Question 1

The first antitrust law in the United States was the

Accepted Answer

A)  Sherman Act, passed in 1960. 
B)  Clayton Act, passed in 1914. 
C)  Clayton Act, passed in 1830. 
D)  Sherman Act, passed in 1890. 
E)  Sherman Act, passed in 1933. 
A)  Sherman Act, passed in 1960. 
B)  Clayton Act, passed in 1914. 
C)  Clayton Act, passed in 1830. 
D)  Sherman Act, passed in 1890. 
E)  Sherman Act, passed in 1933.

Question 2

When an oligopoly reduces its price with the intent of driving away its competitors,it is said to be engaging in

Accepted Answer

A)  pricing differential. 
B)  predatory pricing. 
C)  price fixing. 
D)  a price-tying agreement. 
E)  price discrimination. 
A)  pricing differential. 
B)  predatory pricing. 
C)  price fixing. 
D)  a price-tying agreement. 
E)  price discrimination.

Question 3

When firms in an oligopoly successfully collude and do not cheat on a cartel agreement,they can make a long-run economic profit similar to

Accepted Answer

A)  perfect competition. 
B)  monopoly. 
C)  monopolistic competition. 
D)  non-colluding oligopolies. 
E)  the firms in regulated industries. 
A)  perfect competition. 
B)  monopoly. 
C)  monopolistic competition. 
D)  non-colluding oligopolies. 
E)  the firms in regulated industries.

Question 4

Because it was found guilty of violating the Sherman Act,Microsoft will be subject to

Accepted Answer

A)  rate of return regulation. 
B)  marginal cost pricing. 
C)  price cap regulation. 
D)  predatory pricing. 
E)  None of the above answers is correct. 
A)  rate of return regulation. 
B)  marginal cost pricing. 
C)  price cap regulation. 
D)  predatory pricing. 
E)  None of the above answers is correct.

Question 5

-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.The numbers are millions of dollars of profit.The Nash equilibrium is for Intel to ________ and for AMD to ________ .

Accepted Answer

A)  conduct R&D; conduct R&D 
B)  conduct R&D; not conduct R&D 
C)  not conduct R&D; conduct R&D 
D)  not conduct R&D; not conduct R&D 
E)  conduct R&D; either conduct R&D or not conduct R&D, the equilibrium could be either choice for AMD 
A)  conduct R&D; conduct R&D 
B)  conduct R&D; not conduct R&D 
C)  not conduct R&D; conduct R&D 
D)  not conduct R&D; not conduct R&D 
E)  conduct R&D; either conduct R&D or not conduct R&D, the equilibrium could be either choice for AMD

Question 6

A group of firms in Sunnyvale have a complaint about one of their competitors.They charge that Big Box Building Supply charges such low prices that they can't stay in business.Which of the following is the most likely response from an economist?

Accepted Answer

A)  Big Box Building Supply isn't engaged in predatory pricing because new firms can always enter and compete away any monopoly profits. 
B)  Big Box Building Supply is engaged in price fixing and should be prosecuted for violating antitrust law. 
C)  The firms have a valid complaint against Big Box Building Supply because it is engaged in resale price maintenance. 
D)  The firms don't have a valid complaint against Big Box Building Supply because it is operating like a natural monopoly. 
E)  Big Box Building Supply is engaged in resale price maintenance but most likely is providing efficient service. 
A)  Big Box Building Supply isn't engaged in predatory pricing because new firms can always enter and compete away any monopoly profits. 
B)  Big Box Building Supply is engaged in price fixing and should be prosecuted for violating antitrust law. 
C)  The firms have a valid complaint against Big Box Building Supply because it is engaged in resale price maintenance. 
D)  The firms don't have a valid complaint against Big Box Building Supply because it is operating like a natural monopoly. 
E)  Big Box Building Supply is engaged in resale price maintenance but most likely is providing efficient service.

Question 7

Game theory is used to analyze the interactions among firms in ________.

Accepted Answer

A)  oligopoly 
B)  perfect competition 
C)  monopoly 
D)  monopolistic competition 
E)  Both answers A and D are correct. 
A)  oligopoly 
B)  perfect competition 
C)  monopoly 
D)  monopolistic competition 
E)  Both answers A and D are correct.

Question 8

If Polka Cola agrees to sell its cola to a retailer only if the retailer also buys a lemon-lime drink,Polka Up,then Polka Cola is engaged in

Accepted Answer

A)  a tying arrangement. 
B)  a requirement contracts. 
C)  an exclusive deal. 
D)  territorial confinement. 
E)  price discrimination. 
A)  a tying arrangement. 
B)  a requirement contracts. 
C)  an exclusive deal. 
D)  territorial confinement. 
E)  price discrimination.

Question 9

Oligopoly is a market structure in which

Accepted Answer

A)  many firms each produce a slightly differentiated product. 
B)  one firm produces a unique product. 
C)  a small number of firms compete. 
D)  many firms produce an identical product. 
E)  the number of firms is so small that they do not compete with each other. 
A)  many firms each produce a slightly differentiated product. 
B)  one firm produces a unique product. 
C)  a small number of firms compete. 
D)  many firms produce an identical product. 
E)  the number of firms is so small that they do not compete with each other.

Question 10

A cartel is a group of firms

Accepted Answer

A)  acting separately to limit output, lower price, and decrease economic profit. 
B)  acting together to limit output, raise price, and increase economic profit. 
C)  legally fixing prices. 
D)  acting together to erect barriers to entry. 
E)  that compete primarily with each other rather than the other firms in the market. 
A)  acting separately to limit output, lower price, and decrease economic profit. 
B)  acting together to limit output, raise price, and increase economic profit. 
C)  legally fixing prices. 
D)  acting together to erect barriers to entry. 
E)  that compete primarily with each other rather than the other firms in the market.

Question 11

The range of output for a duopoly ranges between the

Accepted Answer

A)  perfectly competitive outcome and the monopolistically competitive outcome. 
B)  efficient scale and the perfectly competitive outcome. 
C)  minimum of ATC and the efficient scale. 
D)  monopoly outcome and the perfectly competitive outcome. 
E)  short-run perfectly competitive outcome and the long-run perfectly competitive outcome. 
A)  perfectly competitive outcome and the monopolistically competitive outcome. 
B)  efficient scale and the perfectly competitive outcome. 
C)  minimum of ATC and the efficient scale. 
D)  monopoly outcome and the perfectly competitive outcome. 
E)  short-run perfectly competitive outcome and the long-run perfectly competitive outcome.

Question 12

Daryl's Inc.has formed a cartel with the two other firms in its industry.In which of the following market structures does Daryl's operate?

Accepted Answer

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

Question 13

Collusion results when a group of firms
i.act separately to limit output,lower prices,and decrease economic profits.
ii.act together to limit output,raise prices,and increase economic profits.
iii.in the United States legally fix prices.

Accepted Answer

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

Question 14

In a concentrated industry with a Herfindahl-Hirschman Index that exceeds 1,800,the Federal Trade Commission will challenge any merger that increases the Herfindahl-Hirschman index by a minimum of

Accepted Answer

A)  50 points. 
B)  100 points. 
C)  1,000 points. 
D)  1,800 points. 
E)  10,000 points. 
A)  50 points. 
B)  100 points. 
C)  1,000 points. 
D)  1,800 points. 
E)  10,000 points.

Question 15

A collusive agreement to form a cartel is difficult to maintain because

Accepted Answer

A)  each member firm can increase its own profits by cutting its price and selling more. 
B)  forming a cartel is legal but frowned upon throughout the world. 
C)  supply will decrease because of the high cartel price. 
D)  demanders will rebel once they realize a cartel has been formed. 
E)  each firm can increase its profit if it decreases its production even more than the decrease set by the cartel. 
A)  each member firm can increase its own profits by cutting its price and selling more. 
B)  forming a cartel is legal but frowned upon throughout the world. 
C)  supply will decrease because of the high cartel price. 
D)  demanders will rebel once they realize a cartel has been formed. 
E)  each firm can increase its profit if it decreases its production even more than the decrease set by the cartel.

Question 16

Imagine a duopoly in which two firms,A and B,produce the monopoly profit-maximizing output and equally share the economic profit.If firm A increases its output,the market price ________ and total economic profit of the two firms combined ________.

Accepted Answer

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

Question 17

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

Accepted Answer

A)  10; 4 
B)  12; 6 
C)  6; 0 
D)  12; 0 
E)  None of the above answers is correct. 
A)  10; 4 
B)  12; 6 
C)  6; 0 
D)  12; 0 
E)  None of the above answers is correct.

Question 18

The major dilemma facing Boeing and Airbus is the

Accepted Answer

A)  fact that neither will respond to the behavior of the other. 
B)  certainty surrounding the reaction of each firm to the behavior of the other firm. 
C)  fact that if each firm separately tries to maximize its profit, it might wind up with less profit that otherwise. 
D)  competition from other firms that drives their economic profit to zero. 
E)  fact that when they collude to maximize their profit, the other firm's profit might be larger than its profit. 
A)  fact that neither will respond to the behavior of the other. 
B)  certainty surrounding the reaction of each firm to the behavior of the other firm. 
C)  fact that if each firm separately tries to maximize its profit, it might wind up with less profit that otherwise. 
D)  competition from other firms that drives their economic profit to zero. 
E)  fact that when they collude to maximize their profit, the other firm's profit might be larger than its profit.

Question 19

-Which of the following is true? In the above figure,if the market is

Accepted Answer

A)  a monopoly, output will be Q₁ and price will be P₃. 
B)  a monopoly, output will be Q₃ and price will be P₃. 
C)  perfect competition, output will be Q₂ and price will be P₂. 
D)  perfect competition, output will be Q₁ and price will be P₁. 
E)  perfect competition, output will be Q₃ and price will be P₃. 
A)  a monopoly, output will be Q₁ and price will be P₃. 
B)  a monopoly, output will be Q₃ and price will be P₃. 
C)  perfect competition, output will be Q₂ and price will be P₂. 
D)  perfect competition, output will be Q₁ and price will be P₁. 
E)  perfect competition, output will be Q₃ and price will be P₃.

Question 20

When duopoly games are repeated and a "tit for tat" strategy is used,

Accepted Answer

A)  the competitive outcome is more likely to be reached than when the game is played once. 
B)  the monopoly outcome is more likely to be reached than when the game is played once. 
C)  both firms begin to incur economic losses. 
D)  one firm goes out of business. 
E)  because the game is repeated it is impossible to predict whether the competitive or the monopoly outcome is more likely. 
A)  the competitive outcome is more likely to be reached than when the game is played once. 
B)  the monopoly outcome is more likely to be reached than when the game is played once. 
C)  both firms begin to incur economic losses. 
D)  one firm goes out of business. 
E)  because the game is repeated it is impossible to predict whether the competitive or the monopoly outcome is more likely.

The first antitrust law in the United States was the

When an oligopoly reduces its price with the intent of driving away its competitors,it is said to be engaging in

When firms in an oligopoly successfully collude and do not cheat on a cartel agreement,they can make a long-run economic profit similar to

Because it was found guilty of violating the Sherman Act,Microsoft will be subject to

-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.The numbers are millions of dollars of profit.The Nash equilibrium is for Intel to and for AMD to .

A group of firms in Sunnyvale have a complaint about one of their competitors.They charge that Big Box Building Supply charges such low prices that they can't stay in business.Which of the following is the most likely response from an economist?

Game theory is used to analyze the interactions among firms in ________.

If Polka Cola agrees to sell its cola to a retailer only if the retailer also buys a lemon-lime drink,Polka Up,then Polka Cola is engaged in

Oligopoly is a market structure in which

A cartel is a group of firms

The range of output for a duopoly ranges between the

Daryl's Inc.has formed a cartel with the two other firms in its industry.In which of the following market structures does Daryl's operate?

Collusion results when a group of firms i.act separately to limit output,lower prices,and decrease economic profits. ii.act together to limit output,raise prices,and increase economic profits. iii.in the United States legally fix prices.

In a concentrated industry with a Herfindahl-Hirschman Index that exceeds 1,800,the Federal Trade Commission will challenge any merger that increases the Herfindahl-Hirschman index by a minimum of

A collusive agreement to form a cartel is difficult to maintain because

Imagine a duopoly in which two firms,A and B,produce the monopoly profit-maximizing output and equally share the economic profit.If firm A increases its output,the market price and total economic profit of the two firms combined .

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

The major dilemma facing Boeing and Airbus is the

-Which of the following is true? In the above figure,if the market is

When duopoly games are repeated and a "tit for tat" strategy is used,

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 first antitrust law in the United States was the

When an oligopoly reduces its price with the intent of driving away its competitors,it is said to be engaging in

When firms in an oligopoly successfully collude and do not cheat on a cartel agreement,they can make a long-run economic profit similar to

Because it was found guilty of violating the Sherman Act,Microsoft will be subject to

-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.The numbers are millions of dollars of profit.The Nash equilibrium is for Intel to ________ and for AMD to ________ .

A group of firms in Sunnyvale have a complaint about one of their competitors.They charge that Big Box Building Supply charges such low prices that they can't stay in business.Which of the following is the most likely response from an economist?

Game theory is used to analyze the interactions among firms in ________.

If Polka Cola agrees to sell its cola to a retailer only if the retailer also buys a lemon-lime drink,Polka Up,then Polka Cola is engaged in

Oligopoly is a market structure in which

A cartel is a group of firms

The range of output for a duopoly ranges between the

Daryl's Inc.has formed a cartel with the two other firms in its industry.In which of the following market structures does Daryl's operate?

Collusion results when a group of firms i.act separately to limit output,lower prices,and decrease economic profits. ii.act together to limit output,raise prices,and increase economic profits. iii.in the United States legally fix prices.

In a concentrated industry with a Herfindahl-Hirschman Index that exceeds 1,800,the Federal Trade Commission will challenge any merger that increases the Herfindahl-Hirschman index by a minimum of

A collusive agreement to form a cartel is difficult to maintain because

Imagine a duopoly in which two firms,A and B,produce the monopoly profit-maximizing output and equally share the economic profit.If firm A increases its output,the market price ________ and total economic profit of the two firms combined ________.

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

The major dilemma facing Boeing and Airbus is the

-Which of the following is true? In the above figure,if the market is

When duopoly games are repeated and a "tit for tat" strategy is used,

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

-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.The numbers are millions of dollars of profit.The Nash equilibrium is for Intel to and for AMD to .

Imagine a duopoly in which two firms,A and B,produce the monopoly profit-maximizing output and equally share the economic profit.If firm A increases its output,the market price and total economic profit of the two firms combined .

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