Question 1

If Polka Cola agrees to sell its cola to a retailer only if the retailer also buys a lemon-lime drink, Polka Up, then Polka Cola is engaged in

Accepted Answer

A) a tying arrangement. 
B) a requirement contracts. 
C) an exclusive deal. 
D) territorial confinement. 
E) price discrimination. 
A) a tying arrangement. 
B) a requirement contracts. 
C) an exclusive deal. 
D) territorial confinement. 
E) price discrimination.

Question 2

Daryl's Inc.has formed a cartel with the two other firms in its industry.In which of the following market structures does Daryl's operate?

Accepted Answer

A) monopolistic competition. 
B) oligopoly. 
C) perfect competition. 
D) monopoly. 
E) legally protected monopoly. 
A) monopolistic competition. 
B) oligopoly. 
C) perfect competition. 
D) monopoly. 
E) legally protected monopoly.

Question 3

________ is an agreement between a manufacturer and a distributor on the price at which a product will be resold.

Accepted Answer

A) Resale price maintenance 
B) Price discrimination 
C) Price fixing 
D) Predatory pricing 
E) A tying arrangement 
A) Resale price maintenance 
B) Price discrimination 
C) Price fixing 
D) Predatory pricing 
E) A tying arrangement

Question 4

-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 efficient scale for one firm is ________ units per hour.

Accepted Answer

A) 2,000 
B) 4,000 
C) 8,000 
D) 10,000 
E) more than 10,000 
A) 2,000 
B) 4,000 
C) 8,000 
D) 10,000 
E) more than 10,000

Question 5

A Nash equilibrium
I∙is named after the Nobel prize winning economist, John Nash.
Ii∙occurs when each player chooses the best strategy given the strategy of the other player.
Iii∙must give the best possible outcome for both players.

Accepted Answer

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

Question 6

The government believes that which entry barrier has allowed Microsoft to gain monopoly power?

Accepted Answer

A) ownership of the entire supply of a resource 
B) patents 
C) trademarks 
D) economies of scale and network economies 
E) territorial confinement 
A) ownership of the entire supply of a resource 
B) patents 
C) trademarks 
D) economies of scale and network economies 
E) territorial confinement

Question 7

Which of the following is an example of a tying arrangement?

Accepted Answer

A) preventing a buyer from reselling a product outside a specific area 
B) selling one product only if another product is purchased 
C) forcing the purchase of all necessities from a single firm 
D) prohibiting a seller from selling a competing item 
E) selling different units of a good to the same buyer at different prices. 
A) preventing a buyer from reselling a product outside a specific area 
B) selling one product only if another product is purchased 
C) forcing the purchase of all necessities from a single firm 
D) prohibiting a seller from selling a competing item 
E) selling different units of a good to the same buyer at different prices.

Question 8

If a legal oligopoly exists,

Accepted Answer

A) the firms always engage in a "tit for tat" strategy. 
B) there is the possibility that the market is large enough for more firms. 
C) the firms never collude. 
D) monopoly profits cannot be earned. 
E) the firms may legally merge and become a monopoly. 
A) the firms always engage in a "tit for tat" strategy. 
B) there is the possibility that the market is large enough for more firms. 
C) the firms never collude. 
D) monopoly profits cannot be earned. 
E) the firms may legally merge and become a monopoly.

Question 9

The players in a game theory situation often do not act in their joint interest because of which of the following?

Accepted Answer

A) They do not realize the benefit of cooperation. 
B) Players strive to minimize their opponents' profits. 
C) Players do not understand the game and its payoffs. 
D) It is not in each player's self-interest to cooperate. 
E) Players understand the game but they do not know which action(s)will benefit their joint interest. 
A) They do not realize the benefit of cooperation. 
B) Players strive to minimize their opponents' profits. 
C) Players do not understand the game and its payoffs. 
D) It is not in each player's self-interest to cooperate. 
E) Players understand the game but they do not know which action(s)will benefit their joint interest.

Question 10

OPEC, the Organization of Petroleum Exporting Countries, was formed in Baghdad in 1960.Since its formation, this cartel has suffered from a major problem with respect to the quota (limit)of output it assigns each member nation.What is OPEC's goal and what sort of quota do you think the cartel assigns? How and why do nations cheat on their quota? What happens when a nation cheats on its quota?

Accepted Answer

In order to keep oil prices high, as has

Question 11

All games have which features?

Accepted Answer

A) prices, rules, and payoffs 
B) rules, markets, and prices 
C) rules, strategies, and payoffs 
D) rules, strategies, and costs 
E) equilibrium, prices, and quantities 
A) prices, rules, and payoffs 
B) rules, markets, and prices 
C) rules, strategies, and payoffs 
D) rules, strategies, and costs 
E) equilibrium, prices, and quantities

Question 12

In a prisoners' dilemma game, in the Nash equilibrium

Accepted Answer

A) neither player gets his or her best outcome. 
B) both players get their best outcome. 
C) one player gets his or her best outcome and the other player does not. 
D) collusion would not alter the outcome. 
E) Either answer A or C might be correct depending on whether the players communicate with each other or do not communicate with each other. 
A) neither player gets his or her best outcome. 
B) both players get their best outcome. 
C) one player gets his or her best outcome and the other player does not. 
D) collusion would not alter the outcome. 
E) Either answer A or C might be correct depending on whether the players communicate with each other or do not communicate with each other.

Question 13

Setting a price so low that competitors are driven out of a market and then boosting the price is called

Accepted Answer

A) predatory pricing. 
B) a tying arrangement. 
C) resale price maintenance. 
D) price fixing. 
E) price discrimination. 
A) predatory pricing. 
B) a tying arrangement. 
C) resale price maintenance. 
D) price fixing. 
E) price discrimination.

Question 14

-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 figure shows a ________ can profitably operate.

Accepted Answer

A) natural monopoly in which 1 firm 
B) natural oligopoly in which 2 firms 
C) natural oligopoly in which 3 firms 
D) natural oligopoly in which 4 firms 
E) natural oligopoly in which 5 or more firms 
A) natural monopoly in which 1 firm 
B) natural oligopoly in which 2 firms 
C) natural oligopoly in which 3 firms 
D) natural oligopoly in which 4 firms 
E) natural oligopoly in which 5 or more firms

Question 15

-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.In the Nash equilibrium, Firm A will set a price of ________ and Firm B will set a price of ________.

Accepted Answer

A) $10; $20 
B) $20; $10 
C) $10; $10 
D) $20; $20 
E) $20; something, but more information is needed to determine Firm B's price 
A) $10; $20 
B) $20; $10 
C) $10; $10 
D) $20; $20 
E) $20; something, but more information is needed to determine Firm B's price

Question 16

When a city licenses only 3 taxi firms to serve the market, the city has created a

Accepted Answer

A) cartel. 
B) legal monopoly. 
C) monopolistically competitive market. 
D) legal oligopoly. 
E) natural oligopoly. 
A) cartel. 
B) legal monopoly. 
C) monopolistically competitive market. 
D) legal oligopoly. 
E) natural oligopoly.

Question 17

Suppose that an industry has an HHI of 1,900.Two firms in the industry want to merge.Under which conditions will the Federal Trade Commission challenge the merger?

Accepted Answer

A) The market is considered competitive, so the merger will not be challenged. 
B) The merger will be challenged if it raises the HHI by 100 or more points. 
C) The merger will be challenged if it raises the HHI by 50 or more points. 
D) The merger will be challenged if it raises the HHI by 200 or more points. 
E) The merger will be challenged if it raises the HHI by 500 or more points. 
A) The market is considered competitive, so the merger will not be challenged. 
B) The merger will be challenged if it raises the HHI by 100 or more points. 
C) The merger will be challenged if it raises the HHI by 50 or more points. 
D) The merger will be challenged if it raises the HHI by 200 or more points. 
E) The merger will be challenged if it raises the HHI by 500 or more points.

Question 18

Which of the following is found ONLY in oligopoly?

Accepted Answer

A) producers who sell identical products 
B) one firm's actions affect another firm's profit 
C) entry into the industry is blocked 
D) sellers face a downward sloping demand curve for their product 
E) the firm's demand curve is horizontal 
A) producers who sell identical products 
B) one firm's actions affect another firm's profit 
C) entry into the industry is blocked 
D) sellers face a downward sloping demand curve for their product 
E) the firm's demand curve is horizontal

Question 19

-If two duopolists can stick to a cartel agreement to boost their prices, then both

Accepted Answer

A) make greater economic profits than if they did not collude. 
B) price at marginal cost. 
C) price below average total cost. 
D) decrease their economic profits. 
E) increase their production so that each produces more than if they did not collude. 
A) make greater economic profits than if they did not collude. 
B) price at marginal cost. 
C) price below average total cost. 
D) decrease their economic profits. 
E) increase their production so that each produces more than if they did not collude.

Question 20

-If an oligopolistic game is repeatedly played, which of the following can occur?

Accepted Answer

A) Players can learn ways to cooperate and make an economic profit. 
B) The competitive price and output consistently is the final result. 
C) Firms can learn how to cheat more effectively on the other player. 
D) One firm will be driven out of business. 
E) An implicit agreement is reached in which one firm constantly cheats on the cartel and the other firm complies with it. 
A) Players can learn ways to cooperate and make an economic profit. 
B) The competitive price and output consistently is the final result. 
C) Firms can learn how to cheat more effectively on the other player. 
D) One firm will be driven out of business. 
E) An implicit agreement is reached in which one firm constantly cheats on the cartel and the other firm complies with it.

If Polka Cola agrees to sell its cola to a retailer only if the retailer also buys a lemon-lime drink, Polka Up, then Polka Cola is engaged in

Daryl's Inc.has formed a cartel with the two other firms in its industry.In which of the following market structures does Daryl's operate?

________ is an agreement between a manufacturer and a distributor on the price at which a product will be resold.

-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 efficient scale for one firm is ________ units per hour.

A Nash equilibrium I∙is named after the Nobel prize winning economist, John Nash. Ii∙occurs when each player chooses the best strategy given the strategy of the other player. Iii∙must give the best possible outcome for both players.

The government believes that which entry barrier has allowed Microsoft to gain monopoly power?

Which of the following is an example of a tying arrangement?

If a legal oligopoly exists,

The players in a game theory situation often do not act in their joint interest because of which of the following?

All games have which features?

In a prisoners' dilemma game, in the Nash equilibrium

Setting a price so low that competitors are driven out of a market and then boosting the price is called

-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 figure shows a ________ can profitably operate.

-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.In the Nash equilibrium, Firm A will set a price of and Firm B will set a price of .

When a city licenses only 3 taxi firms to serve the market, the city has created a

Suppose that an industry has an HHI of 1,900.Two firms in the industry want to merge.Under which conditions will the Federal Trade Commission challenge the merger?

Which of the following is found ONLY in oligopoly?

-If two duopolists can stick to a cartel agreement to boost their prices, then both

-If an oligopolistic game is repeatedly played, which of the following can occur?

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

If Polka Cola agrees to sell its cola to a retailer only if the retailer also buys a lemon-lime drink, Polka Up, then Polka Cola is engaged in

Daryl's Inc.has formed a cartel with the two other firms in its industry.In which of the following market structures does Daryl's operate?

________ is an agreement between a manufacturer and a distributor on the price at which a product will be resold.

-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 efficient scale for one firm is ________ units per hour.

A Nash equilibrium I∙is named after the Nobel prize winning economist, John Nash. Ii∙occurs when each player chooses the best strategy given the strategy of the other player. Iii∙must give the best possible outcome for both players.

The government believes that which entry barrier has allowed Microsoft to gain monopoly power?

Which of the following is an example of a tying arrangement?

If a legal oligopoly exists,

The players in a game theory situation often do not act in their joint interest because of which of the following?

All games have which features?

In a prisoners' dilemma game, in the Nash equilibrium

Setting a price so low that competitors are driven out of a market and then boosting the price is called

-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 figure shows a ________ can profitably operate.

-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.In the Nash equilibrium, Firm A will set a price of ________ and Firm B will set a price of ________.

When a city licenses only 3 taxi firms to serve the market, the city has created a

Suppose that an industry has an HHI of 1,900.Two firms in the industry want to merge.Under which conditions will the Federal Trade Commission challenge the merger?

Which of the following is found ONLY in oligopoly?

-If two duopolists can stick to a cartel agreement to boost their prices, then both

-If an oligopolistic game is repeatedly played, which of the following can occur?

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

-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.In the Nash equilibrium, Firm A will set a price of and Firm B will set a price of .