Question 1

In a prisoners' dilemma game,in the Nash equilibrium

Accepted Answer

A)  neither player gets his or her best outcome. 
B)  both players get their best outcome. 
C)  one player gets his or her best outcome and the other player does not. 
D)  collusion would not alter the outcome. 
E)  Either answer A or C might be correct depending on whether the players communicate with each other or do not communicate with each other. 
A)  neither player gets his or her best outcome. 
B)  both players get their best outcome. 
C)  one player gets his or her best outcome and the other player does not. 
D)  collusion would not alter the outcome. 
E)  Either answer A or C might be correct depending on whether the players communicate with each other or do not communicate with each other.

Question 2

A cartel is

Accepted Answer

A)  a market structure with a small number of large firms. 
B)  a market structure with a large number of small firms. 
C)  a group of firms acting together to raise price, decrease output, and increase economic profit. 
D)  a market with only two firms. 
E)  another name for an oligopoly. 
A)  a market structure with a small number of large firms. 
B)  a market structure with a large number of small firms. 
C)  a group of firms acting together to raise price, decrease output, and increase economic profit. 
D)  a market with only two firms. 
E)  another name for an oligopoly.

Question 3

Resale price maintenance can be illegal

Accepted Answer

A)  under the Clayton Act. 
B)  under the Sherman Act. 
C)  only if the distributors engage in predatory pricing. 
D)  if distributors tell the manufacturer the maximum price at which they will sell the product. 
E)  only when it is combined with territorial confinement. 
A)  under the Clayton Act. 
B)  under the Sherman Act. 
C)  only if the distributors engage in predatory pricing. 
D)  if distributors tell the manufacturer the maximum price at which they will sell the product. 
E)  only when it is combined with territorial confinement.

Question 4

-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 above game,in the Nash equilibrium,

Accepted Answer

A)  Firm A and Firm B are both making $40,000 in economic profit. 
B)  Firm A and Firm B are both making $55,000 in economic profit. 
C)  Firm A is making $60,000 and Firm B is making $55,000 in economic profit. 
D)  Firm A and Firm B are both making $60,000 in economic profit. 
E)  Firm A and Firm B are both making $35,000 in economic profit. 
A)  Firm A and Firm B are both making $40,000 in economic profit. 
B)  Firm A and Firm B are both making $55,000 in economic profit. 
C)  Firm A is making $60,000 and Firm B is making $55,000 in economic profit. 
D)  Firm A and Firm B are both making $60,000 in economic profit. 
E)  Firm A and Firm B are both making $35,000 in economic profit.

Question 5

A firm faces a small number of competitors.This firm is competing in

Accepted Answer

A)  a monopoly. 
B)  monopolistic competition. 
C)  an oligopoly. 
D)  perfect competition. 
E)  a perfect multi-firm monopoly. 
A)  a monopoly. 
B)  monopolistic competition. 
C)  an oligopoly. 
D)  perfect competition. 
E)  a perfect multi-firm monopoly.

Question 6

The figure above shows the market for airplanes.
-Suppose the airplane market is an oligopoly.According to the figure above,the price can range as high as ________ and as low as ________.

Accepted Answer

A)  $13 million per plane; $1 million per plane 
B)  $30 million per plane; $13 million per plane 
C)  $13 million per plane; $13 million per plane 
D)  $1 million per plane; $1 million per plane 
E)  None of the above answers is correct. 
A)  $13 million per plane; $1 million per plane 
B)  $30 million per plane; $13 million per plane 
C)  $13 million per plane; $13 million per plane 
D)  $1 million per plane; $1 million per plane 
E)  None of the above answers is correct.

Question 7

If a firm engages in predatory pricing,it

Accepted Answer

A)  is following marginal cost pricing. 
B)  is following average cost pricing. 
C)  sets a low price to drive rivals out of business. 
D)  has been regulated using a price cap. 
E)  is guilty of price fixing. 
A)  is following marginal cost pricing. 
B)  is following average cost pricing. 
C)  sets a low price to drive rivals out of business. 
D)  has been regulated using a price cap. 
E)  is guilty of price fixing.

Question 8

Does section 2 of the Sherman Act make it a felony to "attempt" to monopolize an industry,or must the attempt succeed before it is a felony?

Accepted Answer

Section 2 of the Sherman Act m

Question 9

A group of firms acting together to limit output,raise price,and increase economic profit is a called a

Accepted Answer

A)  duopoly. 
B)  monopolistic oligopoly. 
C)  competitive oligopoly. 
D)  cartel. 
E)  multi-firm competitive monopoly. 
A)  duopoly. 
B)  monopolistic oligopoly. 
C)  competitive oligopoly. 
D)  cartel. 
E)  multi-firm competitive monopoly.

Question 10

Which antitrust law has two main provisions,one against conspiring with others to restrict competition and the other making it a felony to monopolize or attempt to monopolize?

Accepted Answer

A)  Sherman Act 
B)  Clayton Act 
C)  Robinson-Patman Act 
D)  Celler-Kefauver Act 
E)  Bade-Parkin Act 
A)  Sherman Act 
B)  Clayton Act 
C)  Robinson-Patman Act 
D)  Celler-Kefauver Act 
E)  Bade-Parkin Act

Question 11

-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 efficient scale for one firm is ________ units per hour.

Accepted Answer

A)  2,000 
B)  4,000 
C)  8,000 
D)  6,000 
E)  10,000 
A)  2,000 
B)  4,000 
C)  8,000 
D)  6,000 
E)  10,000

Question 12

In an oligopoly in which the firms have entered into a cartel agreement,the Nash equilibrium exhibits which of the following?

Accepted Answer

A)  firms jointly maximizing profits 
B)  the firms cheating on the cartel agreement, which benefits society 
C)  production at a price and output level close to monopolistic competition in the long run 
D)  the firms cheating on the cartel agreement, which harms society 
E)  one firm cheating on the cartel agreement and the other firms complying with the cartel agreement 
A)  firms jointly maximizing profits 
B)  the firms cheating on the cartel agreement, which benefits society 
C)  production at a price and output level close to monopolistic competition in the long run 
D)  the firms cheating on the cartel agreement, which harms society 
E)  one firm cheating on the cartel agreement and the other firms complying with the cartel agreement

Question 13

If both firms in a duopoly increase their production by one unit beyond the monopoly output,each firm's profit ________ and the total profit of the duopoly ________.

Accepted Answer

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

Question 14

The figure above shows the market for airplanes.
-Suppose the airplane market is an oligopoly.If the firms act as a monopolist,the price will be ________ and if the firms act as competitors the price will be ________.

Accepted Answer

A)  $13 million per plane; $1 million per plane 
B)  $1 million per plane; $13 million per plane 
C)  $13 million per plane; $13 million per plane 
D)  $1 million per plane; $1 million per plane 
E)  None of the above answers is correct. 
A)  $13 million per plane; $1 million per plane 
B)  $1 million per plane; $13 million per plane 
C)  $13 million per plane; $13 million per plane 
D)  $1 million per plane; $1 million per plane 
E)  None of the above answers is correct.

Question 15

What are the merger rules used by the Federal Trade Commission to help decide whether firms are allowed to merge?

Accepted Answer

The Federal Trade Commission uses guidel

Question 16

Explain what a cartel is and the difficulties faced in maintaining a cartel.

Accepted Answer

A cartel is a group of firms acting toge

Question 17

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Price } \
\text { (dollars per unit) }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { (units) }
\end{array} \
\hline 30 & 0 \
25 & 10 \
20 & 20 \
15 & 30 \
10 & 40 \
5 & 50 \
0 & 60 \
\hline
\end{array}$$
-The table above has the market demand schedule in an industry that has two firms in it.The marginal cost of this product is zero because these two firms have exclusive ownership of the resource and it does not cost any additional amount to produce additional units.
a.If the firms cooperate with each other so that they operate as a monopoly,what price will they charge and what (total)output will they produce?
b.If the firms cannot cooperate but instead behave as perfect competitors,what will be the price and the (total)output they produce?

Accepted Answer

a.As a monopoly,the price will be $15 an

Question 18

Suppose the industry for washing machines has only four firms.The market shares are: Firm A,40 percent; Firm B,20 percent; Firm C 20,percent; and Firm D,20 percent.
a.What is the Herfindahl-Hirschman Index (HHI)?
b.If Firms C and D were to announce a merger,would the Federal Trade Commission oppose the merger?

Accepted Answer

a.The HHI is 2,800.
b.Yes,the Federal Tr

Question 19

Which of the following statements is correct?

Accepted Answer

A)  A firm in oligopoly will charge a price that is lower than the price charged in perfect competition. 
B)  If firms in oligopoly look only at their own self-interest in deciding the output they should produce, the total market output will exceed that of a monopoly. 
C)  If one oligopolist reduces the price of its product, its demand curve shifts leftward. 
D)  Because many producers join to form a cartel, the market becomes monopolistic competition. 
E)  It is in the self-interest of each firm in an oligopoly to take the actions that maximize all the firms' joint profit. 
A)  A firm in oligopoly will charge a price that is lower than the price charged in perfect competition. 
B)  If firms in oligopoly look only at their own self-interest in deciding the output they should produce, the total market output will exceed that of a monopoly. 
C)  If one oligopolist reduces the price of its product, its demand curve shifts leftward. 
D)  Because many producers join to form a cartel, the market becomes monopolistic competition. 
E)  It is in the self-interest of each firm in an oligopoly to take the actions that maximize all the firms' joint profit.

Question 20

The focus of antitrust legislation is to

Accepted Answer

A)  encourage cartels to form because they are easier to regulate. 
B)  maintain competition. 
C)  force society to act in the best interest of producers. 
D)  limit the power of regulatory bodies. 
E)  ensure that producers earn enough profit to stay in business so that consumers are not harmed by too many businesses closing. 
A)  encourage cartels to form because they are easier to regulate. 
B)  maintain competition. 
C)  force society to act in the best interest of producers. 
D)  limit the power of regulatory bodies. 
E)  ensure that producers earn enough profit to stay in business so that consumers are not harmed by too many businesses closing.

In a prisoners' dilemma game,in the Nash equilibrium

A cartel is

Resale price maintenance can be illegal

-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 above game,in the Nash equilibrium,

A firm faces a small number of competitors.This firm is competing in

The figure above shows the market for airplanes. -Suppose the airplane market is an oligopoly.According to the figure above,the price can range as high as and as low as .

If a firm engages in predatory pricing,it

Does section 2 of the Sherman Act make it a felony to "attempt" to monopolize an industry,or must the attempt succeed before it is a felony?

A group of firms acting together to limit output,raise price,and increase economic profit is a called a

Which antitrust law has two main provisions,one against conspiring with others to restrict competition and the other making it a felony to monopolize or attempt to monopolize?

-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 efficient scale for one firm is ________ units per hour.

In an oligopoly in which the firms have entered into a cartel agreement,the Nash equilibrium exhibits which of the following?

If both firms in a duopoly increase their production by one unit beyond the monopoly output,each firm's profit and the total profit of the duopoly .

The figure above shows the market for airplanes. -Suppose the airplane market is an oligopoly.If the firms act as a monopolist,the price will be and if the firms act as competitors the price will be .

What are the merger rules used by the Federal Trade Commission to help decide whether firms are allowed to merge?

Explain what a cartel is and the difficulties faced in maintaining a cartel.

Which of the following statements is correct?

The focus of antitrust legislation is to

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 a prisoners' dilemma game,in the Nash equilibrium

A cartel is

Resale price maintenance can be illegal

-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 above game,in the Nash equilibrium,

A firm faces a small number of competitors.This firm is competing in

The figure above shows the market for airplanes. -Suppose the airplane market is an oligopoly.According to the figure above,the price can range as high as ________ and as low as ________.

If a firm engages in predatory pricing,it

Does section 2 of the Sherman Act make it a felony to "attempt" to monopolize an industry,or must the attempt succeed before it is a felony?

A group of firms acting together to limit output,raise price,and increase economic profit is a called a

Which antitrust law has two main provisions,one against conspiring with others to restrict competition and the other making it a felony to monopolize or attempt to monopolize?

-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 efficient scale for one firm is ________ units per hour.

In an oligopoly in which the firms have entered into a cartel agreement,the Nash equilibrium exhibits which of the following?

If both firms in a duopoly increase their production by one unit beyond the monopoly output,each firm's profit ________ and the total profit of the duopoly ________.

The figure above shows the market for airplanes. -Suppose the airplane market is an oligopoly.If the firms act as a monopolist,the price will be ________ and if the firms act as competitors the price will be ________.

What are the merger rules used by the Federal Trade Commission to help decide whether firms are allowed to merge?

Explain what a cartel is and the difficulties faced in maintaining a cartel.

Which of the following statements is correct?

The focus of antitrust legislation is to

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 the market for airplanes. -Suppose the airplane market is an oligopoly.According to the figure above,the price can range as high as and as low as .

If both firms in a duopoly increase their production by one unit beyond the monopoly output,each firm's profit and the total profit of the duopoly .

The figure above shows the market for airplanes. -Suppose the airplane market is an oligopoly.If the firms act as a monopolist,the price will be and if the firms act as competitors the price will be .