Question 1

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. B

Question 2

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. E

Question 3

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 been the case since 2003,OPEC creates a target level of output designed to achieve a particular high price.OPEC's goal is to set a price high enough so that its member nations earn the maximum economic profit.Once the target output is set,OPEC assigns a production quota to each member.As long as each member adheres to its quota the price will remain high and stable.However,from time to time,individual nations cheat on the agreement by producing more oil than they are allowed.Nations cheat because they realize that if they alone cheat,the impact on oil prices will be slight but the impact on their profit will be large.Once this oil shows up on world markets,the supply of oil increases and prices begin to fall.Then,once prices begin to fall other members begin to panic and they start selling more oil too in order to get the highest price they can before a collapse takes place.If every nation cheats,the supply will increase more than if just a few do and the collapse in price becomes a self-realizing prophecy.

Question 4

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 5

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 6

Which of the following are U.S.antitrust laws?
i.The Rockefeller Act
ii.The Sherman Act
iii.The Natural Monopoly Act

Accepted Answer

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

Question 7

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 8

The range in which a duopoly's output falls is less than or equal to the output level in ________ and more than or equal to the output level in ________.

Accepted Answer

A)  monopolistic competition; monopoly 
B)  monopolistic competition; perfect competition 
C)  perfect competition; monopoly 
D)  monopoly; monopolistic competition 
E)  monopoly; perfect competition 
A)  monopolistic competition; monopoly 
B)  monopolistic competition; perfect competition 
C)  perfect competition; monopoly 
D)  monopoly; monopolistic competition 
E)  monopoly; perfect competition

Question 9

"The duopolists' dilemma occurs when firms in a duopoly coordinate their decisions to achieve the best possible outcome." Is the previous statement correct or incorrect? Why?

Accepted Answer

The statement is incorrect.The

Question 10

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 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,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 12

Federal Trade Commission guidelines state that it will examine mergers in markets for which the Herfindahl-Hirschman Index is

Accepted Answer

A)  a positive number. 
B)  below 1,000 points. 
C)  between 1,000 and 1,800 and the merger would reduce the index by 100 points. 
D)  between 1,000 and 1,800, and the merger would increase the index by 100 points. 
E)  more than 1,800. 
A)  a positive number. 
B)  below 1,000 points. 
C)  between 1,000 and 1,800 and the merger would reduce the index by 100 points. 
D)  between 1,000 and 1,800, and the merger would increase the index by 100 points. 
E)  more than 1,800.

Question 13

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 14

"The Clayton Act repealed the Sherman Act so that only the Clayton Act remains in force." Is the previous statement correct or incorrect?

Accepted Answer

The statement is inc

Question 15

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 output,

Accepted Answer

A)  both firms' profits increase. 
B)  firm A's profits increase and firm B's profits decrease. 
C)  firm B's profits increase and firm A's profits decrease. 
D)  both firms' profits decrease. 
E)  firm A's profits increase and firm B's profits do not change. 
A)  both firms' profits increase. 
B)  firm A's profits increase and firm B's profits decrease. 
C)  firm B's profits increase and firm A's profits decrease. 
D)  both firms' profits decrease. 
E)  firm A's profits increase and firm B's profits do not change.

Question 16

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 17

Which of the following can be games played by firms in an oligopoly?
i.choosing how much to spend on advertising
ii.choosing how much to spend on R&D
iii.choosing to enter a legal duopoly

Accepted Answer

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

Question 18

What market structures other than oligopoly have the characteristic of one firm's actions affecting the actions of its competitors? Explain your answer.

Accepted Answer

No other market structure has the charac

Question 19

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 20

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.

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

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

In the United States,antitrust laws

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?

Which of the following are U.S.antitrust laws? i.The Rockefeller Act ii.The Sherman Act iii.The Natural Monopoly Act

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

The range in which a duopoly's output falls is less than or equal to the output level in and more than or equal to the output level in .

"The duopolists' dilemma occurs when firms in a duopoly coordinate their decisions to achieve the best possible outcome." Is the previous statement correct or incorrect? Why?

What is the conclusion in the prisoners' dilemma?

-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).

Federal Trade Commission guidelines state that it will examine mergers in markets for which the Herfindahl-Hirschman Index is

Tying arrangements

"The Clayton Act repealed the Sherman Act so that only the Clayton Act remains in force." Is the previous statement correct or incorrect?

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 output,

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

Which of the following can be games played by firms in an oligopoly? i.choosing how much to spend on advertising ii.choosing how much to spend on R&D iii.choosing to enter a legal duopoly

What market structures other than oligopoly have the characteristic of one firm's actions affecting the actions of its competitors? Explain your answer.

The major dilemma facing Boeing and Airbus is the

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

Getting Started

The Usand 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 case against Microsoft,it was claimed that combining Internet Explorer and Windows was

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

In the United States,antitrust laws

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?

Which of the following are U.S.antitrust laws? i.The Rockefeller Act ii.The Sherman Act iii.The Natural Monopoly Act

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

The range in which a duopoly's output falls is less than or equal to the output level in ________ and more than or equal to the output level in ________.

"The duopolists' dilemma occurs when firms in a duopoly coordinate their decisions to achieve the best possible outcome." Is the previous statement correct or incorrect? Why?

What is the conclusion in the prisoners' dilemma?

-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).

Federal Trade Commission guidelines state that it will examine mergers in markets for which the Herfindahl-Hirschman Index is

Tying arrangements

"The Clayton Act repealed the Sherman Act so that only the Clayton Act remains in force." Is the previous statement correct or incorrect?

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 output,

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

Which of the following can be games played by firms in an oligopoly? i.choosing how much to spend on advertising ii.choosing how much to spend on R&D iii.choosing to enter a legal duopoly

What market structures other than oligopoly have the characteristic of one firm's actions affecting the actions of its competitors? Explain your answer.

The major dilemma facing Boeing and Airbus is the

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

Getting Started

The Usand 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 range in which a duopoly's output falls is less than or equal to the output level in and more than or equal to the output level in .