Question 1

In a sequential contestable market game

Accepted Answer

A)  a small number of firms can behave like firms in perfect competition. 
B)  the outcome is always a monopoly equilibrium. 
C)  the dominant firm always makes a monopoly profit, while other firms make zero economic profits. 
D)  a firm that enters the market first is protected from potential entrants by natural barriers. 
A)  a small number of firms can behave like firms in perfect competition. 
B)  the outcome is always a monopoly equilibrium. 
C)  the dominant firm always makes a monopoly profit, while other firms make zero economic profits. 
D)  a firm that enters the market first is protected from potential entrants by natural barriers.

Question 2

Market share in the Widget industry  
-In the table above, the Herfindahl-Hirschman Index in the widget industry is

Accepted Answer

A)  100 points. 
B)  742 points. 
C)  2842 points. 
D)  4182 points. 
A)  100 points. 
B)  742 points. 
C)  2842 points. 
D)  4182 points.

Question 3

Which of the following is a distinguishing characteristic of oligopoly?

Accepted Answer

A)  A small number of firms compete. 
B)  No one firm's actions directly affect the actions of the other firms. 
C)  Firms are free to enter and exit the industry. 
D)  Natural barriers cannot prevent the entry of new firms. 
A)  A small number of firms compete. 
B)  No one firm's actions directly affect the actions of the other firms. 
C)  Firms are free to enter and exit the industry. 
D)  Natural barriers cannot prevent the entry of new firms.

Question 4

What is the Sherman Act and what is its purpose?

Accepted Answer

The Sherman Act of 1890 was the first ma

Question 5

In the scenario above, in Nash equilibrium

Accepted Answer

A)  both firms cheat to produce more than the agreed amount. 
B)  both firms comply with the agreement. 
C)  one firm complies with the agreement while the other cheats to produce more than the agreed amount. 
D)  both firms cheat to produce less than the agreed amount. 
A)  both firms cheat to produce more than the agreed amount. 
B)  both firms comply with the agreement. 
C)  one firm complies with the agreement while the other cheats to produce more than the agreed amount. 
D)  both firms cheat to produce less than the agreed amount.

Question 6

In a collusive agreement between two duopolists in an oligopoly, each firm has an incentive to cheat on the agreement because the firm's price

Accepted Answer

A)  exceeds its marginal cost. 
B)  exceeds its marginal revenue. 
C)  is less than its average total cost. 
D)  None of the above answers is correct. 
A)  exceeds its marginal cost. 
B)  exceeds its marginal revenue. 
C)  is less than its average total cost. 
D)  None of the above answers is correct.

Question 7

Why do most collusive agreements have difficulty surviving?

Accepted Answer

Most collusive agreements have difficult

Question 8

In oligopolistic markets

Accepted Answer

A)  there are many firms. 
B)  there are no barriers to entry. 
C)  there are only a few firms. 
D)  all firms are price takers. 
A)  there are many firms. 
B)  there are no barriers to entry. 
C)  there are only a few firms. 
D)  all firms are price takers.

Question 9

-A market has ten firms, whose market shares are given in the table above.
a) If firms I and J wanted to merge, according to the Department of Justice guidelines, would the Department of Justice challenge the merger?
b) If firms A and B wanted to merge, according to the Department of Justice guidelines, would the Department of Justice challenge the merger?

Accepted Answer

a) The decision whether to challenge the

Question 10

Kellogg's and General Mills are two of the dominant breakfast cereal manufactures in the U.S. Each firm can either sign or not sign an exclusive contract with an Olympian gold-medal athlete to appear on the cover of a cereal box. If both companies sign an athlete, they will each make $5 million in economic profit. If only firm signs, they earn $8 million in economic profit and the other firm incurs an economic loss of $1 million. If neither firm signs, they break even. What is the outcome of this game if it is only played once?

Accepted Answer

A)  Neither Kellogg's nor General Mills will sign an athlete. 
B)  Kellogg's will sign an athlete and General Mills will not sign an athlete. 
C)  Both Kellogg's and General Mills will sign an athlete. 
D)  General Mills will sign an athlete and Kellogg's will not sign an athlete. 
A)  Neither Kellogg's nor General Mills will sign an athlete. 
B)  Kellogg's will sign an athlete and General Mills will not sign an athlete. 
C)  Both Kellogg's and General Mills will sign an athlete. 
D)  General Mills will sign an athlete and Kellogg's will not sign an athlete.

Question 11

In game theory, strategies include ________.

Accepted Answer

A)  all possible actions of each player 
B)  only the winning action of each player 
C)  all possible actions and payoffs of each player 
D)  the payoff matrix 
A)  all possible actions of each player 
B)  only the winning action of each player 
C)  all possible actions and payoffs of each player 
D)  the payoff matrix

Question 12

Disney  
-Disney and Fox must decide when to release their next films. The revenues received by each studio depend in part on when the other studio releases its film. Each studio can release its film at Thanksgiving or at Christmas. The revenues received by each studio, in millions of dollars, are depicted in the payoff matrix above. Which of the following statements CORRECTLY describes Disney's strategy given what Fox's release choice may be?

Accepted Answer

A)  If Fox chooses a Thanksgiving release, Disney should choose a Christmas release. 
B)  If Fox chooses a Christmas release, Disney should choose a Thanksgiving release. 
C)  Disney should release on Thanksgiving regardless of what Fox does. 
D)  Both answers A and B are correct. 
A)  If Fox chooses a Thanksgiving release, Disney should choose a Christmas release. 
B)  If Fox chooses a Christmas release, Disney should choose a Thanksgiving release. 
C)  Disney should release on Thanksgiving regardless of what Fox does. 
D)  Both answers A and B are correct.

Question 13

Game theory is distinctive in that its elements are

Accepted Answer

A)  costs, prices, and profits. 
B)  revenues, elasticity, and profits. 
C)  rules, strategies, payoffs, and outcomes. 
D)  patents, copyrights, and barriers to entry. 
A)  costs, prices, and profits. 
B)  revenues, elasticity, and profits. 
C)  rules, strategies, payoffs, and outcomes. 
D)  patents, copyrights, and barriers to entry.

Question 14

In a prisoner's dilemma game, each person will pick

Accepted Answer

A)  their best outcome given what the other person will do. 
B)  their best outcome. 
C)  their worse outcome. 
D)  their best outcome after consulting with the other person. 
A)  their best outcome given what the other person will do. 
B)  their best outcome. 
C)  their worse outcome. 
D)  their best outcome after consulting with the other person.

Question 15

"If an industry's Herfindahl-Hirschman Index is below 1,000, a merger between any two firms in that industry will be disallowed." Comment on the accuracy of the previous statement.

Accepted Answer

The statement is incorrect in at least t

Question 16

When the government prohibits certain kinds of market behavior such as monopoly and monopolistic practices it generally does so through

Accepted Answer

A)  regulatory agencies such as the Interstate Commerce Commission or the Federal Communications Commission. 
B)  antitrust law. 
C)  the police powers of the states. 
D)  use of the capture theory of regulation. 
A)  regulatory agencies such as the Interstate Commerce Commission or the Federal Communications Commission. 
B)  antitrust law. 
C)  the police powers of the states. 
D)  use of the capture theory of regulation.

Question 17

A contestable market is one in which

Accepted Answer

A)  one dominant firm sets the market price, and all other firms are price takers. 
B)  if a firm cuts its price, all other firms will follow the price cut. 
C)  one or a small number of firms operate, but faces competition from potential entrants. 
D)  a group of firms enter into an agreement to restrict output and raise prices. 
A)  one dominant firm sets the market price, and all other firms are price takers. 
B)  if a firm cuts its price, all other firms will follow the price cut. 
C)  one or a small number of firms operate, but faces competition from potential entrants. 
D)  a group of firms enter into an agreement to restrict output and raise prices.

Question 18

An oligopoly is a market structure in which there are

Accepted Answer

A)  only a few buyers but many sellers. 
B)  only a few sellers selling either an identical or differentiated product. 
C)  many sellers selling a differentiated product. 
D)  a few products sold by many sellers. 
A)  only a few buyers but many sellers. 
B)  only a few sellers selling either an identical or differentiated product. 
C)  many sellers selling a differentiated product. 
D)  a few products sold by many sellers.

Question 19

One of the reasons that concentration ratios are not a perfect measure of competitiveness is that they

Accepted Answer

A)  do not measure how high the industry's prices are. 
B)  cannot be measured. 
C)  ignore potential competition. 
D)  tell nothing about how high prices were in the past. 
A)  do not measure how high the industry's prices are. 
B)  cannot be measured. 
C)  ignore potential competition. 
D)  tell nothing about how high prices were in the past.

Question 20

The first antitrust law passed was the ________.

Accepted Answer

A)  Federal Trade Commission Act 
B)  Sherman Act 
C)  Clayton Act 
D)  Robinson-Patman Amendment 
A)  Federal Trade Commission Act 
B)  Sherman Act 
C)  Clayton Act 
D)  Robinson-Patman Amendment

In a sequential contestable market game

Market share in the Widget industry -In the table above, the Herfindahl-Hirschman Index in the widget industry is

Which of the following is a distinguishing characteristic of oligopoly?

What is the Sherman Act and what is its purpose?

In the scenario above, in Nash equilibrium

In a collusive agreement between two duopolists in an oligopoly, each firm has an incentive to cheat on the agreement because the firm's price

Why do most collusive agreements have difficulty surviving?

In oligopolistic markets

In game theory, strategies include ________.

Game theory is distinctive in that its elements are

In a prisoner's dilemma game, each person will pick

"If an industry's Herfindahl-Hirschman Index is below 1,000, a merger between any two firms in that industry will be disallowed." Comment on the accuracy of the previous statement.

When the government prohibits certain kinds of market behavior such as monopoly and monopolistic practices it generally does so through

A contestable market is one in which

An oligopoly is a market structure in which there are

One of the reasons that concentration ratios are not a perfect measure of competitiveness is that they

The first antitrust law passed was the ________.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 15: Oligopoly

In a sequential contestable market game

Market share in the Widget industry -In the table above, the Herfindahl-Hirschman Index in the widget industry is

Which of the following is a distinguishing characteristic of oligopoly?

What is the Sherman Act and what is its purpose?

In the scenario above, in Nash equilibrium

In a collusive agreement between two duopolists in an oligopoly, each firm has an incentive to cheat on the agreement because the firm's price

Why do most collusive agreements have difficulty surviving?

In oligopolistic markets

In game theory, strategies include ________.

Game theory is distinctive in that its elements are

In a prisoner's dilemma game, each person will pick

"If an industry's Herfindahl-Hirschman Index is below 1,000, a merger between any two firms in that industry will be disallowed." Comment on the accuracy of the previous statement.

When the government prohibits certain kinds of market behavior such as monopoly and monopolistic practices it generally does so through

A contestable market is one in which

An oligopoly is a market structure in which there are

One of the reasons that concentration ratios are not a perfect measure of competitiveness is that they

The first antitrust law passed was the ________.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters