Question 1

In a cartel,how does the number of firms affect the likelihood that the cartel will be able to successfully maintain a high price?

Accepted Answer

The more firms that are involved in the

Question 2

-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 figure shows a ________ can profitably operate.

Accepted Answer

A)  natural monopoly in which 1 firm 
B)  natural oligopoly in which 2 firms 
C)  natural oligopoly in which 3 firms 
D)  natural oligopoly in which 4 firms 
E)  natural oligopoly in which 5 or more firms 
A)  natural monopoly in which 1 firm 
B)  natural oligopoly in which 2 firms 
C)  natural oligopoly in which 3 firms 
D)  natural oligopoly in which 4 firms 
E)  natural oligopoly in which 5 or more firms

Question 3

-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.Which of the following statements is correct?

Accepted Answer

A)  If the firms play this game repeatedly, one would end up charging $20 and the other $10. 
B)  If the firms cooperate, both could make $55,000 in economic profit. 
C)  The Nash equilibrium in this game is for both firms to set P = $20 because that maximizes their combined profit. 
D)  Firm B's strategy is to always set P = $20 because that gives Firm B the highest possible profit. 
E)  If Firm B sets P = $20, then Firm A will maximize its profit by setting its P = $20. 
A)  If the firms play this game repeatedly, one would end up charging $20 and the other $10. 
B)  If the firms cooperate, both could make $55,000 in economic profit. 
C)  The Nash equilibrium in this game is for both firms to set P = $20 because that maximizes their combined profit. 
D)  Firm B's strategy is to always set P = $20 because that gives Firm B the highest possible profit. 
E)  If Firm B sets P = $20, then Firm A will maximize its profit by setting its P = $20.

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 Nash equilibrium,Firm A will set a price of ________ and Firm B will set a price of ________.

Accepted Answer

A)  $10; $20 
B)  $20; $10 
C)  $10; $10 
D)  $20; $20 
E)  $20; something, but more information is needed to determine Firm B's price 
A)  $10; $20 
B)  $20; $10 
C)  $10; $10 
D)  $20; $20 
E)  $20; something, but more information is needed to determine Firm B's price

Question 5

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 6

-The figure above shows the market demand curve and the ATC curve for a firm.Each firm in the market has the same ATC curve.If the firms in the industry agree to form a cartel,the firms in the industry make an economic profit if there are ________ firms,each producing ________ units per hour.

Accepted Answer

A)  3; 4,000 
B)  4; 3,000 
C)  2; 6,000 
D)  2; 4,000 
E)  2; 12,000 
A)  3; 4,000 
B)  4; 3,000 
C)  2; 6,000 
D)  2; 4,000 
E)  2; 12,000

Question 7

If firms in an oligopolistic industry successfully collude and form a cartel,what price and output will result?

Accepted Answer

A)  the monopoly price and output 
B)  the competitive price and output 
C)  the monopolistically competitive price and output 
D)  a price higher than the monopoly price and, because there is more than one firm in the industry, more output than the monopoly amount 
E)  a price lower than the competitive price and, because there are only a few firms in the industry, less output than the competitive amount 
A)  the monopoly price and output 
B)  the competitive price and output 
C)  the monopolistically competitive price and output 
D)  a price higher than the monopoly price and, because there is more than one firm in the industry, more output than the monopoly amount 
E)  a price lower than the competitive price and, because there are only a few firms in the industry, less output than the competitive amount

Question 8

-Two firms are introducing an improved version of their toothpastes.They must decide whether or not to advertise their products.The table above gives the payoff matrix in terms of the economic profits they expect in each case.The payoffs are in terms of millions of dollars.
a.What is the Nash equilibrium for the game?
b.If they could cooperate,what strategy would they prefer? What would be the payoff?

Accepted Answer

a.The Nash equilibrium has each firm adv

Question 9

If an oligopolistic game is repeatedly played,which of the following can occur?

Accepted Answer

A)  Players can learn ways to cooperate and make an economic profit. 
B)  The competitive price and output consistently is the final result. 
C)  Firms can learn how to cheat more effectively on the other player. 
D)  One firm will be driven out of business. 
E)  An implicit agreement is reached in which one firm constantly cheats on the cartel and the other firm complies with it. 
A)  Players can learn ways to cooperate and make an economic profit. 
B)  The competitive price and output consistently is the final result. 
C)  Firms can learn how to cheat more effectively on the other player. 
D)  One firm will be driven out of business. 
E)  An implicit agreement is reached in which one firm constantly cheats on the cartel and the other firm complies with it.

Question 10

A cartel is

Accepted Answer

A)  another name for a firm in an oligopoly. 
B)  a collusive agreement among a number of firms. 
C)  a government body that regulates an industry. 
D)  an antitrust law. 
E)  a type of regulation that focuses on quantities rather than price. 
A)  another name for a firm in an oligopoly. 
B)  a collusive agreement among a number of firms. 
C)  a government body that regulates an industry. 
D)  an antitrust law. 
E)  a type of regulation that focuses on quantities rather than price.

Question 11

In the Boeing/Airbus oligopoly example discussed in the text,why did Boeing and Airbus have an incentive to produce more planes than the monopoly outcome?

Accepted Answer

Both Boeing and Airbus wanted to produce

Question 12

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 13

If a firm,Best Computer Buys,requires its customers to buy software from it whenever the customers purchase a computer,the company's policy is called

Accepted Answer

A)  an exclusive deal. 
B)  a territorial confinement. 
C)  a tying arrangement. 
D)  pricing discrimination. 
E)  predatory pricing. 
A)  an exclusive deal. 
B)  a territorial confinement. 
C)  a tying arrangement. 
D)  pricing discrimination. 
E)  predatory pricing.

Question 14

-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,then ________ limit the market to 3 firms.

Accepted Answer

A)  economies of scale 
B)  a "tit for tat" strategy 
C)  collusion 
D)  a Nash equilibrium 
E)  legal requirements 
A)  economies of scale 
B)  a "tit for tat" strategy 
C)  collusion 
D)  a Nash equilibrium 
E)  legal requirements

Question 15

Economists are skeptical that ________ occurs very often because firms engaging in it are certain to suffer an economic loss for a period of time.

Accepted Answer

A)  a tying arrangement 
B)  inefficient resale price maintenance 
C)  predatory pricing 
D)  efficient resale price maintenance 
E)  exclusive dealing 
A)  a tying arrangement 
B)  inefficient resale price maintenance 
C)  predatory pricing 
D)  efficient resale price maintenance 
E)  exclusive dealing

Question 16

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 17

-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 18

The prisoners' dilemma game

Accepted Answer

A)  shows that prisoners are better off if they cooperate. 
B)  shows it is easy to cooperate. 
C)  has an equilibrium in which both prisoners are made as well off as possible. 
D)  would have the same outcome even if the prisoners can communicate and cooperate. 
E)  has an equilibrium in which one prisoner is made as well off as possible and the other prisoner is made as worse off as possible. 
A)  shows that prisoners are better off if they cooperate. 
B)  shows it is easy to cooperate. 
C)  has an equilibrium in which both prisoners are made as well off as possible. 
D)  would have the same outcome even if the prisoners can communicate and cooperate. 
E)  has an equilibrium in which one prisoner is made as well off as possible and the other prisoner is made as worse off as possible.

Question 19

-In the figure above,________ firms will share the market and the ________.

Accepted Answer

A)  2; efficient scale is 80 units 
B)  2; efficient scale is 40 units 
C)  3; efficient scale is 40 units 
D)  2; lowest possible price is $20 
E)  2; lowest possible price is $15 
A)  2; efficient scale is 80 units 
B)  2; efficient scale is 40 units 
C)  3; efficient scale is 40 units 
D)  2; lowest possible price is $20 
E)  2; lowest possible price is $15

Question 20

Describe the characteristics of an oligopoly.

Accepted Answer

There are a small number of firms that a

In a cartel,how does the number of firms affect the likelihood that the cartel will be able to successfully maintain a high price?

-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 figure shows a ________ can profitably operate.

-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.Which of the following statements is correct?

-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 Nash equilibrium,Firm A will set a price of and Firm B will set a price of .

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?

-The figure above shows the market demand curve and the ATC curve for a firm.Each firm in the market has the same ATC curve.If the firms in the industry agree to form a cartel,the firms in the industry make an economic profit if there are firms,each producing units per hour.

If firms in an oligopolistic industry successfully collude and form a cartel,what price and output will result?

If an oligopolistic game is repeatedly played,which of the following can occur?

A cartel is

In the Boeing/Airbus oligopoly example discussed in the text,why did Boeing and Airbus have an incentive to produce more planes than the monopoly outcome?

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

If a firm,Best Computer Buys,requires its customers to buy software from it whenever the customers purchase a computer,the company's policy is called

-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,then ________ limit the market to 3 firms.

Economists are skeptical that ________ occurs very often because firms engaging in it are certain to suffer an economic loss for a period of time.

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 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).

The prisoners' dilemma game

-In the figure above, firms will share the market and the .

Describe the characteristics of an oligopoly.

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 a cartel,how does the number of firms affect the likelihood that the cartel will be able to successfully maintain a high price?

-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 figure shows a ________ can profitably operate.

-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.Which of the following statements is correct?

-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 Nash equilibrium,Firm A will set a price of ________ and Firm B will set a price of ________.

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?

-The figure above shows the market demand curve and the ATC curve for a firm.Each firm in the market has the same ATC curve.If the firms in the industry agree to form a cartel,the firms in the industry make an economic profit if there are ________ firms,each producing ________ units per hour.

If firms in an oligopolistic industry successfully collude and form a cartel,what price and output will result?

If an oligopolistic game is repeatedly played,which of the following can occur?

A cartel is

In the Boeing/Airbus oligopoly example discussed in the text,why did Boeing and Airbus have an incentive to produce more planes than the monopoly outcome?

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

If a firm,Best Computer Buys,requires its customers to buy software from it whenever the customers purchase a computer,the company's policy is called

-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,then ________ limit the market to 3 firms.

Economists are skeptical that ________ occurs very often because firms engaging in it are certain to suffer an economic loss for a period of time.

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 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).

The prisoners' dilemma game

-In the figure above,________ firms will share the market and the ________.

Describe the characteristics of an oligopoly.

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 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 Nash equilibrium,Firm A will set a price of and Firm B will set a price of .

-The figure above shows the market demand curve and the ATC curve for a firm.Each firm in the market has the same ATC curve.If the firms in the industry agree to form a cartel,the firms in the industry make an economic profit if there are firms,each producing units per hour.

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 .

-In the figure above, firms will share the market and the .