Question 1

Because of the shortcomings of concentration ratios, some economists prefer another measure of competition called

Accepted Answer

A) the Competition Index. 
B) the Marginal Revenue-Marginal Cost Index. 
C) the Economic Profit Index. 
D) the Herfindahl-Hirschman Index. 
A) the Competition Index. 
B) the Marginal Revenue-Marginal Cost Index. 
C) the Economic Profit Index. 
D) the Herfindahl-Hirschman Index.

Question 2

An oligopoly firm is similar to a monopolistically competitive firm in that

Accepted Answer

A) both firms face the prisoner's dilemma. 
B) both operate in a market in which there are significant entry barriers. 
C) both firms have market power. 
D) both firms are in industries characterized by an interdependent firm. 
A) both firms face the prisoner's dilemma. 
B) both operate in a market in which there are significant entry barriers. 
C) both firms have market power. 
D) both firms are in industries characterized by an interdependent firm.

Question 3

On January 2, 1971, all cigarette advertising was banned on U.S.television and radio stations.Did this ban likely increase or decrease the profits of cigarette companies in 1971? Briefly explain.

Accepted Answer

If advertising is a prisoners'

Question 4

Explain why selling output at a price below that at which marginal revenue equals marginal cost (MR = MC)might serve to deter entry of a potential competitor.

Accepted Answer

If a potential entrant is unsure about t

Question 5

Which of the following is not part of an oligopolist's business strategy?

Accepted Answer

A) meeting worker health and safety standards required of all firms 
B) deciding the level of total output of a new product 
C) determining the amount of advertising a new product needs 
D) setting the product's price after considering what rivals will do 
A) meeting worker health and safety standards required of all firms 
B) deciding the level of total output of a new product 
C) determining the amount of advertising a new product needs 
D) setting the product's price after considering what rivals will do

Question 6

Which industry has the highest four-firm concentration ratio?

Accepted Answer

A) discount department stores 
B) college bookstores 
C) retail gasoline stations 
D) cigarettes 
A) discount department stores 
B) college bookstores 
C) retail gasoline stations 
D) cigarettes

Question 7

Game theory was developed in the 1940s by John von Neuman, a mathematician, and an economist named

Accepted Answer

A) John Nash. 
B) John Maynard Keynes. 
C) Oskar Morgenstern. 
D) Milton Friedman. 
A) John Nash. 
B) John Maynard Keynes. 
C) Oskar Morgenstern. 
D) Milton Friedman.

Question 8

What is an oligopoly? Give two examples of oligopolistic industries in the United States.

Accepted Answer

Oligopoly is a market structur

Question 9

A sequential game can be used to analyze whether a retail firm should build a large store or a small store in a city, when the correct choice depends on whether a competing firm will build a new store in the same city.Which of the following is used to analyze this type of decision?

Accepted Answer

A) a decision tree 
B) a decision matrix 
C) a sequential matrix 
D) an either-or graph 
A) a decision tree 
B) a decision matrix 
C) a sequential matrix 
D) an either-or graph

Question 10

Two firms would sometimes be better off if they got together and agreed to charge a high price, rather than to compete and risk having to charge a lower, competitive price.What is the greatest deterrent to this strategy?

Accepted Answer

A) The firms may find that the price they charge is greater than the price that would maximize their profits. 
B) An agreement by firms to charge high prices is illegal. The government can fine the firms and send their managers to jail. 
C) Consumers may resent having to pay high prices and not buy from either of the firms. 
D) One of the firms may decide to lower its price and take business away from the firm that charged the high price. 
A) The firms may find that the price they charge is greater than the price that would maximize their profits. 
B) An agreement by firms to charge high prices is illegal. The government can fine the firms and send their managers to jail. 
C) Consumers may resent having to pay high prices and not buy from either of the firms. 
D) One of the firms may decide to lower its price and take business away from the firm that charged the high price.

Question 11

Because of the flaws of the concentration ratio as a measure of the extent of competition in an industry, some economists prefer another measure of competition, the Herfindahl-Hirschman Index.

Accepted Answer

A) True 
 B)False

Question 12

Table 14-2
   
Table 14-2 shows the payoff matrix for Wal-Mart and Target from every combination of pricing strategies for the popular PlayStation 4.At the start of the game each firm charges a low price and each earns a profit of $7,000.
-Refer to Table 14-2.Suppose pricing PlayStations is a repeated game in which Wal-Mart and Target will be selling the game system in competition over a long period of time.In this case, what is the most likely outcome?

Accepted Answer

A) a noncooperative equilibrium in which each firm charges the high price 
B) a cooperative equilibrium in which each firm charges the high price 
C) a noncooperative equilibrium in which each firm charges the low price 
D) a cooperative equilibrium in which each firm charges the low price 
A) a noncooperative equilibrium in which each firm charges the high price 
B) a cooperative equilibrium in which each firm charges the high price 
C) a noncooperative equilibrium in which each firm charges the low price 
D) a cooperative equilibrium in which each firm charges the low price

Question 13

A subgame-perfect equilibrium is a Nash equilibrium in which no player can make himself better off by changing his decision at any decision node.

Accepted Answer

A) True 
 B)False

Question 14

Oligopoly differs from perfect competition and monopolistic competition in that

Accepted Answer

A) barriers to entry are lower in oligopoly industries than they are in perfectly competitive and monopolistically competitive industries. 
B) demand and marginal revenue curves are more useful for analyzing oligopoly than they are for analyzing perfect competition and monopolistic competition. 
C) because oligopoly firms often react when other firms in their industry change their prices, it is difficult to know what the oligopolist's demand curve looks like. 
D) the concentration ratios of oligopoly industries are lower than they are for perfectly competitive and monopolistically competitive industries. 
A) barriers to entry are lower in oligopoly industries than they are in perfectly competitive and monopolistically competitive industries. 
B) demand and marginal revenue curves are more useful for analyzing oligopoly than they are for analyzing perfect competition and monopolistic competition. 
C) because oligopoly firms often react when other firms in their industry change their prices, it is difficult to know what the oligopolist's demand curve looks like. 
D) the concentration ratios of oligopoly industries are lower than they are for perfectly competitive and monopolistically competitive industries.

Question 15

In game theory, the three key characteristics of a game are

Accepted Answer

A) rules, strategies, and payoffs. 
B) rules, regulations, and payoffs. 
C) winners, losers, and rules. 
D) risks, rewards, and penalties. 
A) rules, strategies, and payoffs. 
B) rules, regulations, and payoffs. 
C) winners, losers, and rules. 
D) risks, rewards, and penalties.

Question 16

Monopolistic competition differs from oligopoly in that in monopolistic competition firms act independently while in oligopoly firms act interdependently.

Accepted Answer

A) True 
 B)False

Question 17

A supplier of paper napkins to the fast food industry is unlikely to have significant bargaining power.

Accepted Answer

A) True 
 B)False

Question 18

A form of implicit collusion where one firm in an oligopoly announces a price change which is matched by other firms in the same industry is

Accepted Answer

A) "follow the leader" pricing. 
B) price leadership. 
C) retaliation pricing. 
D) "tit-for-tat" pricing. 
A) "follow the leader" pricing. 
B) price leadership. 
C) retaliation pricing. 
D) "tit-for-tat" pricing.

Question 19

A subgame is a simultaneous game embedded in a sequential game.

Accepted Answer

A) True 
 B)False

Question 20

A game in which pursuing dominant strategies results in noncooperation that leaves all parties worse off is a

Accepted Answer

A) prisoner's dilemma. 
B) cooperative equilibrium. 
C) first-price auction. 
D) zero-sum game. 
A) prisoner's dilemma. 
B) cooperative equilibrium. 
C) first-price auction. 
D) zero-sum game.

Because of the shortcomings of concentration ratios, some economists prefer another measure of competition called

An oligopoly firm is similar to a monopolistically competitive firm in that

On January 2, 1971, all cigarette advertising was banned on U.S.television and radio stations.Did this ban likely increase or decrease the profits of cigarette companies in 1971? Briefly explain.

Explain why selling output at a price below that at which marginal revenue equals marginal cost (MR = MC)might serve to deter entry of a potential competitor.

Which of the following is not part of an oligopolist's business strategy?

Which industry has the highest four-firm concentration ratio?

Game theory was developed in the 1940s by John von Neuman, a mathematician, and an economist named

What is an oligopoly? Give two examples of oligopolistic industries in the United States.

A sequential game can be used to analyze whether a retail firm should build a large store or a small store in a city, when the correct choice depends on whether a competing firm will build a new store in the same city.Which of the following is used to analyze this type of decision?

Two firms would sometimes be better off if they got together and agreed to charge a high price, rather than to compete and risk having to charge a lower, competitive price.What is the greatest deterrent to this strategy?

Because of the flaws of the concentration ratio as a measure of the extent of competition in an industry, some economists prefer another measure of competition, the Herfindahl-Hirschman Index.

A subgame-perfect equilibrium is a Nash equilibrium in which no player can make himself better off by changing his decision at any decision node.

Oligopoly differs from perfect competition and monopolistic competition in that

In game theory, the three key characteristics of a game are

Monopolistic competition differs from oligopoly in that in monopolistic competition firms act independently while in oligopoly firms act interdependently.

A supplier of paper napkins to the fast food industry is unlikely to have significant bargaining power.

A form of implicit collusion where one firm in an oligopoly announces a price change which is matched by other firms in the same industry is

A subgame is a simultaneous game embedded in a sequential game.

A game in which pursuing dominant strategies results in noncooperation that leaves all parties worse off is a

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

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Exam 14: Oligopoly: Firms in Less Competitive Markets

Because of the shortcomings of concentration ratios, some economists prefer another measure of competition called

An oligopoly firm is similar to a monopolistically competitive firm in that

On January 2, 1971, all cigarette advertising was banned on U.S.television and radio stations.Did this ban likely increase or decrease the profits of cigarette companies in 1971? Briefly explain.

Explain why selling output at a price below that at which marginal revenue equals marginal cost (MR = MC)might serve to deter entry of a potential competitor.

Which of the following is not part of an oligopolist's business strategy?

Which industry has the highest four-firm concentration ratio?

Game theory was developed in the 1940s by John von Neuman, a mathematician, and an economist named

What is an oligopoly? Give two examples of oligopolistic industries in the United States.

A sequential game can be used to analyze whether a retail firm should build a large store or a small store in a city, when the correct choice depends on whether a competing firm will build a new store in the same city.Which of the following is used to analyze this type of decision?

Two firms would sometimes be better off if they got together and agreed to charge a high price, rather than to compete and risk having to charge a lower, competitive price.What is the greatest deterrent to this strategy?

Because of the flaws of the concentration ratio as a measure of the extent of competition in an industry, some economists prefer another measure of competition, the Herfindahl-Hirschman Index.

A subgame-perfect equilibrium is a Nash equilibrium in which no player can make himself better off by changing his decision at any decision node.

Oligopoly differs from perfect competition and monopolistic competition in that

In game theory, the three key characteristics of a game are

Monopolistic competition differs from oligopoly in that in monopolistic competition firms act independently while in oligopoly firms act interdependently.

A supplier of paper napkins to the fast food industry is unlikely to have significant bargaining power.

A form of implicit collusion where one firm in an oligopoly announces a price change which is matched by other firms in the same industry is

A subgame is a simultaneous game embedded in a sequential game.

A game in which pursuing dominant strategies results in noncooperation that leaves all parties worse off is a

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters