Question 1

Tying arrangements are

Accepted Answer

A) illegal if they substantially lessen competition. 
B) used by regulators to force a monopoly to produce an efficient amount of production. 
C) used by regulators to force a monopoly to charge an efficient price. 
D) illegal according to the Sherman Act. 
E) necessary in order for a firm to price discriminate. 
A) illegal if they substantially lessen competition. 
B) used by regulators to force a monopoly to produce an efficient amount of production. 
C) used by regulators to force a monopoly to charge an efficient price. 
D) illegal according to the Sherman Act. 
E) necessary in order for a firm to price discriminate.

Question 2

Which of the following provisions require a firm to buy all of a particular item from a single firm?

Accepted Answer

A) tying arrangement 
B) requirements contracts 
C) exclusive dealing 
D) territorial confinement 
E) quantity discrimination 
A) tying arrangement 
B) requirements contracts 
C) exclusive dealing 
D) territorial confinement 
E) quantity discrimination

Question 3

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 4

A market with only two firms is called a

Accepted Answer

A) duopoly. 
B) two-firm monopolistic competition. 
C) two-firm monopoly. 
D) cartel. 
E) two-firm quasi monopoly. 
A) duopoly. 
B) two-firm monopolistic competition. 
C) two-firm monopoly. 
D) cartel. 
E) two-firm quasi monopoly.

Question 5

A cartel is

Accepted Answer

A) a market structure with a small number of large firms. 
B) a market structure with a large number of small firms. 
C) a group of firms acting together to raise price, decrease output, and increase economic profit. 
D) a market with only two firms. 
E) another name for an oligopoly. 
A) a market structure with a small number of large firms. 
B) a market structure with a large number of small firms. 
C) a group of firms acting together to raise price, decrease output, and increase economic profit. 
D) a market with only two firms. 
E) another name for an oligopoly.

Question 6

-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.AMD is playing a tit-for-tat strategy and Intel did not conduct R&D last period.Then, of the following answers, Intel's total profit for the next two periods is the highest if Intel ________ R&D this period and ________ R&D next period.

Accepted Answer

A) conducts; conducts 
B) does not conduct; conducts 
C) conducts; does not conduct 
D) does not conduct; does not conduct 
E) conducts; either conducts or does not conduct because the profit is the same in either case 
A) conducts; conducts 
B) does not conduct; conducts 
C) conducts; does not conduct 
D) does not conduct; does not conduct 
E) conducts; either conducts or does not conduct because the profit is the same in either case

Question 7

Resale price maintenance is efficient if

Accepted Answer

A) it is used in conjunction with a tying arrangement. 
B) the manufacturer does not engage in predatory pricing. 
C) retailers charge the lowest price for the product. 
D) it enables a manufacturer to induce an efficient standard of service from retailers. 
E) it takes the place of an exclusive deal. 
A) it is used in conjunction with a tying arrangement. 
B) the manufacturer does not engage in predatory pricing. 
C) retailers charge the lowest price for the product. 
D) it enables a manufacturer to induce an efficient standard of service from retailers. 
E) it takes the place of an exclusive deal.

Question 8

Does an oligopoly produce the efficient quantity of output or does it create a deadweight loss? Do the firms want to produce the efficient quantity of output? Explain your answer.

Accepted Answer

An oligopoly might or might not operate

Question 9

A firm faces a small number of competitors.This firm is competing in

Accepted Answer

A) a monopoly. 
B) monopolistic competition. 
C) an oligopoly. 
D) perfect competition. 
E) a perfect multi-firm monopoly. 
A) a monopoly. 
B) monopolistic competition. 
C) an oligopoly. 
D) perfect competition. 
E) a perfect multi-firm monopoly.

Question 10

Predatory pricing occurs when a firm sets a ________ price to drive competitors out of business with the intention of then setting a ________ price.

Accepted Answer

A) monopoly; high 
B) monopoly; low 
C) low; monopoly 
D) low; low 
E) high; monopoly 
A) monopoly; high 
B) monopoly; low 
C) low; monopoly 
D) low; low 
E) high; monopoly

Question 11

-The above figure shows the market demand curve for long-distance land-based telephone calls.Suppose the marginal cost of a long-distance telephone call is 2¢ a minute for a call no matter how many minutes of calls are made and there are 3 firms in the industry.If the firms in the industry operate as perfect competitors, there are ________ minutes of calls made per hour.

Accepted Answer

A) between 0 and 3 million 
B) more than 3 million and less than or equal to 5 million 
C) more than 5 million and less than or equal to 7 million 
D) more than 7 million and less than or equal to 9 million 
E) more than 9 million 
A) between 0 and 3 million 
B) more than 3 million and less than or equal to 5 million 
C) more than 5 million and less than or equal to 7 million 
D) more than 7 million and less than or equal to 9 million 
E) more than 9 million

Question 12

The focus of antitrust legislation is to

Accepted Answer

A) encourage cartels to form because they are easier to regulate. 
B) maintain competition. 
C) force society to act in the best interest of producers. 
D) limit the power of regulatory bodies. 
E) ensure that producers earn enough profit to stay in business so that consumers are not harmed by too many businesses closing. 
A) encourage cartels to form because they are easier to regulate. 
B) maintain competition. 
C) force society to act in the best interest of producers. 
D) limit the power of regulatory bodies. 
E) ensure that producers earn enough profit to stay in business so that consumers are not harmed by too many businesses closing.

Question 13

What are the actions that are prohibited according to the Clayton Act and its amendments.What conditions must be met for these actions to be prohibited?

Accepted Answer

The Clayton Act prohibits certain practi

Question 14

"If an industry's Herfindahl-Hirschman Index is below 1,000, a merger between any two firms in that industry will be disallowed." Comment on the accuracy of the previous statement.

Accepted Answer

The statement is incorrect in at least t

Question 15

-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 lowest price at which a firm could stay in business in the long run is ________ per unit and the quantity demanded in the market at that price is ________ units per hour.

Accepted Answer

A) $15; 6,000 
B) $10; 8,000 
C) $10; 6,000 
D) $25; 2,000 
E) $10; 4,000 
A) $15; 6,000 
B) $10; 8,000 
C) $10; 6,000 
D) $25; 2,000 
E) $10; 4,000

Question 16

The manufacturer of perfume enters into an agreement with several distributors about the price at which the distributors can resell the perfume.The distributors who do not agree to the pricing suggestion are not able to sell the perfume.The agreement between manufacturers and distributors is

Accepted Answer

A) resale price maintenance. 
B) an interlocking dealership chain. 
C) always inefficient. 
D) a tying arrangement. 
E) an example of an exclusive deal. 
A) resale price maintenance. 
B) an interlocking dealership chain. 
C) always inefficient. 
D) a tying arrangement. 
E) an example of an exclusive deal.

Question 17

Suppose there are 6 firms in an industry with the following market shares.If the two smallest firms want to merge, how will the Federal Trade Commission reply?
Firm 1: 30
Firm 2: 25
Firm 3: 25
Firm 4: 10
Firm 5: 7
Firm 6: 3

Accepted Answer

A) The firms will be allowed to merge and compete with the larger firms. 
B) The firms will be challenged because the merger will raise the HHI by more than 50 points. 
C) The firms will not be allowed to merge. 
D) The firms will be challenged because the merger will raise the HHI by more than 100 points. 
E) The firms will be challenged because the merger will raise the HHI by more than 250 points. 
A) The firms will be allowed to merge and compete with the larger firms. 
B) The firms will be challenged because the merger will raise the HHI by more than 50 points. 
C) The firms will not be allowed to merge. 
D) The firms will be challenged because the merger will raise the HHI by more than 100 points. 
E) The firms will be challenged because the merger will raise the HHI by more than 250 points.

Question 18

Oligopoly is

Accepted Answer

A) always efficient. 
B) efficient only if the firms cooperate. 
C) efficient only if the firms play non-repeated games. 
D) generally not efficient. 
E) efficient only if the firms innovate. 
A) always efficient. 
B) efficient only if the firms cooperate. 
C) efficient only if the firms play non-repeated games. 
D) generally not efficient. 
E) efficient only if the firms innovate.

Question 19

-The above figure shows the market demand curve for long-distance land-based telephone calls.Suppose the marginal cost of a long-distance telephone call is 2¢ a minute for a call no matter how many minutes of calls are made and there are 3 firms in the industry.If the firms in the industry operate as perfect competitors, the price of a call is ________ per minute and if the firms in the industry operate as a monopoly, the price of a call is ________ per minute.

Accepted Answer

A) 2 cents; more than 3 cents and less than 4 cents 
B) more than 3 cents and less than 4 cents; more than 3 cents and less than 4 cents 
C) 1 cents; 2 cents 
D) 2 cents; either equal to 4 cents or more than 4 cents 
E) either equal to 4 cents or more than 4 cents; 2 cents 
A) 2 cents; more than 3 cents and less than 4 cents 
B) more than 3 cents and less than 4 cents; more than 3 cents and less than 4 cents 
C) 1 cents; 2 cents 
D) 2 cents; either equal to 4 cents or more than 4 cents 
E) either equal to 4 cents or more than 4 cents; 2 cents

Question 20

What is a cartel?

Accepted Answer

A cartel is a group of firms acting toge

Tying arrangements are

Which of the following provisions require a firm to buy all of a particular item from a single firm?

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 .

A market with only two firms is called a

A cartel is

Resale price maintenance is efficient if

Does an oligopoly produce the efficient quantity of output or does it create a deadweight loss? Do the firms want to produce the efficient quantity of output? Explain your answer.

A firm faces a small number of competitors.This firm is competing in

Predatory pricing occurs when a firm sets a price to drive competitors out of business with the intention of then setting a price.

The focus of antitrust legislation is to

What are the actions that are prohibited according to the Clayton Act and its amendments.What conditions must be met for these actions to be prohibited?

"If an industry's Herfindahl-Hirschman Index is below 1,000, a merger between any two firms in that industry will be disallowed." Comment on the accuracy of the previous statement.

-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 lowest price at which a firm could stay in business in the long run is per unit and the quantity demanded in the market at that price is units per hour.

The manufacturer of perfume enters into an agreement with several distributors about the price at which the distributors can resell the perfume.The distributors who do not agree to the pricing suggestion are not able to sell the perfume.The agreement between manufacturers and distributors is

Suppose there are 6 firms in an industry with the following market shares.If the two smallest firms want to merge, how will the Federal Trade Commission reply? Firm 1: 30 Firm 2: 25 Firm 3: 25 Firm 4: 10 Firm 5: 7 Firm 6: 3

Oligopoly is

What is a cartel?

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

Tying arrangements are

Which of the following provisions require a firm to buy all of a particular item from a single firm?

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 ________.

A market with only two firms is called a

A cartel is

Resale price maintenance is efficient if

Does an oligopoly produce the efficient quantity of output or does it create a deadweight loss? Do the firms want to produce the efficient quantity of output? Explain your answer.

A firm faces a small number of competitors.This firm is competing in

Predatory pricing occurs when a firm sets a ________ price to drive competitors out of business with the intention of then setting a ________ price.

The focus of antitrust legislation is to

What are the actions that are prohibited according to the Clayton Act and its amendments.What conditions must be met for these actions to be prohibited?

"If an industry's Herfindahl-Hirschman Index is below 1,000, a merger between any two firms in that industry will be disallowed." Comment on the accuracy of the previous statement.

The manufacturer of perfume enters into an agreement with several distributors about the price at which the distributors can resell the perfume.The distributors who do not agree to the pricing suggestion are not able to sell the perfume.The agreement between manufacturers and distributors is

Suppose there are 6 firms in an industry with the following market shares.If the two smallest firms want to merge, how will the Federal Trade Commission reply? Firm 1: 30 Firm 2: 25 Firm 3: 25 Firm 4: 10 Firm 5: 7 Firm 6: 3

Oligopoly is

What is a cartel?

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

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 .

Predatory pricing occurs when a firm sets a price to drive competitors out of business with the intention of then setting a price.