Question 1

One way to identify oligopoly is to

Accepted Answer

A)  determine the market's minimum price. 
B)  determine the market's maximum price. 
C)  determine whether the firm's ATC exceeds price. 
D)  use the Herfindahl-Hirschman Index (HHI). 
E)  use the Efficiency test. 
A)  determine the market's minimum price. 
B)  determine the market's maximum price. 
C)  determine whether the firm's ATC exceeds price. 
D)  use the Herfindahl-Hirschman Index (HHI). 
E)  use the Efficiency test.

Question 2

-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

Accepted Answer

A)  Bonnie confesses only if she thinks Clyde denies committing the crime. 
B)  Clyde confesses only if he thinks Bonnie denies committing the crime. 
C)  both Bonnie and Clyde confess to the crime. 
D)  both Bonnie and Clyde deny committing the crime. 
E)  Clyde confesses and Bonnie might either confess or not confess, either outcome is consistent with the Nash equilibrium. 
A)  Bonnie confesses only if she thinks Clyde denies committing the crime. 
B)  Clyde confesses only if he thinks Bonnie denies committing the crime. 
C)  both Bonnie and Clyde confess to the crime. 
D)  both Bonnie and Clyde deny committing the crime. 
E)  Clyde confesses and Bonnie might either confess or not confess, either outcome is consistent with the Nash equilibrium.

Question 3

Section 1 of the Sherman Antitrust Act declares what to be illegal?

Accepted Answer

A)  every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations 
B)  mergers of a horizontal nature 
C)  any attempt to monopolize an industry 
D)  sharing of technology among competing firms or mergers where the effect is to lessen competition 
E)  exiting an industry if the remaining firm or firms have a market share that is too large. 
A)  every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations 
B)  mergers of a horizontal nature 
C)  any attempt to monopolize an industry 
D)  sharing of technology among competing firms or mergers where the effect is to lessen competition 
E)  exiting an industry if the remaining firm or firms have a market share that is too large.

Question 4

When oligopolies operate like firms in perfect competition,the firms produce at the point where the

Accepted Answer

A)  price is less than the marginal cost. 
B)  marginal cost equals the price. 
C)  price exceeds the marginal cost by the greatest amount. 
D)  price equals the average total cost. 
E)  marginal cost equals the average total cost. 
A)  price is less than the marginal cost. 
B)  marginal cost equals the price. 
C)  price exceeds the marginal cost by the greatest amount. 
D)  price equals the average total cost. 
E)  marginal cost equals the average total cost.

Question 5

When economies of scale limit the number of firms in an industry to 3,there is a

Accepted Answer

A)  natural monopoly. 
B)  natural oligopoly. 
C)  legal oligopoly. 
D)  legal cartel. 
E)  natural monopolistic competition. 
A)  natural monopoly. 
B)  natural oligopoly. 
C)  legal oligopoly. 
D)  legal cartel. 
E)  natural monopolistic competition.

Question 6

There are two bookstores in a college town.If another bookstore opened,each of the stores would incur an economic loss.This bookstore market is

Accepted Answer

A)  a natural monopoly. 
B)  a monopoly. 
C)  monopolistic competition. 
D)  a natural oligopoly. 
E)  a legal oligopoly. 
A)  a natural monopoly. 
B)  a monopoly. 
C)  monopolistic competition. 
D)  a natural oligopoly. 
E)  a legal oligopoly.

Question 7

Boeing and Airbus have entered into a cartel agreement that will enable them to boost their profits.What occurs if Boeing decides to cheat on the agreement?
i.Boeing lowers the price of its airplanes.
ii.The total industry output increases.
iii.The total profits in the airplane industry will decrease.

Accepted Answer

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

Question 8

-Intel and AMD are a duopoly that produces CPU chips.Intel and AMD can conduct R&D or they cannot conduct R&D.The table above shows the payoff matrix for the two firms.AMD is playing a tit-for-tat strategy and Intel did not conduct R&D last period.Then,of the following answers,Intel's total profit for the next two periods is the highest if Intel ________ R&D this period and ________ R&D next period.

Accepted Answer

A)  conducts; conducts 
B)  does not conduct; conducts 
C)  conducts; does not conduct 
D)  does not conduct; does not conduct 
E)  conducts; either conducts or does not conduct because the profit is the same in either case 
A)  conducts; conducts 
B)  does not conduct; conducts 
C)  conducts; does not conduct 
D)  does not conduct; does not conduct 
E)  conducts; either conducts or does not conduct because the profit is the same in either case

Question 9

-The figure above shows a market that a cartel controls.If the firms in the cartel produce ________ units,they will ________.

Accepted Answer

A)  5; maximize joint profits 
B)  5; minimize joint costs 
C)  10; create a deadweight loss 
D)  10; maximize joint profits 
E)  between 5 and 10; generate an efficient outcome 
A)  5; maximize joint profits 
B)  5; minimize joint costs 
C)  10; create a deadweight loss 
D)  10; maximize joint profits 
E)  between 5 and 10; generate an efficient outcome

Question 10

A market with only two firms is called a

Accepted Answer

A)  duopoly. 
B)  two-firm monopolistic competition. 
C)  two-firm monopoly. 
D)  cartel. 
E)  two-firm quasi monopoly. 
A)  duopoly. 
B)  two-firm monopolistic competition. 
C)  two-firm monopoly. 
D)  cartel. 
E)  two-firm quasi monopoly.

Question 11

If firms in an oligopolistic industry successfully collude and form a cartel,what price and output will result?

Accepted Answer

A)  the monopoly price and output 
B)  the competitive price and output 
C)  the monopolistically competitive price and output 
D)  a price higher than the monopoly price and, because there is more than one firm in the industry, more output than the monopoly amount 
E)  a price lower than the competitive price and, because there are only a few firms in the industry, less output than the competitive amount 
A)  the monopoly price and output 
B)  the competitive price and output 
C)  the monopolistically competitive price and output 
D)  a price higher than the monopoly price and, because there is more than one firm in the industry, more output than the monopoly amount 
E)  a price lower than the competitive price and, because there are only a few firms in the industry, less output than the competitive amount

Question 12

-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 perfect competitors,the price of a call is ________ per minute and if the firms in the industry operate as a monopoly,the price of a call is ________ per minute.

Accepted Answer

A)  2 cents; more than 3 cents and less than 4 cents 
B)  more than 3 cents and less than 4 cents; more than 3 cents and less than 4 cents 
C)  1 cent; 2 cents 
D)  2 cents; either equal to or more than 4 cents 
E)  either equal to or more than 4 cents; 2 cents 
A)  2 cents; more than 3 cents and less than 4 cents 
B)  more than 3 cents and less than 4 cents; more than 3 cents and less than 4 cents 
C)  1 cent; 2 cents 
D)  2 cents; either equal to or more than 4 cents 
E)  either equal to or more than 4 cents; 2 cents

Question 13

The very best joint outcome possible for the firms in a duopoly is to produce the

Accepted Answer

A)  monopoly level of output. 
B)  perfectly competitive level of output. 
C)  amount of output that maximizes total revenue. 
D)  amount of output that minimizes total cost. 
E)  Nash equilibrium level of output if the game is not repeated. 
A)  monopoly level of output. 
B)  perfectly competitive level of output. 
C)  amount of output that maximizes total revenue. 
D)  amount of output that minimizes total cost. 
E)  Nash equilibrium level of output if the game is not repeated.

Question 14

A Nash equilibrium in the duopoly game

Accepted Answer

A)  means that one player has greater market power. 
B)  occurs when each player takes the best possible action regardless of the strategy chosen by other firms. 
C)  will always lead to equilibrium in which the firms' total profit is the largest. 
D)  can occur only if firms cooperate with each other. 
E)  means that a firm must be able to determine its actions and the actions of its competitor. 
A)  means that one player has greater market power. 
B)  occurs when each player takes the best possible action regardless of the strategy chosen by other firms. 
C)  will always lead to equilibrium in which the firms' total profit is the largest. 
D)  can occur only if firms cooperate with each other. 
E)  means that a firm must be able to determine its actions and the actions of its competitor.

Question 15

The prisoners' dilemma game

Accepted Answer

A)  shows that prisoners are better off if they cooperate. 
B)  shows it is easy to cooperate. 
C)  has an equilibrium in which both prisoners are made as well off as possible. 
D)  would have the same outcome even if the prisoners can communicate and cooperate. 
E)  has an equilibrium in which one prisoner is made as well off as possible and the other prisoner is made as worse off as possible. 
A)  shows that prisoners are better off if they cooperate. 
B)  shows it is easy to cooperate. 
C)  has an equilibrium in which both prisoners are made as well off as possible. 
D)  would have the same outcome even if the prisoners can communicate and cooperate. 
E)  has an equilibrium in which one prisoner is made as well off as possible and the other prisoner is made as worse off as possible.

Question 16

Game theory is the tool that economists use to analyze strategic behavior,which is behavior that takes into account the ________ behavior of others and the mutual recognition of ________.

Accepted Answer

A)  unexpected; interdependence 
B)  unexpected; independence 
C)  expected; interdependence 
D)  expected; independence 
E)  random; profit 
A)  unexpected; interdependence 
B)  unexpected; independence 
C)  expected; interdependence 
D)  expected; independence 
E)  random; profit

Question 17

If a duopoly has reached the monopoly outcome,a firm can increase its profit by if it and it alone ________ its price and ________ its production.

Accepted Answer

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

Question 18

According to Section 2 of the Sherman Act,which of the following is a felony?

Accepted Answer

A)  mergers of a vertical nature 
B)  horizontal mergers 
C)  attempts to monopolize an industry 
D)  price increases among competing firms that occur simultaneously 
E)  using the HHI to justify a merger 
A)  mergers of a vertical nature 
B)  horizontal mergers 
C)  attempts to monopolize an industry 
D)  price increases among competing firms that occur simultaneously 
E)  using the HHI to justify a merger

Question 19

-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 20

The prisoners' dilemma is

Accepted Answer

A)  an example of a duopoly game. 
B)  a theory about why firms break the law. 
C)  competition that can occur among firms in monopolistic competition. 
D)  an example of the monopolist charging high prices. 
E)  an example of a game that does not have a Nash equilibrium. 
A)  an example of a duopoly game. 
B)  a theory about why firms break the law. 
C)  competition that can occur among firms in monopolistic competition. 
D)  an example of the monopolist charging high prices. 
E)  an example of a game that does not have a Nash equilibrium.

One way to identify oligopoly is to

-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

Section 1 of the Sherman Antitrust Act declares what to be illegal?

When oligopolies operate like firms in perfect competition,the firms produce at the point where the

When economies of scale limit the number of firms in an industry to 3,there is a

There are two bookstores in a college town.If another bookstore opened,each of the stores would incur an economic loss.This bookstore market is

-The figure above shows a market that a cartel controls.If the firms in the cartel produce units,they will .

A market with only two firms is called a

If firms in an oligopolistic industry successfully collude and form a cartel,what price and output will result?

The very best joint outcome possible for the firms in a duopoly is to produce the

A Nash equilibrium in the duopoly game

The prisoners' dilemma game

Game theory is the tool that economists use to analyze strategic behavior,which is behavior that takes into account the behavior of others and the mutual recognition of .

If a duopoly has reached the monopoly outcome,a firm can increase its profit by if it and it alone its price and its production.

According to Section 2 of the Sherman Act,which of the following is a felony?

-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 prisoners' dilemma is

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

One way to identify oligopoly is to

-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

Section 1 of the Sherman Antitrust Act declares what to be illegal?

When oligopolies operate like firms in perfect competition,the firms produce at the point where the

When economies of scale limit the number of firms in an industry to 3,there is a

There are two bookstores in a college town.If another bookstore opened,each of the stores would incur an economic loss.This bookstore market is

-The figure above shows a market that a cartel controls.If the firms in the cartel produce ________ units,they will ________.

A market with only two firms is called a

If firms in an oligopolistic industry successfully collude and form a cartel,what price and output will result?

The very best joint outcome possible for the firms in a duopoly is to produce the

A Nash equilibrium in the duopoly game

The prisoners' dilemma game

Game theory is the tool that economists use to analyze strategic behavior,which is behavior that takes into account the ________ behavior of others and the mutual recognition of ________.

If a duopoly has reached the monopoly outcome,a firm can increase its profit by if it and it alone ________ its price and ________ its production.

According to Section 2 of the Sherman Act,which of the following is a felony?

-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 prisoners' dilemma is

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 figure above shows a market that a cartel controls.If the firms in the cartel produce units,they will .

Game theory is the tool that economists use to analyze strategic behavior,which is behavior that takes into account the behavior of others and the mutual recognition of .

If a duopoly has reached the monopoly outcome,a firm can increase its profit by if it and it alone its price and its production.