Federal Trade Commission will examine

A cartel is most likely to occur in

For a duopoly,the smallest total quantity is produced when the duopoly achieves

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,economies of scale limit the market to ________ firm(s).

The possible alternatives for an oligopoly range from the monopoly case with ________ to the perfectly competitive case with ________.

When the Federal Trade Commission decides whether to allow firms in an industry to merge,it uses the ________ to guide its decision.

When oligopolies seek to operate as a single-price monopoly,the firms produce at the point where

Suppose a duopoly had reached the monopoly outcome and then the first firm increased its production.If the second firm next increases its production,the second firm's profit ________ and the first firm's profit ________.

What market structures other than oligopoly have the characteristic of one firm's actions affecting the actions of its competitors? Explain your answer.

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,the figure shows a ________ can profitably operate.

A cartel is

Even though four firms can profitably sell hotdogs downtown,the government licenses only two firms.This market is a

"A Nash equilibrium occurs when both parties to a game end up worse off as a result of the decisions that are made." Is the previous definition of a Nash equilibrium correct or incorrect?

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Markets for Factors of Production

Economic Inequality

Filters

The possible alternatives for an oligopoly range from the monopoly case with to the perfectly competitive case with .

Suppose a duopoly had reached the monopoly outcome and then the first firm increased its production.If the second firm next increases its production,the second firm's profit and the first firm's profit .