Question 1

A cartel is

Accepted Answer

A) another name for a firm in an oligopoly. 
B) a collusive agreement among a number of firms. 
C) a government body that regulates an industry. 
D) an antitrust law. 
E) a type of regulation that focuses on quantities rather than price. 
A) another name for a firm in an oligopoly. 
B) a collusive agreement among a number of firms. 
C) a government body that regulates an industry. 
D) an antitrust law. 
E) a type of regulation that focuses on quantities rather than price.

Question 2

Game theory is the tool that economists use to analyze strategic behavior, which is behavior that takes into account the ________ behavior of others and the mutual recognition of ________.

Accepted Answer

A) unexpected; interdependence 
B) unexpected; independence 
C) expected; interdependence 
D) expected; independence 
E) random; profit 
A) unexpected; interdependence 
B) unexpected; independence 
C) expected; interdependence 
D) expected; independence 
E) random; profit

Question 3

If a firm engages in predatory pricing, it

Accepted Answer

A) is following marginal cost pricing. 
B) is following average cost pricing. 
C) sets a low price to drive rivals out of business. 
D) has been regulated using a price cap. 
E) is guilty of price fixing. 
A) is following marginal cost pricing. 
B) is following average cost pricing. 
C) sets a low price to drive rivals out of business. 
D) has been regulated using a price cap. 
E) is guilty of price fixing.

Question 4

If the HHI for an industry equals 3,200,

Accepted Answer

A) firms in the industry must enter a cartel in order to earn an economic profit. 
B) firms in the industry are most likely to make zero economic profit. 
C) the industry is probably an oligopoly. 
D) firms in the industry are likely to act independently of each other. 
E) the industry is almost surely monopolistic competition. 
A) firms in the industry must enter a cartel in order to earn an economic profit. 
B) firms in the industry are most likely to make zero economic profit. 
C) the industry is probably an oligopoly. 
D) firms in the industry are likely to act independently of each other. 
E) the industry is almost surely monopolistic competition.

Question 5

If an industry has an HHI of 2,500, the market structure is that of

Accepted Answer

A) a monopoly. 
B) monopolistic competition. 
C) an oligopoly. 
D) perfect competition. 
E) either monopoly or perfect competition, depending on the existence or absence of barriers to entry. 
A) a monopoly. 
B) monopolistic competition. 
C) an oligopoly. 
D) perfect competition. 
E) either monopoly or perfect competition, depending on the existence or absence of barriers to entry.

Question 6

Which of the following is always a violation of the antitrust law?

Accepted Answer

A) price fixing 
B) price discrimination 
C) resale price maintenance 
D) predatory pricing 
E) tying arrangements 
A) price fixing 
B) price discrimination 
C) resale price maintenance 
D) predatory pricing 
E) tying arrangements

Question 7

"The Clayton Act repealed the Sherman Act so that only the Clayton Act remains in force." Is the previous statement correct or incorrect?

Accepted Answer

The statement is inc

Question 8

Which of the following is (are)prohibited if it substantially lessens competition or creates a monopoly?
I∙price discrimination
Ii∙tying arrangements
Iii∙exclusive dealing

Accepted Answer

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

Question 9

Which of the following does antitrust law prohibit if it substantially lessens competition or creates a monopoly?
I∙acquiring a competitor's shares or assets
Ii∙territorial confinement
Iii∙becoming a director of a competing firm

Accepted Answer

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

Question 10

A Nash equilibrium in the duopoly game

Accepted Answer

A) means that one player has greater market power. 
B) occurs when each player takes the best possible action regardless of the strategy chosen by other firms. 
C) will always lead to equilibrium in which the firms' total profit is the largest. 
D) can occur only if firms cooperate with each other. 
E) means that a firm must be able to determine its actions and the actions of its competitor. 
A) means that one player has greater market power. 
B) occurs when each player takes the best possible action regardless of the strategy chosen by other firms. 
C) will always lead to equilibrium in which the firms' total profit is the largest. 
D) can occur only if firms cooperate with each other. 
E) means that a firm must be able to determine its actions and the actions of its competitor.

Question 11

Economists use game theory to analyze strategic behavior, which takes into account

Accepted Answer

A) monopoly situations. 
B) the expected behavior of others and the recognition of mutual interdependence. 
C) the price-taking behavior of oligopolists. 
D) non-price competition. 
E) that increased demand decreases the market power of the firms in the market. 
A) monopoly situations. 
B) the expected behavior of others and the recognition of mutual interdependence. 
C) the price-taking behavior of oligopolists. 
D) non-price competition. 
E) that increased demand decreases the market power of the firms in the market.

Question 12

Which of the following statements is correct?

Accepted Answer

A) A firm in oligopoly will charge a price that is lower than the price charged in perfect competition. 
B) If firms in oligopoly look only at their own self-interest in deciding the output they should produce, the total market output will exceed that of a monopoly. 
C) If one oligopolist reduces the price of its product, its demand curve shifts leftward. 
D) Because many producers join to form a cartel, the market becomes monopolistic competition. 
E) It is in the self-interest of each firm in an oligopoly to take the actions that maximize all the firms' joint profit. 
A) A firm in oligopoly will charge a price that is lower than the price charged in perfect competition. 
B) If firms in oligopoly look only at their own self-interest in deciding the output they should produce, the total market output will exceed that of a monopoly. 
C) If one oligopolist reduces the price of its product, its demand curve shifts leftward. 
D) Because many producers join to form a cartel, the market becomes monopolistic competition. 
E) It is in the self-interest of each firm in an oligopoly to take the actions that maximize all the firms' joint profit.

Question 13

Under the Clayton Act and its amendments, which of the following activities is illegal if it creates monopoly?
I∙contracts that require other goods to be bought from the same firm
Ii∙contracts that prevent a buyer from reselling a product outside a specified area
Iii∙becoming a director of a competing firm

Accepted Answer

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

Question 14

The prisoners' dilemma is

Accepted Answer

A) an example of a duopoly game. 
B) a theory about why firms break the law. 
C) competition that can occur among firms in monopolistic competition. 
D) an example of the monopolist charging high prices. 
E) an example of a game that does not have a Nash equilibrium. 
A) an example of a duopoly game. 
B) a theory about why firms break the law. 
C) competition that can occur among firms in monopolistic competition. 
D) an example of the monopolist charging high prices. 
E) an example of a game that does not have a Nash equilibrium.

Question 15

If firms in an oligopolistic industry successfully collude and form a cartel, what price and output will result?

Accepted Answer

A) the monopoly price and output 
B) the competitive price and output 
C) the monopolistically competitive price and output 
D) a price higher than the monopoly price and, because there is more than one firm in the industry, more output than the monopoly amount 
E) a price lower than the competitive price and, because there are only a few firms in the industry, less output than the competitive amount 
A) the monopoly price and output 
B) the competitive price and output 
C) the monopolistically competitive price and output 
D) a price higher than the monopoly price and, because there is more than one firm in the industry, more output than the monopoly amount 
E) a price lower than the competitive price and, because there are only a few firms in the industry, less output than the competitive amount

Question 16

Which of the following are U.S.antitrust laws?
I∙The Rockefeller Act
Ii∙The Sherman Act
Iii∙The Natural Monopoly Act

Accepted Answer

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

Question 17

A characteristic common in both oligopoly and monopolistic competition is:

Accepted Answer

A) a small number of firms compete in the market. 
B) natural or legal barriers prevent the entry of new firms into the market. 
C) each firm faces a downward-sloping demand curve. 
D) the firms in the market are interdependent. 
E) each firm has a large share of the market. 
A) a small number of firms compete in the market. 
B) natural or legal barriers prevent the entry of new firms into the market. 
C) each firm faces a downward-sloping demand curve. 
D) the firms in the market are interdependent. 
E) each firm has a large share of the market.

Question 18

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 19

In a market with a Herfindahl-Hirschman Index of 2,000, according to their guidelines will the Department of Justice challenge a merger that would increase the index by 50?

Accepted Answer

Yes, according to their guidelines the F

Question 20

-The only two firms in a market are trying to decide what price to charge.The payoff matrix for this duopoly game is shown above.The payoffs are thousands of dollars of economic profit.Which of the following statements is correct?

Accepted Answer

A) If the firms play this game repeatedly, one would end up charging $20 and the other $10. 
B) If the firms cooperate, both could make $55,000 in economic profit. 
C) The Nash equilibrium in this game is for both firms to set P = $20 because that maximizes their combined profit. 
D) Firm B's strategy is to always set P = $20 because that gives Firm B the highest possible profit. 
E) If Firm B sets P = $20, then Firm A will maximize its profit by setting its P = $20. 
A) If the firms play this game repeatedly, one would end up charging $20 and the other $10. 
B) If the firms cooperate, both could make $55,000 in economic profit. 
C) The Nash equilibrium in this game is for both firms to set P = $20 because that maximizes their combined profit. 
D) Firm B's strategy is to always set P = $20 because that gives Firm B the highest possible profit. 
E) If Firm B sets P = $20, then Firm A will maximize its profit by setting its P = $20.

A cartel is

Game theory is the tool that economists use to analyze strategic behavior, which is behavior that takes into account the behavior of others and the mutual recognition of .

If a firm engages in predatory pricing, it

If the HHI for an industry equals 3,200,

If an industry has an HHI of 2,500, the market structure is that of

Which of the following is always a violation of the antitrust law?

"The Clayton Act repealed the Sherman Act so that only the Clayton Act remains in force." Is the previous statement correct or incorrect?

Which of the following is (are)prohibited if it substantially lessens competition or creates a monopoly? I∙price discrimination Ii∙tying arrangements Iii∙exclusive dealing

Which of the following does antitrust law prohibit if it substantially lessens competition or creates a monopoly? I∙acquiring a competitor's shares or assets Ii∙territorial confinement Iii∙becoming a director of a competing firm

A Nash equilibrium in the duopoly game

Economists use game theory to analyze strategic behavior, which takes into account

Which of the following statements is correct?

The prisoners' dilemma is

If firms in an oligopolistic industry successfully collude and form a cartel, what price and output will result?

Which of the following are U.S.antitrust laws? I∙The Rockefeller Act Ii∙The Sherman Act Iii∙The Natural Monopoly Act

A characteristic common in both oligopoly and monopolistic competition is:

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

In a market with a Herfindahl-Hirschman Index of 2,000, according to their guidelines will the Department of Justice challenge a merger that would increase the index by 50?

-The only two firms in a market are trying to decide what price to charge.The payoff matrix for this duopoly game is shown above.The payoffs are thousands of dollars of economic profit.Which of the following statements is correct?

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

A cartel is

Game theory is the tool that economists use to analyze strategic behavior, which is behavior that takes into account the ________ behavior of others and the mutual recognition of ________.

If a firm engages in predatory pricing, it

If the HHI for an industry equals 3,200,

If an industry has an HHI of 2,500, the market structure is that of

Which of the following is always a violation of the antitrust law?

"The Clayton Act repealed the Sherman Act so that only the Clayton Act remains in force." Is the previous statement correct or incorrect?

Which of the following is (are)prohibited if it substantially lessens competition or creates a monopoly? I∙price discrimination Ii∙tying arrangements Iii∙exclusive dealing

Which of the following does antitrust law prohibit if it substantially lessens competition or creates a monopoly? I∙acquiring a competitor's shares or assets Ii∙territorial confinement Iii∙becoming a director of a competing firm

A Nash equilibrium in the duopoly game

Economists use game theory to analyze strategic behavior, which takes into account

Which of the following statements is correct?

The prisoners' dilemma is

If firms in an oligopolistic industry successfully collude and form a cartel, what price and output will result?

Which of the following are U.S.antitrust laws? I∙The Rockefeller Act Ii∙The Sherman Act Iii∙The Natural Monopoly Act

A characteristic common in both oligopoly and monopolistic competition is:

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

In a market with a Herfindahl-Hirschman Index of 2,000, according to their guidelines will the Department of Justice challenge a merger that would increase the index by 50?

-The only two firms in a market are trying to decide what price to charge.The payoff matrix for this duopoly game is shown above.The payoffs are thousands of dollars of economic profit.Which of the following statements is correct?

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

Game theory is the tool that economists use to analyze strategic behavior, which is behavior that takes into account the behavior of others and the mutual recognition of .