Question 1

When two ice cream vendors locate next to each other on the beach, they are exhibiting a Nash equilibrium.

Accepted Answer

A) True 
 B)False  True

Question 2

Oligopoly:

Accepted Answer

A) Does not meet the condition for allocative efficiency. 
B) Does not meet the condition for productive efficiency. 
C) May lead to greater technological progress. 
D) a. and b. are true, but not c. 
A) Does not meet the condition for allocative efficiency. 
B) Does not meet the condition for productive efficiency. 
C) May lead to greater technological progress. 
D) a. and b. are true, but not c. D

Question 3

If entry into an industry was very easy, the four firm concentration ratio would not be a very useful index of the competitiveness in that industry

Accepted Answer

A) True 
 B)False  True

Question 4

The four firm concentration ratio in an industry with ten equally sixed firms is 40%.

Accepted Answer

A) True 
 B)False

Question 5

Oligopoly is likely to occur whenever the number of firms is so small that any change in output or price by one firm appreciably impacts the sales of competing firms.

Accepted Answer

A) True 
 B)False

Question 6

Firms in an oligopoly market can potentially earn economic profits.

Accepted Answer

A) In the short run, but not the long run. 
B) In the long run, but not the short run. 
C) In both the short run and long run 
D) In neither the short run nor the long run 
A) In the short run, but not the long run. 
B) In the long run, but not the short run. 
C) In both the short run and long run 
D) In neither the short run nor the long run

Question 7

Exhibit
The following payoff matrix shows the possible sentences that two suspects, who are arrested on suspicion of car theft, could receive. The suspects are interrogated separately and are unable to communicate with one another.
  
-Refer to Exhibit. Under the circumstances:

Accepted Answer

A) if Suspect 1 confesses, Suspect 2 is better off not confessing. 
B) if Suspect 2 confesses, Suspect 1 is better off not confessing. 
C) if Suspect 1 confesses, Suspect 2 is better off confessing. 
D) if Suspect 1 does not confess, Suspect 2 is better off not confessing. 
A) if Suspect 1 confesses, Suspect 2 is better off not confessing. 
B) if Suspect 2 confesses, Suspect 1 is better off not confessing. 
C) if Suspect 1 confesses, Suspect 2 is better off confessing. 
D) if Suspect 1 does not confess, Suspect 2 is better off not confessing.

Question 8

Exhibit
The following payoff matrix shows the possible sentences that two suspects, who are arrested on suspicion of car theft, could receive. The suspects are interrogated separately and are unable to communicate with one another.
  
-Refer to Exhibit. The game is called the "Prisoners' Dilemma"because:

Accepted Answer

A) the Nash equilibrium of the game results in the lowest combined prison term. 
B) the prisoners, by acting in their own private interests, end up worse off than otherwise could be the case. 
C) when cooperation is not allowed, the prisoners each choose not to confess. 
D) the prisoners always act in solidarity, when each could individually be better off. 
A) the Nash equilibrium of the game results in the lowest combined prison term. 
B) the prisoners, by acting in their own private interests, end up worse off than otherwise could be the case. 
C) when cooperation is not allowed, the prisoners each choose not to confess. 
D) the prisoners always act in solidarity, when each could individually be better off.

Question 9

If an industry has a price leader, it is most likely to be a dominant firm.

Accepted Answer

A) True 
 B)False

Question 10

Oligopoly firms are guaranteed economic profits in the long run.

Accepted Answer

A) True 
 B)False

Question 11

Traffic congestion represents

Accepted Answer

A) A positive network externality 
B) A negative network externality 
C) A Bandwagon effect 
D) Neither a positive nor a negative externality snob effect; congestion 
A) A positive network externality 
B) A negative network externality 
C) A Bandwagon effect 
D) Neither a positive nor a negative externality snob effect; congestion

Question 12

In oligopoly markets, firms have no perceptible influence on the market price.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following types of mergers are of greater concern as being anticompetitive among antitrust regulators?

Accepted Answer

A) Horizontal mergers 
B) Vertical mergers 
C) Conglomerate mergers 
D) Horizontal, vertical and conglomerate mergers are of equal concern as being anticompetitive 
A) Horizontal mergers 
B) Vertical mergers 
C) Conglomerate mergers 
D) Horizontal, vertical and conglomerate mergers are of equal concern as being anticompetitive

Question 14

The long run success of a collusion

Accepted Answer

A) Is limited by ease of entry into the industry. 
B) Is enhanced by ease of entry into the industry. 
C) Is unaffected by the ease of entry into the industry. 
D) Could be either limited by or enhanced by ease of entry into the industry. 
A) Is limited by ease of entry into the industry. 
B) Is enhanced by ease of entry into the industry. 
C) Is unaffected by the ease of entry into the industry. 
D) Could be either limited by or enhanced by ease of entry into the industry.

Question 15

Which of the following is not true?

Accepted Answer

A) Collusion is relatively rare, in part because it is illegal in many countries. 
B) Collusion is relatively rare, even though members find it easy to agree on key decisions. 
C) Collusion is relatively rare, in part because members frequently have an incentive to cheat on the cartel. 
D) Collusion is harder to maintain when differentiated products are involved, which introduce many ways to undercut a collusive agreement. 
A) Collusion is relatively rare, in part because it is illegal in many countries. 
B) Collusion is relatively rare, even though members find it easy to agree on key decisions. 
C) Collusion is relatively rare, in part because members frequently have an incentive to cheat on the cartel. 
D) Collusion is harder to maintain when differentiated products are involved, which introduce many ways to undercut a collusive agreement.

Question 16

Whenever any firms in a concentrated industry merge, the Herfindahl-Hirschman Index:

Accepted Answer

A) will rise. 
B) may rise or stay the same. 
C) may rise or fall. 
D) will fall. 
A) will rise. 
B) may rise or stay the same. 
C) may rise or fall. 
D) will fall.

Question 17

A tit for tat strategy

Accepted Answer

A) Generates the same result as the prisoner's dilemma. 
B) Provides a way to punish rivals who defect from the jointly optimum behavior 
C) Means that a firm would cooperate as long as other firms cooperated. 
D) Both b. and c. are true 
A) Generates the same result as the prisoner's dilemma. 
B) Provides a way to punish rivals who defect from the jointly optimum behavior 
C) Means that a firm would cooperate as long as other firms cooperated. 
D) Both b. and c. are true

Question 18

A firm could be engaged in successful predatory pricing if:

Accepted Answer

A) It charged prices greater than the average variable cost of production. 
B) It did not drive rivals out of the market. 
C) It did not raise its prices after its predatory price cutting. 
D) None of the above is true. 
A) It charged prices greater than the average variable cost of production. 
B) It did not drive rivals out of the market. 
C) It did not raise its prices after its predatory price cutting. 
D) None of the above is true.

Question 19

It more difficult for firms to reach collusive agreements when they are of different sizes, with substantially different production costs and estimates of demand conditions, than when these differences are smaller.

Accepted Answer

A) True 
 B)False

Question 20

Foreign firms are incorporated in four firm concentration ratios.

Accepted Answer

A) True 
 B)False

When two ice cream vendors locate next to each other on the beach, they are exhibiting a Nash equilibrium.

Oligopoly:

If entry into an industry was very easy, the four firm concentration ratio would not be a very useful index of the competitiveness in that industry

The four firm concentration ratio in an industry with ten equally sixed firms is 40%.

Oligopoly is likely to occur whenever the number of firms is so small that any change in output or price by one firm appreciably impacts the sales of competing firms.

Firms in an oligopoly market can potentially earn economic profits.

Exhibit The following payoff matrix shows the possible sentences that two suspects, who are arrested on suspicion of car theft, could receive. The suspects are interrogated separately and are unable to communicate with one another. -Refer to Exhibit. Under the circumstances:

If an industry has a price leader, it is most likely to be a dominant firm.

Oligopoly firms are guaranteed economic profits in the long run.

Traffic congestion represents

In oligopoly markets, firms have no perceptible influence on the market price.

Which of the following types of mergers are of greater concern as being anticompetitive among antitrust regulators?

The long run success of a collusion

Which of the following is not true?

Whenever any firms in a concentrated industry merge, the Herfindahl-Hirschman Index:

A tit for tat strategy

A firm could be engaged in successful predatory pricing if:

It more difficult for firms to reach collusive agreements when they are of different sizes, with substantially different production costs and estimates of demand conditions, than when these differences are smaller.

Foreign firms are incorporated in four firm concentration ratios.

Market Failure, Market Efficiency and Welfare

Elasticities

Market in Motion and Price Controls

Demand Supply and Market Equilibrium

Economics Eight Powerful Ideas and the Role and Method of Economics

International Finance

International Trade, Income Poverty and Health Care

The Markets for Labor Capital and Land

Monopolistic Competition, Product Differentiation, Monopoly and Antitrust

Firms in Perfectly Competitive Markets

The Firm Production and Costs

Consumer Choice Theory

Filters

Exam 9: Oligopoly and Strategic Behavior

When two ice cream vendors locate next to each other on the beach, they are exhibiting a Nash equilibrium.

Oligopoly:

If entry into an industry was very easy, the four firm concentration ratio would not be a very useful index of the competitiveness in that industry

The four firm concentration ratio in an industry with ten equally sixed firms is 40%.

Oligopoly is likely to occur whenever the number of firms is so small that any change in output or price by one firm appreciably impacts the sales of competing firms.

Firms in an oligopoly market can potentially earn economic profits.

Exhibit The following payoff matrix shows the possible sentences that two suspects, who are arrested on suspicion of car theft, could receive. The suspects are interrogated separately and are unable to communicate with one another. -Refer to Exhibit. Under the circumstances:

If an industry has a price leader, it is most likely to be a dominant firm.

Oligopoly firms are guaranteed economic profits in the long run.

Traffic congestion represents

In oligopoly markets, firms have no perceptible influence on the market price.

Which of the following types of mergers are of greater concern as being anticompetitive among antitrust regulators?

The long run success of a collusion

Which of the following is not true?

Whenever any firms in a concentrated industry merge, the Herfindahl-Hirschman Index:

A tit for tat strategy

A firm could be engaged in successful predatory pricing if:

It more difficult for firms to reach collusive agreements when they are of different sizes, with substantially different production costs and estimates of demand conditions, than when these differences are smaller.

Foreign firms are incorporated in four firm concentration ratios.

Market Failure, Market Efficiency and Welfare

Elasticities

Market in Motion and Price Controls

Demand Supply and Market Equilibrium

Economics Eight Powerful Ideas and the Role and Method of Economics

International Finance

International Trade, Income Poverty and Health Care

The Markets for Labor Capital and Land

Monopolistic Competition, Product Differentiation, Monopoly and Antitrust

Firms in Perfectly Competitive Markets

The Firm Production and Costs

Consumer Choice Theory

Filters