Question 1

The cell-phone market can be considered a(n)________ because ________.

Accepted Answer

A)  oligopoly; there are large profits for the firms that dominate the market 
B)  monopoly; Apple makes the largest profit in the market 
C)  monopolistically competitive market; the few firms make a profit and produce a variety of phones 
D)  oligopoly; there are few barriers to entry 
E)  monopolistically competitive market; the firms charge a markup over marginal cost 
A)  oligopoly; there are large profits for the firms that dominate the market 
B)  monopoly; Apple makes the largest profit in the market 
C)  monopolistically competitive market; the few firms make a profit and produce a variety of phones 
D)  oligopoly; there are few barriers to entry 
E)  monopolistically competitive market; the firms charge a markup over marginal cost

Question 2

Why do oligopoly firms find it difficult to cooperate and not cheat on a cartel agreement?

Accepted Answer

Firms in an oligopoly have large market

Question 3

The government believes that which entry barrier has allowed Microsoft to gain monopoly power?

Accepted Answer

A)  ownership of the entire supply of a resource 
B)  patents 
C)  trademarks 
D)  economies of scale and network economies 
E)  territorial confinement 
A)  ownership of the entire supply of a resource 
B)  patents 
C)  trademarks 
D)  economies of scale and network economies 
E)  territorial confinement

Question 4

The tool that economists use to analyze the mutual interdependence of oligopolies is

Accepted Answer

A)  economies of scale. 
B)  the four-firm concentration ratio. 
C)  game theory. 
D)  the HHI. 
E)  the efficient scale. 
A)  economies of scale. 
B)  the four-firm concentration ratio. 
C)  game theory. 
D)  the HHI. 
E)  the efficient scale.

Question 5

Price fixing

Accepted Answer

A)  always is a violation of the law. 
B)  is allowed only if otherwise a firm would go bankrupt. 
C)  is one of the business practices prohibited by the Clayton Act. 
D)  is a violation of the law only when it is combined with predatory pricing. 
E)  is legal if the businesses have received prior clearance from the Justice Department. 
A)  always is a violation of the law. 
B)  is allowed only if otherwise a firm would go bankrupt. 
C)  is one of the business practices prohibited by the Clayton Act. 
D)  is a violation of the law only when it is combined with predatory pricing. 
E)  is legal if the businesses have received prior clearance from the Justice Department.

Question 6

Setting a price so low that competitors are driven out of a market and then boosting the price is called

Accepted Answer

A)  predatory pricing. 
B)  a tying arrangement. 
C)  resale price maintenance. 
D)  price fixing. 
E)  price discrimination. 
A)  predatory pricing. 
B)  a tying arrangement. 
C)  resale price maintenance. 
D)  price fixing. 
E)  price discrimination.

Question 7

"Duopoly" is

Accepted Answer

A)  another name for monopoly. 
B)  a special type of monopolistic competition. 
C)  a two-firm oligopoly. 
D)  a game with three players. 
E)  the situation when a firm sets a duo (two) of different prices for its customers. 
A)  another name for monopoly. 
B)  a special type of monopolistic competition. 
C)  a two-firm oligopoly. 
D)  a game with three players. 
E)  the situation when a firm sets a duo (two) of different prices for its customers.

Question 8

Suppose there are 6 firms in an industry with the following market shares.If the two smallest firms want to merge,how will the Federal Trade Commission reply?
Firm 1: 30
Firm 2: 25
Firm 3: 25
Firm 4: 10
Firm 5: 7
Firm 6: 3

Accepted Answer

A)  The firms will be allowed to merge and compete with the larger firms. 
B)  The firms will be challenged because the merger will raise the HHI by more than 50 points. 
C)  The firms will not be allowed to merge. 
D)  The firms will be challenged because the merger will raise the HHI by more than 100 points. 
E)  The firms will be challenged because the merger will raise the HHI by more than 250 points. 
A)  The firms will be allowed to merge and compete with the larger firms. 
B)  The firms will be challenged because the merger will raise the HHI by more than 50 points. 
C)  The firms will not be allowed to merge. 
D)  The firms will be challenged because the merger will raise the HHI by more than 100 points. 
E)  The firms will be challenged because the merger will raise the HHI by more than 250 points.

Question 9

In a market with a Herfindahl-Hirschman Index of 2,000,according to their guidelines,will the Department of Justice challenge a merger that would increase the index by 50?

Accepted Answer

Yes,according to their guideli

Question 10

OPEC,the Organization of Petroleum Exporting Countries,was formed in Baghdad in 1960.Since its formation,this cartel has suffered from a major problem with respect to the quota (limit)of output it assigns each member nation.What is OPEC's goal and what sort of quota do you think the cartel assigns? How and why do nations cheat on their quota? What happens when a nation cheats on its quota?

Accepted Answer

In order to keep oil prices high,as has

Question 11

What is the dilemma faced by firms in oligopoly?

Accepted Answer

Because there are just a few large firms

Question 12

Long-run economic profits are most likely to be earned in

Accepted Answer

A)  perfect competition and oligopoly. 
B)  perfect competition and monopoly. 
C)  monopoly and oligopoly. 
D)  oligopoly and monopolistic competition. 
E)  perfect competition and monopolistic competition. 
A)  perfect competition and oligopoly. 
B)  perfect competition and monopoly. 
C)  monopoly and oligopoly. 
D)  oligopoly and monopolistic competition. 
E)  perfect competition and monopolistic competition.

Question 13

Which of the following is always a violation of the antitrust law?

Accepted Answer

A)  price fixing 
B)  price discrimination 
C)  resale price maintenance 
D)  predatory pricing 
E)  tying arrangements 
A)  price fixing 
B)  price discrimination 
C)  resale price maintenance 
D)  predatory pricing 
E)  tying arrangements

Question 14

A cartel is a collusive agreement among a number of firms that is designed to

Accepted Answer

A)  expand output and lower prices but not to a predatory level. 
B)  restrict output and lower prices to a predatory level. 
C)  restrict output and raise prices. 
D)  expand output and raise prices. 
E)  expand output and lower prices to a predatory level. 
A)  expand output and lower prices but not to a predatory level. 
B)  restrict output and lower prices to a predatory level. 
C)  restrict output and raise prices. 
D)  expand output and raise prices. 
E)  expand output and lower prices to a predatory level.

Question 15

What is the conclusion in the prisoners' dilemma?

Accepted Answer

A)  Firms should not enter a legal duopoly. 
B)  Two prisoners acting in their own best interest harm their joint interest. 
C)  There is no Nash equilibrium available to the prisoners. 
D)  Prisoners do not act interdependently. 
E)  Duopolies almost always reach their best outcome. 
A)  Firms should not enter a legal duopoly. 
B)  Two prisoners acting in their own best interest harm their joint interest. 
C)  There is no Nash equilibrium available to the prisoners. 
D)  Prisoners do not act interdependently. 
E)  Duopolies almost always reach their best outcome.

Question 16

-Suppose Intel and AMD can each charge either $300 or $200 for a CPU (the computing unit of a computer).The above table illustrates the payoffs,in millions of dollars,from each of the four possible outcomes that could occur in their duopoly setting.What must Intel's price be for AMD to earn $220 million in profit?

Accepted Answer

A)  $200 
B)  $400 
C)  $220 
D)  either $300 or $400 because AMD earns $220 million in profit either way 
E)  None of the above answers is correct because the payoff matrix shows that it is not possible for AMD to earn $220 million in profit 
A)  $200 
B)  $400 
C)  $220 
D)  either $300 or $400 because AMD earns $220 million in profit either way 
E)  None of the above answers is correct because the payoff matrix shows that it is not possible for AMD to earn $220 million in profit

Question 17

In the case against Microsoft,it was claimed that combining Internet Explorer and Windows was

Accepted Answer

A)  predatory pricing. 
B)  an illegal tying agreement. 
C)  creating one product that is convenient for the consumers. 
D)  illegal territorial confinement. 
E)  an inefficient resale maintenance agreement. 
A)  predatory pricing. 
B)  an illegal tying agreement. 
C)  creating one product that is convenient for the consumers. 
D)  illegal territorial confinement. 
E)  an inefficient resale maintenance agreement.

Question 18

Under the Clayton Act and its amendments,which of the following activities is illegal if it creates monopoly?
i.contracts that require other goods to be bought from the same firm
ii.contracts that prevent a buyer from reselling a product outside a specified area
iii.becoming a director of a competing firm

Accepted Answer

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

Question 19

If a duopoly has reached the monopoly outcome and only one firm increases its production,that firm's profit ________ and the other 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 20

-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 lowest price at which a firm could stay in business in the long run is ________ per unit and the quantity demanded in the market at that price is ________ units per hour.

Accepted Answer

A)  $20; 4,000 
B)  $10; 8,000 
C)  $10; 4,000 
D)  $20; 2,000 
E)  $20; 8,000 
A)  $20; 4,000 
B)  $10; 8,000 
C)  $10; 4,000 
D)  $20; 2,000 
E)  $20; 8,000

The cell-phone market can be considered a(n) because .

Why do oligopoly firms find it difficult to cooperate and not cheat on a cartel agreement?

The government believes that which entry barrier has allowed Microsoft to gain monopoly power?

The tool that economists use to analyze the mutual interdependence of oligopolies is

Price fixing

Setting a price so low that competitors are driven out of a market and then boosting the price is called

"Duopoly" is

Suppose there are 6 firms in an industry with the following market shares.If the two smallest firms want to merge,how will the Federal Trade Commission reply? Firm 1: 30 Firm 2: 25 Firm 3: 25 Firm 4: 10 Firm 5: 7 Firm 6: 3

In a market with a Herfindahl-Hirschman Index of 2,000,according to their guidelines,will the Department of Justice challenge a merger that would increase the index by 50?

What is the dilemma faced by firms in oligopoly?

Long-run economic profits are most likely to be earned in

Which of the following is always a violation of the antitrust law?

A cartel is a collusive agreement among a number of firms that is designed to

What is the conclusion in the prisoners' dilemma?

In the case against Microsoft,it was claimed that combining Internet Explorer and Windows was

If a duopoly has reached the monopoly outcome and only one firm increases its production,that firm's profit and the other firm's profit .

-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 lowest price at which a firm could stay in business in the long run is per unit and the quantity demanded in the market at that price is units per hour.

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 cell-phone market can be considered a(n)________ because ________.

Why do oligopoly firms find it difficult to cooperate and not cheat on a cartel agreement?

The government believes that which entry barrier has allowed Microsoft to gain monopoly power?

The tool that economists use to analyze the mutual interdependence of oligopolies is

Price fixing

Setting a price so low that competitors are driven out of a market and then boosting the price is called

"Duopoly" is

Suppose there are 6 firms in an industry with the following market shares.If the two smallest firms want to merge,how will the Federal Trade Commission reply? Firm 1: 30 Firm 2: 25 Firm 3: 25 Firm 4: 10 Firm 5: 7 Firm 6: 3

In a market with a Herfindahl-Hirschman Index of 2,000,according to their guidelines,will the Department of Justice challenge a merger that would increase the index by 50?

What is the dilemma faced by firms in oligopoly?

Long-run economic profits are most likely to be earned in

Which of the following is always a violation of the antitrust law?

A cartel is a collusive agreement among a number of firms that is designed to

What is the conclusion in the prisoners' dilemma?

In the case against Microsoft,it was claimed that combining Internet Explorer and Windows was

If a duopoly has reached the monopoly outcome and only one firm increases its production,that firm's profit ________ and the other firm's profit ________.

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 cell-phone market can be considered a(n) because .

If a duopoly has reached the monopoly outcome and only one firm increases its production,that firm's profit and the other firm's profit .