Question 1

There are two bookstores in a college town.If another bookstore opened, each of the stores would incur an economic loss.This bookstore market is

Accepted Answer

A) a natural monopoly. 
B) a monopoly. 
C) monopolistic competition. 
D) a natural oligopoly. 
E) a legal oligopoly. 
A) a natural monopoly. 
B) a monopoly. 
C) monopolistic competition. 
D) a natural oligopoly. 
E) a legal oligopoly.

Question 2

Firms operating in an oligopoly

Accepted Answer

A) always compete on price. 
B) always compete on price, product quality and marketing. 
C) can make the same profit as a monopoly but there is no assurance that they will do so. 
D) usually achieve the competitive outcome. 
E) always make the same profit as a monopoly. 
A) always compete on price. 
B) always compete on price, product quality and marketing. 
C) can make the same profit as a monopoly but there is no assurance that they will do so. 
D) usually achieve the competitive outcome. 
E) always make the same profit as a monopoly.

Question 3

In an oligopoly, output is

Accepted Answer

A) less than the output in monopoly. 
B) greater than the output in perfect competition. 
C) in all circumstances the same as the output in perfect competition. 
D) somewhere between the output in monopoly and that in perfect competition outcomes. 
E) in all circumstances the same as the output in monopoly. 
A) less than the output in monopoly. 
B) greater than the output in perfect competition. 
C) in all circumstances the same as the output in perfect competition. 
D) somewhere between the output in monopoly and that in perfect competition outcomes. 
E) in all circumstances the same as the output in monopoly.

Question 4

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 5

-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 6

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 7

A Nash equilibrium is defined as

Accepted Answer

A) making zero economic profit in the long run. 
B) forming a cartel with strong penalties for cheaters. 
C) relying on other game players to realize the benefit of cooperation. 
D) each player taking the best possible action given the action of the other player. 
E) each player taking the action that is best for all the players. 
A) making zero economic profit in the long run. 
B) forming a cartel with strong penalties for cheaters. 
C) relying on other game players to realize the benefit of cooperation. 
D) each player taking the best possible action given the action of the other player. 
E) each player taking the action that is best for all the players.

Question 8

-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 9

A Nash equilibrium occurs when each player in a game takes the ________ given the action of the other player.

Accepted Answer

A) worst possible action for himself or herself 
B) best possible action for himself or herself 
C) most unpredictable possible action 
D) most mutually beneficial possible action 
E) best possible action for the other player 
A) worst possible action for himself or herself 
B) best possible action for himself or herself 
C) most unpredictable possible action 
D) most mutually beneficial possible action 
E) best possible action for the other player

Question 10

The tool that economists use to analyze the mutual interdependence of oligopolies is

Accepted Answer

A) economies of scale. 
B) the four-firm concentration ratio. 
C) game theory. 
D) the HHI. 
E) the efficient scale. 
A) economies of scale. 
B) the four-firm concentration ratio. 
C) game theory. 
D) the HHI. 
E) the efficient scale.

Question 11

In the prisoners' dilemma, each player is ________ regardless of the other player's actions.

Accepted Answer

A) forced to confess 
B) forced to deny 
C) better off confessing 
D) better off denying 
E) going to go free 
A) forced to confess 
B) forced to deny 
C) better off confessing 
D) better off denying 
E) going to go free

Question 12

What is the best outcome for society: When firms in an oligopoly operate as a monopoly or when they act as perfect competitors? Briefly explain your answer.

Accepted Answer

The best outcome for society is when the

Question 13

The prisoners' dilemma is an example of

Accepted Answer

A) product differentiation. 
B) collusion. 
C) game theory. 
D) monopolistic competition. 
E) decision making in a monopoly. 
A) product differentiation. 
B) collusion. 
C) game theory. 
D) monopolistic competition. 
E) decision making in a monopoly.

Question 14

If the Herfindahl-Hirschman Index (HHI)for a market is between 1,000 and 1,800, the Federal Trade Commission will examine

Accepted Answer

A) all mergers. 
B) no mergers. 
C) mergers that raise the HHI by 100 or more points. 
D) mergers that raise the HHI by 100 or fewer point. 
E) mergers that lower the HHI by 100 or more points. 
A) all mergers. 
B) no mergers. 
C) mergers that raise the HHI by 100 or more points. 
D) mergers that raise the HHI by 100 or fewer point. 
E) mergers that lower the HHI by 100 or more points.

Question 15

In a concentrated industry with a Herfindahl-Hirschman Index that exceeds 1,800, the Federal Trade Commission will challenge any merger that increases the Herfindahl-Hirschman index by a minimum of

Accepted Answer

A) 50 points. 
B) 100 points. 
C) 1,000 points. 
D) 1,800 points. 
E) 10,000 points. 
A) 50 points. 
B) 100 points. 
C) 1,000 points. 
D) 1,800 points. 
E) 10,000 points.

Question 16

Which of the following can be games played by firms in an oligopoly?
I∙choosing how much to spend on advertising
Ii∙choosing how much to spend on R&D
Iii∙choosing to enter a legal duopoly

Accepted Answer

A) i and ii 
B) i and iii 
C) ii and iii 
D) ii only 
E) iii only 
A) i and ii 
B) i and iii 
C) ii and iii 
D) ii only 
E) iii only

Question 17

A cartel is most likely to occur in

Accepted Answer

A) perfect competition as firms compete by reducing cost. 
B) oligopoly as firms act together to raise prices and increase profits. 
C) monopolistic competition where firms collude to increase profits. 
D) oligopoly as firms compete to lower price and increase their own profits. 
E) monopoly because it faces no competition. 
A) perfect competition as firms compete by reducing cost. 
B) oligopoly as firms act together to raise prices and increase profits. 
C) monopolistic competition where firms collude to increase profits. 
D) oligopoly as firms compete to lower price and increase their own profits. 
E) monopoly because it faces no competition.

Question 18

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 19

Under the Clayton Act and its amendments, which of the following activities is illegal if it creates monopoly?

Accepted Answer

A) exit of a firm from a market with 4 or fewer surviving firms 
B) price hikes among competing firms 
C) price discrimination 
D) patents that result in price hikes 
E) entry of a firm into a new market 
A) exit of a firm from a market with 4 or fewer surviving firms 
B) price hikes among competing firms 
C) price discrimination 
D) patents that result in price hikes 
E) entry of a firm into a new market

Question 20

-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

There are two bookstores in a college town.If another bookstore opened, each of the stores would incur an economic loss.This bookstore market is

Firms operating in an oligopoly

In an oligopoly, output is

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

-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 .

An oligopoly created because of economies of scale is called a

A Nash equilibrium is defined as

-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.

A Nash equilibrium occurs when each player in a game takes the ________ given the action of the other player.

The tool that economists use to analyze the mutual interdependence of oligopolies is

In the prisoners' dilemma, each player is ________ regardless of the other player's actions.

What is the best outcome for society: When firms in an oligopoly operate as a monopoly or when they act as perfect competitors? Briefly explain your answer.

The prisoners' dilemma is an example of

If the Herfindahl-Hirschman Index (HHI)for a market is between 1,000 and 1,800, the Federal Trade Commission will examine

In a concentrated industry with a Herfindahl-Hirschman Index that exceeds 1,800, the Federal Trade Commission will challenge any merger that increases the Herfindahl-Hirschman index by a minimum of

Which of the following can be games played by firms in an oligopoly? I∙choosing how much to spend on advertising Ii∙choosing how much to spend on R&D Iii∙choosing to enter a legal duopoly

A cartel is most likely to occur in

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

Under the Clayton Act and its amendments, which of the following activities is illegal if it creates monopoly?

-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).

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

There are two bookstores in a college town.If another bookstore opened, each of the stores would incur an economic loss.This bookstore market is

Firms operating in an oligopoly

In an oligopoly, output is

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

-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 ________ .

An oligopoly created because of economies of scale is called a

A Nash equilibrium is defined as

-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.

A Nash equilibrium occurs when each player in a game takes the ________ given the action of the other player.

The tool that economists use to analyze the mutual interdependence of oligopolies is

In the prisoners' dilemma, each player is ________ regardless of the other player's actions.

What is the best outcome for society: When firms in an oligopoly operate as a monopoly or when they act as perfect competitors? Briefly explain your answer.

The prisoners' dilemma is an example of

If the Herfindahl-Hirschman Index (HHI)for a market is between 1,000 and 1,800, the Federal Trade Commission will examine

In a concentrated industry with a Herfindahl-Hirschman Index that exceeds 1,800, the Federal Trade Commission will challenge any merger that increases the Herfindahl-Hirschman index by a minimum of

Which of the following can be games played by firms in an oligopoly? I∙choosing how much to spend on advertising Ii∙choosing how much to spend on R&D Iii∙choosing to enter a legal duopoly

A cartel is most likely to occur in

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

Under the Clayton Act and its amendments, which of the following activities is illegal if it creates monopoly?

-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).

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 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.