Question 1

For a firm to be engaged in predatory pricing, and for it to be successful:

Accepted Answer

A) It would have to charge a price less than the average variable cost of production. 
B) It would have to drive rivals out of the market. 
C) It would have to raise its prices after rivals were driven out of the market. 
D) All of the above would have to be true. 
A) It would have to charge a price less than the average variable cost of production. 
B) It would have to drive rivals out of the market. 
C) It would have to raise its prices after rivals were driven out of the market. 
D) All of the above would have to be true.

Question 2

Which of the following characterizes an oligopolistic industry?

Accepted Answer

A) Few firms and standardized products 
B) Few firms and differentiated products 
C) Few firms and wither standardized or differentiated products 
D) A large number of competing firms 
A) Few firms and standardized products 
B) Few firms and differentiated products 
C) Few firms and wither standardized or differentiated products 
D) A large number of competing firms

Question 3

When small firms in a concentrated industry merge, it will increase the Herfindahl-Hirshman Index but not change the four firm concentration ratio.

Accepted Answer

A) True 
 B)False

Question 4

There are very few non-price means of undermining cartel agreements to restrict competition among members.

Accepted Answer

A) True 
 B)False

Question 5

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 dominant strategy of Suspect 2 is to:

Accepted Answer

A) confess, regardless of what Suspect 1 is expected to do. 
B) not confess, regardless of what Suspect 1 is expected to do. 
C) confess if Suspect 1 is expected to confess, not confess if Suspect 1 is expected to not confess. 
D) confess if Suspect 1 is expected to not confess, not confess if Suspect 1 is expected to confess. 
A) confess, regardless of what Suspect 1 is expected to do. 
B) not confess, regardless of what Suspect 1 is expected to do. 
C) confess if Suspect 1 is expected to confess, not confess if Suspect 1 is expected to not confess. 
D) confess if Suspect 1 is expected to not confess, not confess if Suspect 1 is expected to confess.

Question 6

When an oligopoly cuts its price to try and attract customers from rivals, it could lead to a price war.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is characteristic of an oligopolistic industry?

Accepted Answer

A) few firms 
B) interdependence 
C) large barriers to entry 
D) All of the above 
A) few firms 
B) interdependence 
C) large barriers to entry 
D) All of the above

Question 8

Firms in an oligopoly market tend to have strategies that are ____ and ____ economic profits.

Accepted Answer

A) Independent of one another; earn guaranteed 
B) Independent of one another; are not guraranteed . 
C) Interdependent with one another; earn guaranteed 
D) Interdependent with one another; are not guraranteed 
A) Independent of one another; earn guaranteed 
B) Independent of one another; are not guraranteed . 
C) Interdependent with one another; earn guaranteed 
D) Interdependent with one another; are not guraranteed

Question 9

Barriers to entry into oligopoly industries can be the result of patents, ownership of key resources, large start up costs, or pronounced economies of scale.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following could not create barriers to entry?

Accepted Answer

A) Negative network externalities 
B) Ownership of essential inputs 
C) Economies of scale 
D) All of the above could create barriers to entry 
A) Negative network externalities 
B) Ownership of essential inputs 
C) Economies of scale 
D) All of the above could create barriers to entry

Question 11

Which of the following is true?

Accepted Answer

A) Price leadership is a form of explicit collusion. 
B) Price leadership is more likely when there are a substantial number of roughly equally sized firms in oligopoly. 
C) A price leader is most likely to be a dominant firm in an industry. 
D) None of the above is true. 
A) Price leadership is a form of explicit collusion. 
B) Price leadership is more likely when there are a substantial number of roughly equally sized firms in oligopoly. 
C) A price leader is most likely to be a dominant firm in an industry. 
D) None of the above is true.

Question 12

In a repeated game,

Accepted Answer

A) Cooperation is more likely than in a one-shot game 
B) Cooperation is less likely than in a one-shot game 
C) Cooperation can be either more or less likely than in a one-shot game 
D) The results are likely to be the same as in a one-shot game 
A) Cooperation is more likely than in a one-shot game 
B) Cooperation is less likely than in a one-shot game 
C) Cooperation can be either more or less likely than in a one-shot game 
D) The results are likely to be the same as in a one-shot game

Question 13

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. When the prisoner's follow their dominant strategy, the sentences for Suspect 1 and Suspect 2 are:?

Accepted Answer

A) 2 years and 2 years, respectively. 
B) 6 years and 6 years, respectively. 
C) 10 years and 1 year, respectively. 
D) 1 year and 10 years, respectively. 
A) 2 years and 2 years, respectively. 
B) 6 years and 6 years, respectively. 
C) 10 years and 1 year, respectively. 
D) 1 year and 10 years, respectively.

Question 14

The existence of antitrust law is one reasons economists assume that most strategic behavior in the marketplace is noncooperative.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is true?

Accepted Answer

A) A Nash equilibrium maximizes a player's welfare, regardless of the behavior of a competitor while a dominant strategy maximizes a player's welfare, given the actions of its competitor. 
B) A Nash equilibrium maximizes a player's welfare, given the actions of its competitor, while a dominant strategy maximizes a player's welfare, regardless of the behavior of its competitor. 
C) A Nash equilibrium is just another name for a dominant strategy. 
D) A Nash equilibrium may or may not be a self-enforcing equilibrium. 
A) A Nash equilibrium maximizes a player's welfare, regardless of the behavior of a competitor while a dominant strategy maximizes a player's welfare, given the actions of its competitor. 
B) A Nash equilibrium maximizes a player's welfare, given the actions of its competitor, while a dominant strategy maximizes a player's welfare, regardless of the behavior of its competitor. 
C) A Nash equilibrium is just another name for a dominant strategy. 
D) A Nash equilibrium may or may not be a self-enforcing equilibrium.

For a firm to be engaged in predatory pricing, and for it to be successful:

Which of the following characterizes an oligopolistic industry?

When small firms in a concentrated industry merge, it will increase the Herfindahl-Hirshman Index but not change the four firm concentration ratio.

There are very few non-price means of undermining cartel agreements to restrict competition among members.

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 dominant strategy of Suspect 2 is to:

When an oligopoly cuts its price to try and attract customers from rivals, it could lead to a price war.

Which of the following is characteristic of an oligopolistic industry?

Firms in an oligopoly market tend to have strategies that are and economic profits.

Barriers to entry into oligopoly industries can be the result of patents, ownership of key resources, large start up costs, or pronounced economies of scale.

Which of the following could not create barriers to entry?

Which of the following is true?

In a repeated game,

The existence of antitrust law is one reasons economists assume that most strategic behavior in the marketplace is noncooperative.

Which of the following is true?

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

For a firm to be engaged in predatory pricing, and for it to be successful:

Which of the following characterizes an oligopolistic industry?

When small firms in a concentrated industry merge, it will increase the Herfindahl-Hirshman Index but not change the four firm concentration ratio.

There are very few non-price means of undermining cartel agreements to restrict competition among members.

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 dominant strategy of Suspect 2 is to:

When an oligopoly cuts its price to try and attract customers from rivals, it could lead to a price war.

Which of the following is characteristic of an oligopolistic industry?

Firms in an oligopoly market tend to have strategies that are ____ and ____ economic profits.

Barriers to entry into oligopoly industries can be the result of patents, ownership of key resources, large start up costs, or pronounced economies of scale.

Which of the following could not create barriers to entry?

Which of the following is true?

In a repeated game,

The existence of antitrust law is one reasons economists assume that most strategic behavior in the marketplace is noncooperative.

Which of the following is true?

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

Firms in an oligopoly market tend to have strategies that are and economic profits.