Question 1

Firms in oligopoly can achieve an economic profit

Accepted Answer

A)  always in the long run. 
B)  if they cooperate. 
C)  only if the demand for their products is inelastic. 
D)  only if the demand for their products is elastic. 
E)  if they reach the non-cooperative equilibrium. 
A)  always in the long run. 
B)  if they cooperate. 
C)  only if the demand for their products is inelastic. 
D)  only if the demand for their products is elastic. 
E)  if they reach the non-cooperative equilibrium.

Question 2

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 3

The players in a game theory situation often do not act in their joint interest because of which of the following?

Accepted Answer

A)  They do not realize the benefit of cooperation. 
B)  Players strive to minimize their opponents' profits. 
C)  Players do not understand the game and its payoffs. 
D)  It is not in each player's self-interest to cooperate. 
E)  Players understand the game but they do not know which action(s) will benefit their joint interest. 
A)  They do not realize the benefit of cooperation. 
B)  Players strive to minimize their opponents' profits. 
C)  Players do not understand the game and its payoffs. 
D)  It is not in each player's self-interest to cooperate. 
E)  Players understand the game but they do not know which action(s) will benefit their joint interest.

Question 4

An oligopoly created because of economies of scale is called a

Accepted Answer

A)  natural oligopoly. 
B)  legal oligopoly. 
C)  public oligopoly. 
D)  monopolistic oligopoly. 
E)  scale oligopoly. 
A)  natural oligopoly. 
B)  legal oligopoly. 
C)  public oligopoly. 
D)  monopolistic oligopoly. 
E)  scale oligopoly.

Question 5

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 6

-Intel and AMD are a duopoly that produce CPU chips.Intel and AMD can conduct R&D or they can not 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 7

Sammy's Inc.competes with a few other firms because there are natural barriers to entry.Sammy's operates in

Accepted Answer

A)  a perfectly competitive market. 
B)  an oligopoly. 
C)  a monopolistically competitive market. 
D)  a monopoly. 
E)  a natural monopolistically competitive market. 
A)  a perfectly competitive market. 
B)  an oligopoly. 
C)  a monopolistically competitive market. 
D)  a monopoly. 
E)  a natural monopolistically competitive market.

Question 8

For a duopoly,the maximum total profit is reached when the duopoly produces

Accepted Answer

A)  the same amount of output as the competitive outcome. 
B)  the same amount of output as the monopoly outcome. 
C)  an amount of output that lies between the competitive outcome and the monopoly outcome. 
D)  more output than the competitive outcome. 
E)  less output than the monopoly outcome. 
A)  the same amount of output as the competitive outcome. 
B)  the same amount of output as the monopoly outcome. 
C)  an amount of output that lies between the competitive outcome and the monopoly outcome. 
D)  more output than the competitive outcome. 
E)  less output than the monopoly outcome.

Question 9

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)  $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 10

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 11

When a city licenses only 3 taxi firms to serve the market,the city has created a

Accepted Answer

A)  cartel. 
B)  legal monopoly. 
C)  monopolistically competitive market. 
D)  legal oligopoly. 
E)  natural oligopoly. 
A)  cartel. 
B)  legal monopoly. 
C)  monopolistically competitive market. 
D)  legal oligopoly. 
E)  natural oligopoly.

Question 12

If Sony required all its retailers not to sell televisions from other companies,Sony would be engaging in what kind of activity? Is Sony's requirement legal or does it violate the Clayton Act?

Accepted Answer

Sony is engaged in an exclusive deal.The

Question 13

-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 14

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 15

What is a Nash equilibrium? Is this equilibrium the best outcome for the players? Give an example.

Accepted Answer

John Nash proposed the concept of an equ

Question 16

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 17

-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 cents; 2 cents 
D)  2 cents; either equal to 4 cents or more than 4 cents 
E)  either equal to 4 cents 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 cents; 2 cents 
D)  2 cents; either equal to 4 cents or more than 4 cents 
E)  either equal to 4 cents or more than 4 cents; 2 cents

Question 18

In order for the Federal Trade Commission to consider an industry concentrated,the industry must have a Herfindahl-Hirschman Index of

Accepted Answer

A)  less than 1,000. 
B)  between 1,000 and 1,400. 
C)  greater than 1,800. 
D)  less than zero. 
E)  between 1,400 and 1,800. 
A)  less than 1,000. 
B)  between 1,000 and 1,400. 
C)  greater than 1,800. 
D)  less than zero. 
E)  between 1,400 and 1,800.

Question 19

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 20

Which of the following is an example of exclusive dealing?

Accepted Answer

A)  preventing a buyer from reselling a product outside a specific area 
B)  forcing a buyer to buy other goods from a supplier 
C)  forcing the purchase of all necessities from a single firm 
D)  prohibiting a seller from selling a competing item 
E)  selling different units of a good to the same buyer at different prices 
A)  preventing a buyer from reselling a product outside a specific area 
B)  forcing a buyer to buy other goods from a supplier 
C)  forcing the purchase of all necessities from a single firm 
D)  prohibiting a seller from selling a competing item 
E)  selling different units of a good to the same buyer at different prices

Firms in oligopoly can achieve an economic profit

The range of output for a duopoly ranges between the

The players in a game theory situation often do not act in their joint interest because of which of the following?

An oligopoly created because of economies of scale is called a

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

-Intel and AMD are a duopoly that produce CPU chips.Intel and AMD can conduct R&D or they can not 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 .

Sammy's Inc.competes with a few other firms because there are natural barriers to entry.Sammy's operates in

For a duopoly,the maximum total profit is reached when the duopoly produces

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 .

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

When a city licenses only 3 taxi firms to serve the market,the city has created a

If Sony required all its retailers not to sell televisions from other companies,Sony would be engaging in what kind of activity? Is Sony's requirement legal or does it violate the Clayton Act?

-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,

What is a Nash equilibrium? Is this equilibrium the best outcome for the players? Give an example.

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

In order for the Federal Trade Commission to consider an industry concentrated,the industry must have a Herfindahl-Hirschman Index of

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

Which of the following is an example of exclusive dealing?

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

Firms in oligopoly can achieve an economic profit

The range of output for a duopoly ranges between the

The players in a game theory situation often do not act in their joint interest because of which of the following?

An oligopoly created because of economies of scale is called a

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

-Intel and AMD are a duopoly that produce CPU chips.Intel and AMD can conduct R&D or they can not 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 ________ .

Sammy's Inc.competes with a few other firms because there are natural barriers to entry.Sammy's operates in

For a duopoly,the maximum total profit is reached when the duopoly produces

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 ________.

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

When a city licenses only 3 taxi firms to serve the market,the city has created a

If Sony required all its retailers not to sell televisions from other companies,Sony would be engaging in what kind of activity? Is Sony's requirement legal or does it violate the Clayton Act?

-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,

What is a Nash equilibrium? Is this equilibrium the best outcome for the players? Give an example.

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

In order for the Federal Trade Commission to consider an industry concentrated,the industry must have a Herfindahl-Hirschman Index of

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

Which of the following is an example of exclusive dealing?

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

-Intel and AMD are a duopoly that produce CPU chips.Intel and AMD can conduct R&D or they can not 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 .

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 .