Question 1

The specific oligopolistic model used in a market

Accepted Answer

A)  depends on the pricing structure of the good or service sold. 
B)  depends on the characteristics of the market, such as time horizon for competition. 
C)  is usually a Cournot model, unless cartels are illegal. 
D)  All of the above. 
A)  depends on the pricing structure of the good or service sold. 
B)  depends on the characteristics of the market, such as time horizon for competition. 
C)  is usually a Cournot model, unless cartels are illegal. 
D)  All of the above.

Question 2

A cartel might fail because

Accepted Answer

A)  it does not control enough of the output in a market to raise prices enough. 
B)  there is an incentive for members to cheat. 
C)  too many firms leave the cartel, causing the cartel price to fall. 
D)  All of the above. 
A)  it does not control enough of the output in a market to raise prices enough. 
B)  there is an incentive for members to cheat. 
C)  too many firms leave the cartel, causing the cartel price to fall. 
D)  All of the above.

Question 3

Suppose the demand for pizza in a small isolated town is p = 10 - Q.There are only two firms,A and B,and each has a cost function TC = 2 + q.Determine the Cournot equilibrium.

Accepted Answer

The answer of Suppose the demand for pizza in a...

Question 4

-The above figure shows the reaction functions for two pizza shops in a small isolated town.Collusion would result in

Accepted Answer

A)  each firm producing 25 pizzas. 
B)  each firm producing 40 pizzas. 
C)  the firms splitting the production of 100 making 50 pizzas each. 
D)  firm A monopolizing the market by selling 50 pizzas. 
A)  each firm producing 25 pizzas. 
B)  each firm producing 40 pizzas. 
C)  the firms splitting the production of 100 making 50 pizzas each. 
D)  firm A monopolizing the market by selling 50 pizzas.

Question 5

A merger between a firm and one of its suppliers would be called

Accepted Answer

A)  a horizontal merger. 
B)  a vertical merger. 
C)  an anti-trust violation. 
D)  a Cournot merger. 
A)  a horizontal merger. 
B)  a vertical merger. 
C)  an anti-trust violation. 
D)  a Cournot merger.

Question 6

Mergers are closely scrutinized by the government because

Accepted Answer

A)  they might allow the firms involved to dominate the market and act as a legalized cartel (monopoly). 
B)  they always result in a more efficient market. 
C)  the always result in lower joint profits of the firms involved. 
D)  all mergers are undesirable. 
A)  they might allow the firms involved to dominate the market and act as a legalized cartel (monopoly). 
B)  they always result in a more efficient market. 
C)  the always result in lower joint profits of the firms involved. 
D)  all mergers are undesirable.

Question 7

Suppose two Cournot duopolist firms operate at zero marginal cost.The market demand is p = a - bQ.Firm 1's best-response function is

Accepted Answer

A)  q1= (a - b   )/2b. 
B)  q1= (a - 2b   )/2b. 
C)  q1= a/b. 
D)  q1= a/2b. 
A)  q1= (a - b   )/2b. 
B)  q1= (a - 2b   )/2b. 
C)  q1= a/b. 
D)  q1= a/2b.

Question 8

In the simplest version of the Cournot model,we assume

Accepted Answer

A)  the firms set quantities independently and simultaneously. 
B)  the firms have identical costs and sell identical products. 
C)  there are a small number of firms, and no other firm can enter the market. 
D)  All of the above. 
A)  the firms set quantities independently and simultaneously. 
B)  the firms have identical costs and sell identical products. 
C)  there are a small number of firms, and no other firm can enter the market. 
D)  All of the above.

Question 9

Each member of a cartel

Accepted Answer

A)  agrees to reduce output lower than it would if it were acting independently. 
B)  is operating illegally in every country in which it is doing business. 
C)  sets output independently of the impact on other members. 
D)  makes less money than it otherwise would. 
A)  agrees to reduce output lower than it would if it were acting independently. 
B)  is operating illegally in every country in which it is doing business. 
C)  sets output independently of the impact on other members. 
D)  makes less money than it otherwise would.

Question 10

A product can be differentiated through

Accepted Answer

A)  physical changes to the product. 
B)  marketing. 
C)  creating barriers to entry. 
D)  Both A and B. 
A)  physical changes to the product. 
B)  marketing. 
C)  creating barriers to entry. 
D)  Both A and B.

Question 11

Mergers may result in

Accepted Answer

A)  anticompetitive behavior. 
B)  more efficient production. 
C)  fewer firms in a market. 
D)  All of the above. 
A)  anticompetitive behavior. 
B)  more efficient production. 
C)  fewer firms in a market. 
D)  All of the above.

Question 12

If AC < p where MR = MC

Accepted Answer

A)  firms earn positive profits and new firms will enter. 
B)  firms earn negative profits and existing firms will leave. 
C)  firms earn zero profits and new firms will not enter. 
D)  None of the above. 
A)  firms earn positive profits and new firms will enter. 
B)  firms earn negative profits and existing firms will leave. 
C)  firms earn zero profits and new firms will not enter. 
D)  None of the above.

Question 13

When the market demand curve is relatively inelastic

Accepted Answer

A)  it is unrealistic for a cartel to form because profits will be lower. 
B)  penalties for forming an illegal cartel will be relatively low. 
C)  the lower the price the cartel sets, the greater the benefits to the cartel. 
D)  the higher the price the cartel sets, the greater the benefits to the cartel. 
A)  it is unrealistic for a cartel to form because profits will be lower. 
B)  penalties for forming an illegal cartel will be relatively low. 
C)  the lower the price the cartel sets, the greater the benefits to the cartel. 
D)  the higher the price the cartel sets, the greater the benefits to the cartel.

Question 14

If a firm's marginal costs ________ then its ________.

Accepted Answer

A)  fall; best-response curve shifts 
B)  rise; forced out of the oligopoly 
C)  rise; output increases 
D)  fall; price falls 
A)  fall; best-response curve shifts 
B)  rise; forced out of the oligopoly 
C)  rise; output increases 
D)  fall; price falls

Question 15

Assuming a homogeneous product,the Bertrand equilibrium price is

Accepted Answer

A)  independent of the number of firms. 
B)  independent of the firm's marginal costs. 
C)  equal to the Cournot equilibrium price. 
D)  equal to the monopoly price. 
A)  independent of the number of firms. 
B)  independent of the firm's marginal costs. 
C)  equal to the Cournot equilibrium price. 
D)  equal to the monopoly price.

Question 16

Firms seek to differentiate their product

Accepted Answer

A)  to avoid state and federal regulation. 
B)  to create an illusion of value. 
C)  to strengthen their demand and to make it more inelastic. 
D)  to strengthen their demand and to make it more elastic. 
A)  to avoid state and federal regulation. 
B)  to create an illusion of value. 
C)  to strengthen their demand and to make it more inelastic. 
D)  to strengthen their demand and to make it more elastic.

Question 17

In a Bertrand duopoly with product differentiation,explain how a change in one firm's marginal cost can have an effect on the price charged by the other firm.

Accepted Answer

Each firm's price is a functio

Question 18

A monopolistically competitive firm has the free entry characteristics of ________ and the price setting characteristics of ________.

Accepted Answer

A)  an oligopolistic market; perfect competition 
B)  perfect competition; a monopoly 
C)  a monopolistic market; a cartel 
D)  perfect competition; perfect competition 
A)  an oligopolistic market; perfect competition 
B)  perfect competition; a monopoly 
C)  a monopolistic market; a cartel 
D)  perfect competition; perfect competition

Question 19

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

Accepted Answer

A)  set quantities independently and simultaneously. 
B)  set quantities independently and sequentially. 
C)  set price independently and simultaneously. 
D)  are not in a Nash equilibrium. 
A)  set quantities independently and simultaneously. 
B)  set quantities independently and sequentially. 
C)  set price independently and simultaneously. 
D)  are not in a Nash equilibrium.

Question 20

-The above figure shows the reaction functions for two pizza shops in a small isolated town.The perfect competitive outcome is that

Accepted Answer

A)  each firm produces 40 pizzas. 
B)  each firm produces 50 pizzas. 
C)  the firms split the production of 200 pizzas. 
D)  each firm produces 200 pizzas. 
A)  each firm produces 40 pizzas. 
B)  each firm produces 50 pizzas. 
C)  the firms split the production of 200 pizzas. 
D)  each firm produces 200 pizzas.

The specific oligopolistic model used in a market

A cartel might fail because

Suppose the demand for pizza in a small isolated town is p = 10 - Q.There are only two firms,A and B,and each has a cost function TC = 2 + q.Determine the Cournot equilibrium.

-The above figure shows the reaction functions for two pizza shops in a small isolated town.Collusion would result in

A merger between a firm and one of its suppliers would be called

Mergers are closely scrutinized by the government because

Suppose two Cournot duopolist firms operate at zero marginal cost.The market demand is p = a - bQ.Firm 1's best-response function is

In the simplest version of the Cournot model,we assume

Each member of a cartel

A product can be differentiated through

Mergers may result in

If AC < p where MR = MC

When the market demand curve is relatively inelastic

If a firm's marginal costs then its .

Assuming a homogeneous product,the Bertrand equilibrium price is

Firms seek to differentiate their product

In a Bertrand duopoly with product differentiation,explain how a change in one firm's marginal cost can have an effect on the price charged by the other firm.

A monopolistically competitive firm has the free entry characteristics of and the price setting characteristics of .

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

-The above figure shows the reaction functions for two pizza shops in a small isolated town.The perfect competitive outcome is that

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 specific oligopolistic model used in a market

A cartel might fail because

Suppose the demand for pizza in a small isolated town is p = 10 - Q.There are only two firms,A and B,and each has a cost function TC = 2 + q.Determine the Cournot equilibrium.

-The above figure shows the reaction functions for two pizza shops in a small isolated town.Collusion would result in

A merger between a firm and one of its suppliers would be called

Mergers are closely scrutinized by the government because

Suppose two Cournot duopolist firms operate at zero marginal cost.The market demand is p = a - bQ.Firm 1's best-response function is

In the simplest version of the Cournot model,we assume

Each member of a cartel

A product can be differentiated through

Mergers may result in

If AC < p where MR = MC

When the market demand curve is relatively inelastic

If a firm's marginal costs ________ then its ________.

Assuming a homogeneous product,the Bertrand equilibrium price is

Firms seek to differentiate their product

In a Bertrand duopoly with product differentiation,explain how a change in one firm's marginal cost can have an effect on the price charged by the other firm.

A monopolistically competitive firm has the free entry characteristics of ________ and the price setting characteristics of ________.

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

-The above figure shows the reaction functions for two pizza shops in a small isolated town.The perfect competitive outcome is that

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

If a firm's marginal costs then its .

A monopolistically competitive firm has the free entry characteristics of and the price setting characteristics of .