Question 1

-Refer to Figure 12.8.If both firms follow their dominant strategies,Firm A will earn profits equal to

Accepted Answer

A)  $700. 
B)  $500. 
C)  $200. 
D)  $100. 
A)  $700. 
B)  $500. 
C)  $200. 
D)  $100.

Question 2

The cereal industry is an example of a oligopolistic industry.

Accepted Answer

A) True 
 B)False

Question 3

A dominant strategy exists when a firm's choice is the best regardless of other firms' decisions.

Accepted Answer

A) True 
 B)False

Question 4

The Nash equilibrium is an outcome of a game

Accepted Answer

A)  when each player is doing the best he or she can, given the actions of the other players. 
B)  in which each player has a competitive advantage over the other players. 
C)  in which there are no winners only losers. 
D)  when all the possibilities are revealed to the players. 
A)  when each player is doing the best he or she can, given the actions of the other players. 
B)  in which each player has a competitive advantage over the other players. 
C)  in which there are no winners only losers. 
D)  when all the possibilities are revealed to the players.

Question 5

Which of the following best defines the advertisers' dilemma?

Accepted Answer

A)  Firms A and B will be better off spending money on advertising, however each firm decides not to advertise. 
B)  Firms A and B will be better off not spending money on advertising, however each firm decides to advertise. 
C)  Firm A advertises, but firm B does not advertise. 
D)  Firm B advertises, but firm A does not advertise. 
A)  Firms A and B will be better off spending money on advertising, however each firm decides not to advertise. 
B)  Firms A and B will be better off not spending money on advertising, however each firm decides to advertise. 
C)  Firm A advertises, but firm B does not advertise. 
D)  Firm B advertises, but firm A does not advertise.

Question 6

Under what conditions does an oligopoly market result in the same outcome as monopoly? What does this imply for the oligopoly's long-run profits?

Accepted Answer

Oligopoly results in the monop

Question 7

An insecure monopolist can

Accepted Answer

A)  always deter entry by lowering the price of output. 
B)  deter entry in the short run but not the long run. 
C)  deter entry in the long run but not the short run. 
D)  deter entry if the minimum entry quantity is relatively large. 
A)  always deter entry by lowering the price of output. 
B)  deter entry in the short run but not the long run. 
C)  deter entry in the long run but not the short run. 
D)  deter entry if the minimum entry quantity is relatively large.

Question 8

An arrangement in which firms conspire to fix prices is called

Accepted Answer

A)  a cartel. 
B)  price ceiling. 
C)  price fixing. 
D)  a duopoly. 
A)  a cartel. 
B)  price ceiling. 
C)  price fixing. 
D)  a duopoly.

Question 9

-Refer to Figure 12.9.If both firms follow their dominant strategies,Firm Y will earn profits equal to

Accepted Answer

A)  $200. 
B)  $300. 
C)  $400. 
D)  $600. 
A)  $200. 
B)  $300. 
C)  $400. 
D)  $600.

Question 10

-Refer to Figure 12.8.Which of the following would be a Nash equilibrium?

Accepted Answer

A)  Both A and B advertise. 
B)  Both A and B do not advertise. 
C)  A advertises and B does not. 
D)  B advertises and A does not. 
A)  Both A and B advertise. 
B)  Both A and B do not advertise. 
C)  A advertises and B does not. 
D)  B advertises and A does not.

Question 11

Recall the Application about the economics professor who caught three students cheating on their final exam to answer the following question(s).
-Recall the Application.How many of the three students confessed when the professor questioned them about cheating?

Accepted Answer

A)  none 
B)  one 
C)  two 
D)  three 
A)  none 
B)  one 
C)  two 
D)  three

Question 12

Under price leadership,when firm A suddenly drops its price,what could its competitors interpret by the drop in price?

Accepted Answer

A)  Firm A is breaking an explicit pricing agreement. 
B)  Firm A is forming a cartel. 
C)  Firm A is not cooperating with the price fixing. 
D)  Firm A observed a change in demand or production. 
A)  Firm A is breaking an explicit pricing agreement. 
B)  Firm A is forming a cartel. 
C)  Firm A is not cooperating with the price fixing. 
D)  Firm A observed a change in demand or production.

Question 13

An oligopolistic industry has barriers to entry.

Accepted Answer

A) True 
 B)False

Question 14

12.3 Simultaneous Decision Making and the Payoff Matrix
  
-Refer to Figure 12.7.The numerical data show daily profits for each of the two firms when they choose a specific pricing strategy.If Zeta commits to charging a high price,Omega can earn the largest profit by

Accepted Answer

A)  also charging a high price. 
B)  charging a low price. 
C)  convincing Zeta to charge a low price and then matching it. 
D)  doing none of the above. 
A)  also charging a high price. 
B)  charging a low price. 
C)  convincing Zeta to charge a low price and then matching it. 
D)  doing none of the above.

Question 15

A cartel is

Accepted Answer

A)  a group of firms that coordinate their pricing and quantity decisions. 
B)  a type of oligopoly in which the demand curve is "kinked." 
C)  a duopoly market where firms have the exact product. 
D)  a group of firms that all produce the same level of output. 
A)  a group of firms that coordinate their pricing and quantity decisions. 
B)  a type of oligopoly in which the demand curve is "kinked." 
C)  a duopoly market where firms have the exact product. 
D)  a group of firms that all produce the same level of output.

Question 16

If an insecure monopolist needs to determine what strategy will be best to prevent a second firm from entering the market,what could be the key variable to use when determining the best strategy?

Accepted Answer

A)  minimum entry quantity 
B)  minimum exit quantity 
C)  maximum entry quantity 
D)  maximum exit quantity 
A)  minimum entry quantity 
B)  minimum exit quantity 
C)  maximum entry quantity 
D)  maximum exit quantity

-Refer to Figure 12.8.If both firms follow their dominant strategies,Firm A will earn profits equal to

The cereal industry is an example of a oligopolistic industry.

A dominant strategy exists when a firm's choice is the best regardless of other firms' decisions.

The Nash equilibrium is an outcome of a game

Which of the following best defines the advertisers' dilemma?

Under what conditions does an oligopoly market result in the same outcome as monopoly? What does this imply for the oligopoly's long-run profits?

An insecure monopolist can

An arrangement in which firms conspire to fix prices is called

-Refer to Figure 12.9.If both firms follow their dominant strategies,Firm Y will earn profits equal to

-Refer to Figure 12.8.Which of the following would be a Nash equilibrium?

Recall the Application about the economics professor who caught three students cheating on their final exam to answer the following question(s). -Recall the Application.How many of the three students confessed when the professor questioned them about cheating?

Under price leadership,when firm A suddenly drops its price,what could its competitors interpret by the drop in price?

An oligopolistic industry has barriers to entry.

12.3 Simultaneous Decision Making and the Payoff Matrix -Refer to Figure 12.7.The numerical data show daily profits for each of the two firms when they choose a specific pricing strategy.If Zeta commits to charging a high price,Omega can earn the largest profit by

A cartel is

If an insecure monopolist needs to determine what strategy will be best to prevent a second firm from entering the market,what could be the key variable to use when determining the best strategy?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 12: Oligopoly and Strategic Behavior

-Refer to Figure 12.8.If both firms follow their dominant strategies,Firm A will earn profits equal to

The cereal industry is an example of a oligopolistic industry.

A dominant strategy exists when a firm's choice is the best regardless of other firms' decisions.

The Nash equilibrium is an outcome of a game

Which of the following best defines the advertisers' dilemma?

Under what conditions does an oligopoly market result in the same outcome as monopoly? What does this imply for the oligopoly's long-run profits?

An insecure monopolist can

An arrangement in which firms conspire to fix prices is called

-Refer to Figure 12.9.If both firms follow their dominant strategies,Firm Y will earn profits equal to

-Refer to Figure 12.8.Which of the following would be a Nash equilibrium?

Recall the Application about the economics professor who caught three students cheating on their final exam to answer the following question(s). -Recall the Application.How many of the three students confessed when the professor questioned them about cheating?

Under price leadership,when firm A suddenly drops its price,what could its competitors interpret by the drop in price?

An oligopolistic industry has barriers to entry.

12.3 Simultaneous Decision Making and the Payoff Matrix -Refer to Figure 12.7.The numerical data show daily profits for each of the two firms when they choose a specific pricing strategy.If Zeta commits to charging a high price,Omega can earn the largest profit by

A cartel is

If an insecure monopolist needs to determine what strategy will be best to prevent a second firm from entering the market,what could be the key variable to use when determining the best strategy?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters