Question 1

In the prisoners' dilemma,each player is ________ regardless of the other player's actions.

Accepted Answer

A)  forced to confess 
B)  forced to deny 
C)  better off confessing 
D)  better off denying 
E)  going to go free 
A)  forced to confess 
B)  forced to deny 
C)  better off confessing 
D)  better off denying 
E)  going to go free

Question 2

If one firm in a duopoly increases its production by one unit beyond the monopoly output,that firm's profit ________,the other firm's profit ________,and the total profit of the duopoly ________.

Accepted Answer

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

Question 3

"Because firms in an oligopoly are so large,they do not need to consider each other's actions." Is the previous statement correct or incorrect? Explain your answer.

Accepted Answer

The statement is most definitely incorre

Question 4

-The table above shows the payoff matrix offered to two suspected criminals,Bonnie and Clyde.The payoffs are the years they will spend in prison.The suspected criminals are not allowed to communicate.Given the information in the payoff matrix,the Nash equilibrium is that Bonnie ________ and Clyde ________.

Accepted Answer

A)  confesses; denies 
B)  confesses; confesses 
C)  denies; denies 
D)  denies; confesses 
E)  denies; either confess or denies, either outcome is consistent with the Nash equilibrium. 
A)  confesses; denies 
B)  confesses; confesses 
C)  denies; denies 
D)  denies; confesses 
E)  denies; either confess or denies, either outcome is consistent with the Nash equilibrium.

Question 5

A group of firms that has entered into an agreement to restrict output and increase prices and profits is called

Accepted Answer

A)  a compliance. 
B)  a cartel. 
C)  an oligopoly. 
D)  a duopoly. 
E)  a multi-firm monopoly. 
A)  a compliance. 
B)  a cartel. 
C)  an oligopoly. 
D)  a duopoly. 
E)  a multi-firm monopoly.

Question 6

The manufacturer of perfume enters into an agreement with several distributors about the price at which the distributors can resell the perfume.The distributors who do not agree to the pricing suggestion are not able to sell the perfume.The agreement between manufacturers and distributors is

Accepted Answer

A)  resale price maintenance. 
B)  an interlocking dealership chain. 
C)  always inefficient. 
D)  a tying arrangement. 
E)  an example of an exclusive deal. 
A)  resale price maintenance. 
B)  an interlocking dealership chain. 
C)  always inefficient. 
D)  a tying arrangement. 
E)  an example of an exclusive deal.

Question 7

The concepts of mutual interdependence and game theory illustrate the fact that firms competing in oligopoly

Accepted Answer

A)  consider the actions of the rivals before changing the price of their product. 
B)  ignore the actions of their rivals when considering price changes. 
C)  engage in frequent price changes. 
D)  never change prices. 
E)  will mutually determine the combined best outcome for all players. 
A)  consider the actions of the rivals before changing the price of their product. 
B)  ignore the actions of their rivals when considering price changes. 
C)  engage in frequent price changes. 
D)  never change prices. 
E)  will mutually determine the combined best outcome for all players.

Question 8

What are the actions that are prohibited according to the Clayton Act and its amendments? What conditions must be met for these actions to be prohibited?

Accepted Answer

The Clayton Act prohibits certain practi

Question 9

"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 10

The players in a game theory situation often do not act in their joint interest because of which of the following?

Accepted Answer

A)  They do not realize the benefit of cooperation. 
B)  Players strive to minimize their opponents' profits. 
C)  Players do not understand the game and its payoffs. 
D)  It is not in each player's self-interest to cooperate. 
E)  Players understand the game but they do not know which action(s) will benefit their joint interest. 
A)  They do not realize the benefit of cooperation. 
B)  Players strive to minimize their opponents' profits. 
C)  Players do not understand the game and its payoffs. 
D)  It is not in each player's self-interest to cooperate. 
E)  Players understand the game but they do not know which action(s) will benefit their joint interest.

Question 11

In an oligopoly,there are

Accepted Answer

A)  many firms and barriers to entry. 
B)  many firms and no barriers to entry. 
C)  few firms and barriers to entry. 
D)  few firms and no barriers to entry. 
E)  barriers to entry and only one firm. 
A)  many firms and barriers to entry. 
B)  many firms and no barriers to entry. 
C)  few firms and barriers to entry. 
D)  few firms and no barriers to entry. 
E)  barriers to entry and only one firm.

Question 12

Economists use game theory to analyze strategic behavior,which takes into account

Accepted Answer

A)  monopoly situations. 
B)  the expected behavior of others and the recognition of mutual interdependence. 
C)  the price-taking behavior of oligopolists. 
D)  non-price competition. 
E)  that increased demand decreases the market power of the firms in the market. 
A)  monopoly situations. 
B)  the expected behavior of others and the recognition of mutual interdependence. 
C)  the price-taking behavior of oligopolists. 
D)  non-price competition. 
E)  that increased demand decreases the market power of the firms in the market.

Question 13

In the United States,antitrust laws

Accepted Answer

A)  do not allow one person to be a director of two competing firms if being a member "substantially lessens competition." 
B)  break up a company if it is too large because "size itself is an offense." 
C)  do not always prosecute firms if they have fixed their prices. 
D)  regard excess competition as a felony under Section 3 of the Sherman Act. 
E)  place a maximum limit of 125 firms that are allowed to compete in any market. 
A)  do not allow one person to be a director of two competing firms if being a member "substantially lessens competition." 
B)  break up a company if it is too large because "size itself is an offense." 
C)  do not always prosecute firms if they have fixed their prices. 
D)  regard excess competition as a felony under Section 3 of the Sherman Act. 
E)  place a maximum limit of 125 firms that are allowed to compete in any market.

Question 14

Tying arrangements

Accepted Answer

A)  require retailers to charge a specific price determined by the manufacturer. 
B)  require a buyer to purchase one product in order to buy another, different product. 
C)  are illegal under the Sherman Act. 
D)  always allow a firm to increase its market power. 
E)  are always illegal under the Clayton Act. 
A)  require retailers to charge a specific price determined by the manufacturer. 
B)  require a buyer to purchase one product in order to buy another, different product. 
C)  are illegal under the Sherman Act. 
D)  always allow a firm to increase its market power. 
E)  are always illegal under the Clayton Act.

Question 15

An oligopoly created because of economies of scale is called a

Accepted Answer

A)  natural oligopoly. 
B)  legal oligopoly. 
C)  public oligopoly. 
D)  monopolistic oligopoly. 
E)  scale oligopoly. 
A)  natural oligopoly. 
B)  legal oligopoly. 
C)  public oligopoly. 
D)  monopolistic oligopoly. 
E)  scale oligopoly.

Question 16

-The figure above shows a ________ where ________ firm(s)produce(s)________.

Accepted Answer

A)  natural oligopoly; 3; 30 units each 
B)  natural duopoly; 2; 45 units each 
C)  natural monopoly; 2; 90 units 
D)  monopoly; 1; 90 units 
E)  natural monopoly; 3; 90 units each 
A)  natural oligopoly; 3; 30 units each 
B)  natural duopoly; 2; 45 units each 
C)  natural monopoly; 2; 90 units 
D)  monopoly; 1; 90 units 
E)  natural monopoly; 3; 90 units each

Question 17

For a duopoly,the maximum total profit is reached when the duopoly produces

Accepted Answer

A)  the same amount of output as the competitive outcome. 
B)  the same amount of output as the monopoly outcome. 
C)  an amount of output that lies between the competitive outcome and the monopoly outcome. 
D)  more output than the competitive outcome. 
E)  less output than the monopoly outcome. 
A)  the same amount of output as the competitive outcome. 
B)  the same amount of output as the monopoly outcome. 
C)  an amount of output that lies between the competitive outcome and the monopoly outcome. 
D)  more output than the competitive outcome. 
E)  less output than the monopoly outcome.

Question 18

-The only two firms in a market are trying to decide what price to charge.The payoff matrix for this duopoly game is shown above.The payoffs are thousands of dollars of economic profit.In the Nash equilibrium,Firm A will set a price of ________ and Firm B will set a price of ________.

Accepted Answer

A)  $10; $20 
B)  $20; $10 
C)  $10; $10 
D)  $20; $20 
E)  $20; something, but more information is needed to determine Firm B's price 
A)  $10; $20 
B)  $20; $10 
C)  $10; $10 
D)  $20; $20 
E)  $20; something, but more information is needed to determine Firm B's price

Question 19

Which of the following are characteristics of an oligopoly?
i.The HHI for an oligopoly is between 100 and 1800.
ii.There are a few firms that compete.
iii.The firms can increase their profit by forming a cartel.

Accepted Answer

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

Question 20

Which of the following does antitrust law prohibit if it substantially lessens competition or creates a monopoly?
i.acquiring a competitor's shares or assets
ii.territorial confinement
iii.becoming a director of a competing firm

Accepted Answer

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

In the prisoners' dilemma,each player is ________ regardless of the other player's actions.

If one firm in a duopoly increases its production by one unit beyond the monopoly output,that firm's profit ,the other firm's profit ,and the total profit of the duopoly .

"Because firms in an oligopoly are so large,they do not need to consider each other's actions." Is the previous statement correct or incorrect? Explain your answer.

-The table above shows the payoff matrix offered to two suspected criminals,Bonnie and Clyde.The payoffs are the years they will spend in prison.The suspected criminals are not allowed to communicate.Given the information in the payoff matrix,the Nash equilibrium is that Bonnie and Clyde .

A group of firms that has entered into an agreement to restrict output and increase prices and profits is called

The manufacturer of perfume enters into an agreement with several distributors about the price at which the distributors can resell the perfume.The distributors who do not agree to the pricing suggestion are not able to sell the perfume.The agreement between manufacturers and distributors is

The concepts of mutual interdependence and game theory illustrate the fact that firms competing in oligopoly

What are the actions that are prohibited according to the Clayton Act and its amendments? What conditions must be met for these actions to be prohibited?

"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.

The players in a game theory situation often do not act in their joint interest because of which of the following?

In an oligopoly,there are

Economists use game theory to analyze strategic behavior,which takes into account

In the United States,antitrust laws

Tying arrangements

An oligopoly created because of economies of scale is called a

-The figure above shows a where firm(s)produce(s).

For a duopoly,the maximum total profit is reached when the duopoly produces

-The only two firms in a market are trying to decide what price to charge.The payoff matrix for this duopoly game is shown above.The payoffs are thousands of dollars of economic profit.In the Nash equilibrium,Firm A will set a price of and Firm B will set a price of .

Which of the following are characteristics of an oligopoly? i.The HHI for an oligopoly is between 100 and 1800. ii.There are a few firms that compete. iii.The firms can increase their profit by forming a cartel.

Which of the following does antitrust law prohibit if it substantially lessens competition or creates a monopoly? i.acquiring a competitor's shares or assets ii.territorial confinement iii.becoming a director of a competing firm

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

In the prisoners' dilemma,each player is ________ regardless of the other player's actions.

If one firm in a duopoly increases its production by one unit beyond the monopoly output,that firm's profit ________,the other firm's profit ________,and the total profit of the duopoly ________.

"Because firms in an oligopoly are so large,they do not need to consider each other's actions." Is the previous statement correct or incorrect? Explain your answer.

A group of firms that has entered into an agreement to restrict output and increase prices and profits is called

The manufacturer of perfume enters into an agreement with several distributors about the price at which the distributors can resell the perfume.The distributors who do not agree to the pricing suggestion are not able to sell the perfume.The agreement between manufacturers and distributors is

The concepts of mutual interdependence and game theory illustrate the fact that firms competing in oligopoly

What are the actions that are prohibited according to the Clayton Act and its amendments? What conditions must be met for these actions to be prohibited?

"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.

The players in a game theory situation often do not act in their joint interest because of which of the following?

In an oligopoly,there are

Economists use game theory to analyze strategic behavior,which takes into account

In the United States,antitrust laws

Tying arrangements

An oligopoly created because of economies of scale is called a

-The figure above shows a ________ where ________ firm(s)produce(s)________.

For a duopoly,the maximum total profit is reached when the duopoly produces

-The only two firms in a market are trying to decide what price to charge.The payoff matrix for this duopoly game is shown above.The payoffs are thousands of dollars of economic profit.In the Nash equilibrium,Firm A will set a price of ________ and Firm B will set a price of ________.

Which of the following are characteristics of an oligopoly? i.The HHI for an oligopoly is between 100 and 1800. ii.There are a few firms that compete. iii.The firms can increase their profit by forming a cartel.

Which of the following does antitrust law prohibit if it substantially lessens competition or creates a monopoly? i.acquiring a competitor's shares or assets ii.territorial confinement iii.becoming a director of a competing firm

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

If one firm in a duopoly increases its production by one unit beyond the monopoly output,that firm's profit ,the other firm's profit ,and the total profit of the duopoly .

-The figure above shows a where firm(s)produce(s).

-The only two firms in a market are trying to decide what price to charge.The payoff matrix for this duopoly game is shown above.The payoffs are thousands of dollars of economic profit.In the Nash equilibrium,Firm A will set a price of and Firm B will set a price of .