Question 1

The Bertrand model is a more plausible model of firm behavior than the Cournot model

Accepted Answer

A)  when firms set the quantity to be sold. 
B)  when firms sell a differentiated product. 
C)  because firms that sell a non-differentiated product typically act as price takers. 
D)  because the Bertrand model predicts that firms will price at marginal cost. 
A)  when firms set the quantity to be sold. 
B)  when firms sell a differentiated product. 
C)  because firms that sell a non-differentiated product typically act as price takers. 
D)  because the Bertrand model predicts that firms will price at marginal cost.

Question 2

Which of the following does NOT influence the type of oligopoly that forms?

Accepted Answer

A)  whether firms act sequentially or simultaneously 
B)  whether firms set price or quantity 
C)  the type of demand curve the firms face 
D)  the time horizon over which firms will be in competition 
A)  whether firms act sequentially or simultaneously 
B)  whether firms set price or quantity 
C)  the type of demand curve the firms face 
D)  the time horizon over which firms will be in competition

Question 3

-The above figure shows the reaction functions for two pizza shops in a small isolated town.The Cournot equilibrium is at point

Accepted Answer

A)  a. 
B)  b. 
C)  c. 
D)  d. 
A)  a. 
B)  b. 
C)  c. 
D)  d.

Question 4

Cartels are inherently self-destructive because each member firm has the incentive to cheat on the cartel agreement.

Accepted Answer

A) True 
 B)False

Question 5

A typical firm in a cartel will hold which of the following attitudes?

Accepted Answer

A)  If everyone cheats, I'm better off, and so is everyone in the cartel. 
B)  If I alone cheat, I'm better off; if everyone cheats, I'm worse off. 
C)  I can never do better for myself than following agreed-upon cartel rules. 
D)  If I suspect others are planning to cheat, I'll do best for myself by deciding not to cheat. 
A)  If everyone cheats, I'm better off, and so is everyone in the cartel. 
B)  If I alone cheat, I'm better off; if everyone cheats, I'm worse off. 
C)  I can never do better for myself than following agreed-upon cartel rules. 
D)  If I suspect others are planning to cheat, I'll do best for myself by deciding not to cheat.

Question 6

Explain why gasoline stations across the street from each other with large signs displaying their prices may "legally" jointly set monopoly prices.

Accepted Answer

A gasoline station posts its prices on a

Question 7

In monopolistically competitive markets

Accepted Answer

A)  price is greater than it would be in perfect competition. 
B)  price is less than it would be in perfect monopoly. 
C)  quantity is greater than it would be in perfect monopoly. 
D)  All of the above. 
A)  price is greater than it would be in perfect competition. 
B)  price is less than it would be in perfect monopoly. 
C)  quantity is greater than it would be in perfect monopoly. 
D)  All of the above.

Question 8

Is it true that in the long run,a monopolistically competitive firm has market power but earns no profit? Explain.

Accepted Answer

As strange as it sounds,yes.The firm ear

Question 9

Television stations have seemingly synchronized their commercial breaks.This is likely an example of

Accepted Answer

A)  tacit collusion. 
B)  explicit collusion. 
C)  mixed strategies. 
D)  pure strategies. 
A)  tacit collusion. 
B)  explicit collusion. 
C)  mixed strategies. 
D)  pure strategies.

Question 10

Assuming a homogeneous product,the Bertrand duopoly equilibrium price is

Accepted Answer

A)  the same as the Cournot equilibrium price. 
B)  less than the Cournot equilibrium price. 
C)  greater than the Cournot equilibrium price. 
D)  equal to the monopoly price. 
A)  the same as the Cournot equilibrium price. 
B)  less than the Cournot equilibrium price. 
C)  greater than the Cournot equilibrium price. 
D)  equal to the monopoly price.

Question 11

In the simplest version of the Cournot model,we assume the firms

Accepted Answer

A)  set price independently and simultaneously. 
B)  set quantities independently and sequentially. 
C)  sell identical products. 
D)  the firms are in a Nash equilibrium. 
A)  set price independently and simultaneously. 
B)  set quantities independently and sequentially. 
C)  sell identical products. 
D)  the firms are in a Nash equilibrium.

Question 12

The use of "most-favored-customer" clauses is an example of

Accepted Answer

A)  incenting members to maintain the cartel, because if they lower the price for one customer, they have to lower it for previous customers as well. 
B)  incenting members to maintain the cartel, because if they raise the price for one customer, they have to raise it for previous customers as well. 
C)  giving customers special perks for purchasing goods from members of the cartel. 
D)  selling higher quality goods and services to favorite customers. 
A)  incenting members to maintain the cartel, because if they lower the price for one customer, they have to lower it for previous customers as well. 
B)  incenting members to maintain the cartel, because if they raise the price for one customer, they have to raise it for previous customers as well. 
C)  giving customers special perks for purchasing goods from members of the cartel. 
D)  selling higher quality goods and services to favorite customers.

Question 13

The market for electricians in a small town might have a different structure than in a large city because

Accepted Answer

A)  cartels are legal in large cities but not in small towns. 
B)  the small town market can only support a few electricians. 
C)  unions are stronger in large cities than in small towns. 
D)  None of the above. 
A)  cartels are legal in large cities but not in small towns. 
B)  the small town market can only support a few electricians. 
C)  unions are stronger in large cities than in small towns. 
D)  None of the above.

Question 14

Monopolistically competitive firms face downward sloping residual demand curves because these firms

Accepted Answer

A)  have relatively few rivals (compared to competition). 
B)  sell differentiated products. 
C)  A and/or B. 
D)  None of the above. 
A)  have relatively few rivals (compared to competition). 
B)  sell differentiated products. 
C)  A and/or B. 
D)  None of the above.

Question 15

Which of the following is a current example of a government-granted cartel?

Accepted Answer

A)  the "Big Three" accounting firms 
B)  the U.S. automobile industry 
C)  U.S. professional baseball 
D)  the U.S. airline industry 
A)  the "Big Three" accounting firms 
B)  the U.S. automobile industry 
C)  U.S. professional baseball 
D)  the U.S. airline industry

Question 16

The Cournot Model of Oligopoly assumes that

Accepted Answer

A)  firms decide what quantity to produce. 
B)  firms make their decisions simultaneously. 
C)  firms do not cooperate. 
D)  All of the above. 
A)  firms decide what quantity to produce. 
B)  firms make their decisions simultaneously. 
C)  firms do not cooperate. 
D)  All of the above.

Question 17

If a firm is selling a quantity that is not on its best-response curve it

Accepted Answer

A)  will go out of business. 
B)  is in a Nash equilibrium. 
C)  will want to change its behavior. 
D)  is operating in a duopoly. 
A)  will go out of business. 
B)  is in a Nash equilibrium. 
C)  will want to change its behavior. 
D)  is operating in a duopoly.

Question 18

Compared to a cartel,firms in a Cournot Oligopoly

Accepted Answer

A)  make more joint profit. 
B)  sell less output. 
C)  make less joint profit. 
D)  act independently. 
A)  make more joint profit. 
B)  sell less output. 
C)  make less joint profit. 
D)  act independently.

Question 19

In the long run a monopolistic competitor

Accepted Answer

A)  set MR = MC. 
B)  produces where P = AC. 
C)  sets P > MC. 
D)  All of the above. 
A)  set MR = MC. 
B)  produces where P = AC. 
C)  sets P > MC. 
D)  All of the above.

Question 20

In the Cournot model

Accepted Answer

A)  market price is unaffected by the actions of any individual firm. 
B)  firms do not have to worry about the strategies of the other firms. 
C)  firms' profits are independent. 
D)  firms' profits are interdependent. 
A)  market price is unaffected by the actions of any individual firm. 
B)  firms do not have to worry about the strategies of the other firms. 
C)  firms' profits are independent. 
D)  firms' profits are interdependent.

The Bertrand model is a more plausible model of firm behavior than the Cournot model

Which of the following does NOT influence the type of oligopoly that forms?

-The above figure shows the reaction functions for two pizza shops in a small isolated town.The Cournot equilibrium is at point

Cartels are inherently self-destructive because each member firm has the incentive to cheat on the cartel agreement.

A typical firm in a cartel will hold which of the following attitudes?

Explain why gasoline stations across the street from each other with large signs displaying their prices may "legally" jointly set monopoly prices.

In monopolistically competitive markets

Is it true that in the long run,a monopolistically competitive firm has market power but earns no profit? Explain.

Television stations have seemingly synchronized their commercial breaks.This is likely an example of

Assuming a homogeneous product,the Bertrand duopoly equilibrium price is

In the simplest version of the Cournot model,we assume the firms

The use of "most-favored-customer" clauses is an example of

The market for electricians in a small town might have a different structure than in a large city because

Monopolistically competitive firms face downward sloping residual demand curves because these firms

Which of the following is a current example of a government-granted cartel?

The Cournot Model of Oligopoly assumes that

If a firm is selling a quantity that is not on its best-response curve it

Compared to a cartel,firms in a Cournot Oligopoly

In the long run a monopolistic competitor

In the Cournot model

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 11: Oligopoly and Monopolistic Competition

The Bertrand model is a more plausible model of firm behavior than the Cournot model

Which of the following does NOT influence the type of oligopoly that forms?

-The above figure shows the reaction functions for two pizza shops in a small isolated town.The Cournot equilibrium is at point

Cartels are inherently self-destructive because each member firm has the incentive to cheat on the cartel agreement.

A typical firm in a cartel will hold which of the following attitudes?

Explain why gasoline stations across the street from each other with large signs displaying their prices may "legally" jointly set monopoly prices.

In monopolistically competitive markets

Is it true that in the long run,a monopolistically competitive firm has market power but earns no profit? Explain.

Television stations have seemingly synchronized their commercial breaks.This is likely an example of

Assuming a homogeneous product,the Bertrand duopoly equilibrium price is

In the simplest version of the Cournot model,we assume the firms

The use of "most-favored-customer" clauses is an example of

The market for electricians in a small town might have a different structure than in a large city because

Monopolistically competitive firms face downward sloping residual demand curves because these firms

Which of the following is a current example of a government-granted cartel?

The Cournot Model of Oligopoly assumes that

If a firm is selling a quantity that is not on its best-response curve it

Compared to a cartel,firms in a Cournot Oligopoly

In the long run a monopolistic competitor

In the Cournot model

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters