Question 1

The prisoners' dilemma is an example of

Accepted Answer

A)  product differentiation. 
B)  collusion. 
C)  game theory. 
D)  monopolistic competition. 
E)  decision making in a monopoly. 
A)  product differentiation. 
B)  collusion. 
C)  game theory. 
D)  monopolistic competition. 
E)  decision making in a monopoly.

Question 2

The efficient scale of one firm is 20 units and the average total cost at the efficient scale is $30.The quantity demanded in the market as a whole at $30 is 40 units.This market is

Accepted Answer

A)  a natural duopoly. 
B)  a legal duopoly. 
C)  a natural monopoly. 
D)  a legal monopoly. 
E)  monopolistically competitive. 
A)  a natural duopoly. 
B)  a legal duopoly. 
C)  a natural monopoly. 
D)  a legal monopoly. 
E)  monopolistically competitive.

Question 3

If a legal oligopoly exists,

Accepted Answer

A)  the firms always engage in a "tit for tat" strategy. 
B)  there is the possibility that the market is large enough for more firms. 
C)  the firms never collude. 
D)  monopoly profits cannot be earned. 
E)  the firms may legally merge and become a monopoly. 
A)  the firms always engage in a "tit for tat" strategy. 
B)  there is the possibility that the market is large enough for more firms. 
C)  the firms never collude. 
D)  monopoly profits cannot be earned. 
E)  the firms may legally merge and become a monopoly.

Question 4

Suppose that an industry has an HHI of 1,900.Two firms in the industry want to merge.Under which conditions will the Federal Trade Commission challenge the merger?

Accepted Answer

A)  The market is considered competitive, so the merger will not be challenged. 
B)  The merger will be challenged if it raises the HHI by 100 or more points. 
C)  The merger will be challenged if it raises the HHI by 50 or more points. 
D)  The merger will be challenged if it raises the HHI by 200 or more points. 
E)  The merger will be challenged if it raises the HHI by 500 or more points. 
A)  The market is considered competitive, so the merger will not be challenged. 
B)  The merger will be challenged if it raises the HHI by 100 or more points. 
C)  The merger will be challenged if it raises the HHI by 50 or more points. 
D)  The merger will be challenged if it raises the HHI by 200 or more points. 
E)  The merger will be challenged if it raises the HHI by 500 or more points.

Question 5

The Federal Trade Commission ________ the merger between AT&T and T-Mobile because the merger was projected to ________.

Accepted Answer

A)  did not approve; increase the HHI by at least 700 points and reduce market competitiveness 
B)  approved; increase the HHI by only 700 points and not substantially affect market competitiveness 
C)  approved; decrease the HHI by almost 500 points 
D)  did not approve; increase the four-firm concentration ratio by 20 percent 
E)  did not approve; cause the firms to engage in predatory pricing 
A)  did not approve; increase the HHI by at least 700 points and reduce market competitiveness 
B)  approved; increase the HHI by only 700 points and not substantially affect market competitiveness 
C)  approved; decrease the HHI by almost 500 points 
D)  did not approve; increase the four-firm concentration ratio by 20 percent 
E)  did not approve; cause the firms to engage in predatory pricing

Question 6

The Shiny Watch company,a manufacturer of expensive watches,requires all of its retailers to sell its watches for a specific price.Which of the following statements are true?
i.The Shiny Watch company is engaged in predatory pricing.
ii.The Shiny Watch company is definitely violating the law
iii.The Shiny Watch company creates an efficient outcome it its retailers provide an efficient level of service.

Accepted Answer

A)  i, ii and iii. 
B)  ii only. 
C)  iii only. 
D)  i and ii. 
E)  ii and iii. 
A)  i, ii and iii. 
B)  ii only. 
C)  iii only. 
D)  i and ii. 
E)  ii and iii.

Question 7

If Sony required all its retailers not to sell televisions from other companies,Sony would be engaging in what kind of activity? Is Sony's requirement legal or does it violate the Clayton Act?

Accepted Answer

Sony is engaged in an exclusive deal.The

Question 8

Describe the Department of Justice's claims against Microsoft.

Accepted Answer

The Department of Justice claims that Mi

Question 9

What is game theory and what light does it shed on the duopolists' dilemma?

Accepted Answer

Game theory is a tool economists use to

Question 10

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

Accepted Answer

John Nash proposed the concept of an equ

Question 11

Resale price maintenance

Accepted Answer

A)  can lead to efficiency by preventing low-price shops from being free riders. 
B)  can lead to inefficiency by preventing low-price shops from being free riders. 
C)  is always legal. 
D)  is a clear example of predatory pricing. 
E)  is an example of a tying arrangement. 
A)  can lead to efficiency by preventing low-price shops from being free riders. 
B)  can lead to inefficiency by preventing low-price shops from being free riders. 
C)  is always legal. 
D)  is a clear example of predatory pricing. 
E)  is an example of a tying arrangement.

Question 12

The figure above shows the market for airplanes.
-Suppose the airplane market is an oligopoly.According to the figure above,if the firms act as a monopolist,the quantity produced will be ________ planes per week,and if the firms act as competitors,the quantity produced will be ________ planes per week.

Accepted Answer

A)  6; 12 
B)  12; 6 
C)  0; 6 
D)  12; 0 
E)  None of the above answers is correct. 
A)  6; 12 
B)  12; 6 
C)  0; 6 
D)  12; 0 
E)  None of the above answers is correct.

Question 13

Tying arrangements

Accepted Answer

A)  work only in perfectly competitive markets. 
B)  are illegal under the Sherman Act. 
C)  are illegal under the Clayton Act if they create monopoly. 
D)  are illegal under the Clayton Act and the Sherman Act only if they used along with predatory pricing. 
E)  are always illegal under the Clayton Act. 
A)  work only in perfectly competitive markets. 
B)  are illegal under the Sherman Act. 
C)  are illegal under the Clayton Act if they create monopoly. 
D)  are illegal under the Clayton Act and the Sherman Act only if they used along with predatory pricing. 
E)  are always illegal under the Clayton Act.

Question 14

Suppose two companies,Sony and Magnavox,are competing in a duopoly.If both companies charge a high price,they each make $700 million in economic profit.If both companies charge a low price,they each make $500 million in economic profit.If one company charges a high price and the other a low price,the company charging the higher price makes $450 million in economic profit and the company charging the lower price makes $800 million in economic profit.
a.Complete the payoff matrix below for Sony and Magnavox.
   
b.Find the Nash equilibrium.

Accepted Answer

@#IMG-DLM& 
a.The completed payoff matri

Question 15

The Clayton Act

Accepted Answer

A)  replaced the Sherman Act. 
B)  along with its amendments, outlawed several business practices if they substantially lessened competition or created monopoly. 
C)  along with its amendments, prohibited all business practices that substantially lessen competition or create monopoly. 
D)  was the first anti-trust law in the United States. 
E)  was repealed in 1985. 
A)  replaced the Sherman Act. 
B)  along with its amendments, outlawed several business practices if they substantially lessened competition or created monopoly. 
C)  along with its amendments, prohibited all business practices that substantially lessen competition or create monopoly. 
D)  was the first anti-trust law in the United States. 
E)  was repealed in 1985.

Question 16

One of the main tools economists use to analyze strategic behavior is

Accepted Answer

A)  the Herfindahl-Hirschman Index. 
B)  game theory. 
C)  cartel theory. 
D)  the collusion index. 
E)  dual theory, which is used to study duopolies. 
A)  the Herfindahl-Hirschman Index. 
B)  game theory. 
C)  cartel theory. 
D)  the collusion index. 
E)  dual theory, which is used to study duopolies.

Question 17

In an oligopoly,output is

Accepted Answer

A)  less than the output in monopoly. 
B)  greater than the output in perfect competition. 
C)  in all circumstances the same as the output in perfect competition. 
D)  somewhere between the output in monopoly and that in perfect competition outcomes. 
E)  in all circumstances the same as the output in monopoly. 
A)  less than the output in monopoly. 
B)  greater than the output in perfect competition. 
C)  in all circumstances the same as the output in perfect competition. 
D)  somewhere between the output in monopoly and that in perfect competition outcomes. 
E)  in all circumstances the same as the output in monopoly.

Question 18

Which of the following is an example of a tying arrangement?

Accepted Answer

A)  preventing a buyer from reselling a product outside a specific area 
B)  selling one product only if another product is purchased 
C)  forcing the purchase of all necessities from a single firm 
D)  prohibiting a seller from selling a competing item 
E)  selling different units of a good to the same buyer at different prices. 
A)  preventing a buyer from reselling a product outside a specific area 
B)  selling one product only if another product is purchased 
C)  forcing the purchase of all necessities from a single firm 
D)  prohibiting a seller from selling a competing item 
E)  selling different units of a good to the same buyer at different prices.

Question 19

In order for the Federal Trade Commission to consider an industry concentrated,the industry must have a Herfindahl-Hirschman Index of

Accepted Answer

A)  less than 1,000. 
B)  between 1,000 and 1,400. 
C)  greater than 1,800. 
D)  less than zero. 
E)  between 1,400 and 1,800. 
A)  less than 1,000. 
B)  between 1,000 and 1,400. 
C)  greater than 1,800. 
D)  less than zero. 
E)  between 1,400 and 1,800.

Question 20

What is a cartel?

Accepted Answer

A cartel is a group of firms acting toge

The prisoners' dilemma is an example of

The efficient scale of one firm is 20 units and the average total cost at the efficient scale is $30.The quantity demanded in the market as a whole at $30 is 40 units.This market is

If a legal oligopoly exists,

Suppose that an industry has an HHI of 1,900.Two firms in the industry want to merge.Under which conditions will the Federal Trade Commission challenge the merger?

The Federal Trade Commission the merger between AT&T and T-Mobile because the merger was projected to .

If Sony required all its retailers not to sell televisions from other companies,Sony would be engaging in what kind of activity? Is Sony's requirement legal or does it violate the Clayton Act?

Describe the Department of Justice's claims against Microsoft.

What is game theory and what light does it shed on the duopolists' dilemma?

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

Resale price maintenance

The figure above shows the market for airplanes. -Suppose the airplane market is an oligopoly.According to the figure above,if the firms act as a monopolist,the quantity produced will be planes per week,and if the firms act as competitors,the quantity produced will be planes per week.

Tying arrangements

The Clayton Act

One of the main tools economists use to analyze strategic behavior is

In an oligopoly,output is

Which of the following is an example of a tying arrangement?

In order for the Federal Trade Commission to consider an industry concentrated,the industry must have a Herfindahl-Hirschman Index of

What is a cartel?

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

The prisoners' dilemma is an example of

The efficient scale of one firm is 20 units and the average total cost at the efficient scale is $30.The quantity demanded in the market as a whole at $30 is 40 units.This market is

If a legal oligopoly exists,

Suppose that an industry has an HHI of 1,900.Two firms in the industry want to merge.Under which conditions will the Federal Trade Commission challenge the merger?

The Federal Trade Commission ________ the merger between AT&T and T-Mobile because the merger was projected to ________.

If Sony required all its retailers not to sell televisions from other companies,Sony would be engaging in what kind of activity? Is Sony's requirement legal or does it violate the Clayton Act?

Describe the Department of Justice's claims against Microsoft.

What is game theory and what light does it shed on the duopolists' dilemma?

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

Resale price maintenance

Tying arrangements

The Clayton Act

One of the main tools economists use to analyze strategic behavior is

In an oligopoly,output is

Which of the following is an example of a tying arrangement?

In order for the Federal Trade Commission to consider an industry concentrated,the industry must have a Herfindahl-Hirschman Index of

What is a cartel?

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 Federal Trade Commission the merger between AT&T and T-Mobile because the merger was projected to .