Question 1

If the industry is an oligopoly, the price charged and the quantity produced would be the same as if the industry was a monopoly if the

Accepted Answer

A)  oligopolists face kinked demand curves. 
B)  Cournot model applies. 
C)  firms agree not to engage in non-price competition. 
D)  oligopolists collude. 
A)  oligopolists face kinked demand curves. 
B)  Cournot model applies. 
C)  firms agree not to engage in non-price competition. 
D)  oligopolists collude.

Question 2

Collusion occurs when

Accepted Answer

A)  a firm chooses a level of output to maximise its own profit. 
B)  two firms' price and output decisions come into conflict. 
C)  there is an agreement among firms to charge the same price or otherwise not to compete. 
D)  firms refuse to follow their price leaders. 
A)  a firm chooses a level of output to maximise its own profit. 
B)  two firms' price and output decisions come into conflict. 
C)  there is an agreement among firms to charge the same price or otherwise not to compete. 
D)  firms refuse to follow their price leaders.

Question 3

The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called

Accepted Answer

A)  Nash equilibrium. 
B)  the prisoner's dilemma. 
C)  game theory. 
D)  dominant strategy equilibrium. 
A)  Nash equilibrium. 
B)  the prisoner's dilemma. 
C)  game theory. 
D)  dominant strategy equilibrium.

Question 4

A Nash equilibrium is

Accepted Answer

A)  reached when an oligopoly's market demand and supply intersect. 
B)  reached when each player chooses the best strategy for himself and for the group. 
C)  reached when each player chooses the best strategy for himself, given the other strategies chosen by the other players in the group. 
D)  an equilibrium comprising non-dominant strategies only. 
A)  reached when an oligopoly's market demand and supply intersect. 
B)  reached when each player chooses the best strategy for himself and for the group. 
C)  reached when each player chooses the best strategy for himself, given the other strategies chosen by the other players in the group. 
D)  an equilibrium comprising non-dominant strategies only.

Question 5

In a Nash equilibrium, all players select non-dominant strategies.

Accepted Answer

A) True 
 B)False

Question 6

A weakness of the kinked demand curve model of oligopoly is

Accepted Answer

A)  that marginal costs are frequently changing. 
B)  it assumes that firms are reluctant to change prices. 
C)  the marginal revenue curve is kinked at the market price. 
D)  it does not explain how prices are determined. 
A)  that marginal costs are frequently changing. 
B)  it assumes that firms are reluctant to change prices. 
C)  the marginal revenue curve is kinked at the market price. 
D)  it does not explain how prices are determined.

Question 7

Producing a differentiated product occurs in which of the following industries?

Accepted Answer

A)  oligopoly, monopolistic competition and perfect competition 
B)  monopolistic competition only 
C)  oligopoly only 
D)  monopolistic competition and oligopoly 
A)  oligopoly, monopolistic competition and perfect competition 
B)  monopolistic competition only 
C)  oligopoly only 
D)  monopolistic competition and oligopoly

Question 8

All games share three characteristics. Two of these characteristics are rule and strategies. What is the third characteristic called?

Accepted Answer

A)  competition 
B)  collusion 
C)  results 
D)  payoffs 
A)  competition 
B)  collusion 
C)  results 
D)  payoffs

Question 9

A situation in which each firm chooses the best strategy given the strategies chosen by other firms is called a

Accepted Answer

A)  Nash equilibrium. 
B)  dominant strategy. 
C)  collusion. 
D)  payoff matrix. 
A)  Nash equilibrium. 
B)  dominant strategy. 
C)  collusion. 
D)  payoff matrix.

Question 10

The study of how people make decisions in situations in which attaining their goals depends on their interactions with others is called

Accepted Answer

A)  game theory. 
B)  oligopoly. 
C)  competitive analysis. 
D)  strategic analysis. 
A)  game theory. 
B)  oligopoly. 
C)  competitive analysis. 
D)  strategic analysis.

Question 11

An entry barrier exists when firms in an industry charge the lowest price possible for their products.

Accepted Answer

A) True 
 B)False

Question 12

Collusion would be common in an oligopoly and a monopolistically competitive industry.

Accepted Answer

A) True 
 B)False

Question 13

The justification for occupational licensing laws is that they protect the public from incompetent practitioners (for example, lawyers and medical doctors), but the laws also result in

Accepted Answer

A)  higher prices and restrictions on the number of people who can enter the professions affected by the laws. 
B)  economies of scale. 
C)  ownership of a key input. 
D)  an increase in the amount of output required to achieve minimum efficient scale. 
A)  higher prices and restrictions on the number of people who can enter the professions affected by the laws. 
B)  economies of scale. 
C)  ownership of a key input. 
D)  an increase in the amount of output required to achieve minimum efficient scale.

Question 14

All of the following are characteristics of game theory except

Accepted Answer

A)  rules that determine what actions are allowable. 
B)  payoffs that are the results of the interaction among players' strategies. 
C)  strategies that players employ to attain their objectives. 
D)  independence among players. 
A)  rules that determine what actions are allowable. 
B)  payoffs that are the results of the interaction among players' strategies. 
C)  strategies that players employ to attain their objectives. 
D)  independence among players.

Question 15

Discuss how traditional models of oligopoly may be able to be explained using game theory.

Accepted Answer

is a possible outcome, as firms in oligo

Question 16

Each member of OPEC can increase its income by selling more oil than its output quota because

Accepted Answer

A)  by selling more at OPEC's cartel price, a member will automatically earn more income. 
B)  each member's demand is more elastic than the total demand for oil. 
C)  the demand for oil is inelastic so total revenue increases. 
D)  the demand for oil is perfectly elastic. 
A)  by selling more at OPEC's cartel price, a member will automatically earn more income. 
B)  each member's demand is more elastic than the total demand for oil. 
C)  the demand for oil is inelastic so total revenue increases. 
D)  the demand for oil is perfectly elastic.

Question 17

-Refer to Figure 11-1. Should Lexus lower its price in order to deter BMW's entry into the luxury hybrid automobile market?

Accepted Answer

A)  In terms of profit earned, it makes no difference whether Lexus lowers its price or not; in either case it will make $280 million profit if BMW enters. 
B)  No, it should keep the same price and work to capitalise on its brand loyalty. 
C)  Yes, it will drive BMW out of the market. 
D)  No, because BMW will enter the market regardless of Lexus' decision about its price. 
A)  In terms of profit earned, it makes no difference whether Lexus lowers its price or not; in either case it will make $280 million profit if BMW enters. 
B)  No, it should keep the same price and work to capitalise on its brand loyalty. 
C)  Yes, it will drive BMW out of the market. 
D)  No, because BMW will enter the market regardless of Lexus' decision about its price.

Question 18

-Refer to Table 11-1. Is there a dominant strategy for Star Connections and, if so, what is it?

Accepted Answer

A)  No, its outcome depends on what Godrickporter does. 
B)  Yes, Star Connections should increase its advertising spending. 
C)  Yes, Star Connections should reduce its advertising spending. 
D)  Yes, Star Connections' dominant strategy is to collude with Godrickporter. 
A)  No, its outcome depends on what Godrickporter does. 
B)  Yes, Star Connections should increase its advertising spending. 
C)  Yes, Star Connections should reduce its advertising spending. 
D)  Yes, Star Connections' dominant strategy is to collude with Godrickporter.

Question 19

Prisoner's dilemma games imply that cooperative behaviour between two people or two firms always breaks down. But reality teaches us that people and firms often cooperate successfully to achieve their goals. Why do the results from prisoner's dilemma games fail to predict real world results?

Accepted Answer

A)  Prisoner's dilemma games do not permit people or firms to renege on agreements, which often occurs in real word situations. 
B)  The prisoner's dilemma does not apply to most business situations that are repeated over and over. 
C)  Prisoner's dilemma games predict the behaviour of people and firms that engage in illegal activity; most people and firms do not resort to illegal activity. 
D)  Most real world situations involve more than two people or firms; the prisoner's dilemma is only applicable to situations that involve two parties. 
A)  Prisoner's dilemma games do not permit people or firms to renege on agreements, which often occurs in real word situations. 
B)  The prisoner's dilemma does not apply to most business situations that are repeated over and over. 
C)  Prisoner's dilemma games predict the behaviour of people and firms that engage in illegal activity; most people and firms do not resort to illegal activity. 
D)  Most real world situations involve more than two people or firms; the prisoner's dilemma is only applicable to situations that involve two parties.

Question 20

Which of the following is not a barrier to entry?

Accepted Answer

A)  an inelastic demand curve 
B)  economies of scale 
C)  ownership of a key input 
D)  a patent 
A)  an inelastic demand curve 
B)  economies of scale 
C)  ownership of a key input 
D)  a patent

If the industry is an oligopoly, the price charged and the quantity produced would be the same as if the industry was a monopoly if the

Collusion occurs when

The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called

A Nash equilibrium is

In a Nash equilibrium, all players select non-dominant strategies.

A weakness of the kinked demand curve model of oligopoly is

Producing a differentiated product occurs in which of the following industries?

All games share three characteristics. Two of these characteristics are rule and strategies. What is the third characteristic called?

A situation in which each firm chooses the best strategy given the strategies chosen by other firms is called a

The study of how people make decisions in situations in which attaining their goals depends on their interactions with others is called

An entry barrier exists when firms in an industry charge the lowest price possible for their products.

Collusion would be common in an oligopoly and a monopolistically competitive industry.

The justification for occupational licensing laws is that they protect the public from incompetent practitioners (for example, lawyers and medical doctors), but the laws also result in

All of the following are characteristics of game theory except

Discuss how traditional models of oligopoly may be able to be explained using game theory.

Each member of OPEC can increase its income by selling more oil than its output quota because

-Refer to Figure 11-1. Should Lexus lower its price in order to deter BMW's entry into the luxury hybrid automobile market?

-Refer to Table 11-1. Is there a dominant strategy for Star Connections and, if so, what is it?

Prisoner's dilemma games imply that cooperative behaviour between two people or two firms always breaks down. But reality teaches us that people and firms often cooperate successfully to achieve their goals. Why do the results from prisoner's dilemma games fail to predict real world results?

Which of the following is not a barrier to entry?

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 11: Oligopoly : Firms in Less Competitve Markets

If the industry is an oligopoly, the price charged and the quantity produced would be the same as if the industry was a monopoly if the

Collusion occurs when

The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called

A Nash equilibrium is

In a Nash equilibrium, all players select non-dominant strategies.

A weakness of the kinked demand curve model of oligopoly is

Producing a differentiated product occurs in which of the following industries?

All games share three characteristics. Two of these characteristics are rule and strategies. What is the third characteristic called?

A situation in which each firm chooses the best strategy given the strategies chosen by other firms is called a

The study of how people make decisions in situations in which attaining their goals depends on their interactions with others is called

An entry barrier exists when firms in an industry charge the lowest price possible for their products.

Collusion would be common in an oligopoly and a monopolistically competitive industry.

The justification for occupational licensing laws is that they protect the public from incompetent practitioners (for example, lawyers and medical doctors), but the laws also result in

All of the following are characteristics of game theory except

Discuss how traditional models of oligopoly may be able to be explained using game theory.

Each member of OPEC can increase its income by selling more oil than its output quota because

-Refer to Figure 11-1. Should Lexus lower its price in order to deter BMW's entry into the luxury hybrid automobile market?

-Refer to Table 11-1. Is there a dominant strategy for Star Connections and, if so, what is it?

Prisoner's dilemma games imply that cooperative behaviour between two people or two firms always breaks down. But reality teaches us that people and firms often cooperate successfully to achieve their goals. Why do the results from prisoner's dilemma games fail to predict real world results?

Which of the following is not a barrier to entry?

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters