Question 1

In which market structures is there product differentiation?

Accepted Answer

A)  perfect competition and monopolistic competition 
B)  monopolistic competition and oligopoly 
C)  oligopoly and monopoly 
D)  perfect competition and monopoly 
A)  perfect competition and monopolistic competition 
B)  monopolistic competition and oligopoly 
C)  oligopoly and monopoly 
D)  perfect competition and monopoly

Question 2

A market with few sellers, some influence over price, high barriers to entry, a differentiated product, and non-price competition is known as

Accepted Answer

A)  perfect competition. 
B)  monopolistic competition. 
C)  oligopoly. 
D)  monopoly. 
A)  perfect competition. 
B)  monopolistic competition. 
C)  oligopoly. 
D)  monopoly.

Question 3

Between 1986 and 1998 the De Beers company controlled the world diamond market. De Beers and its affiliated association of producers restricted diamond sales to maximize profits. De Beers and its association was "the only game in town" and had what is

Accepted Answer

A)  a cartel. 
B)  a duopoly. 
C)  monopolistic competitor. 
D)  perfect competitor. 
A)  a cartel. 
B)  a duopoly. 
C)  monopolistic competitor. 
D)  perfect competitor.

Question 4

How can network effects lead an industry to become an oligopoly?

Accepted Answer

If a few firms selling products subject

Question 5

-According to the above table, the four-firm concentration ratio of this industry is

Accepted Answer

A)  69.2 percent. 
B)  35.1 percent. 
C)  66.7 percent. 
D)  67.5 percent. 
A)  69.2 percent. 
B)  35.1 percent. 
C)  66.7 percent. 
D)  67.5 percent.

Question 6

According to game theory, a cartel of several firms is an example of a(n)

Accepted Answer

A)  zero-sum game. 
B)  positive-sum game. 
C)  cooperative game. 
D)  noncooperative game. 
A)  zero-sum game. 
B)  positive-sum game. 
C)  cooperative game. 
D)  noncooperative game.

Question 7

A noncooperative game is

Accepted Answer

A)  companies colluding in order to make higher than competitive rates of return. 
B)  the manner in which one oligopolist reacts to a change in price made by another oligopolist in the industry. 
C)  a game in which firms will not negotiate in any way. 
D)  when plans made by firms are known as game strategies. 
A)  companies colluding in order to make higher than competitive rates of return. 
B)  the manner in which one oligopolist reacts to a change in price made by another oligopolist in the industry. 
C)  a game in which firms will not negotiate in any way. 
D)  when plans made by firms are known as game strategies.

Question 8

A market situation in which there are very few sellers is

Accepted Answer

A)  oligopoly. 
B)  perfect competition. 
C)  monopoly. 
D)  monopolistic competition. 
A)  oligopoly. 
B)  perfect competition. 
C)  monopoly. 
D)  monopolistic competition.

Question 9

Strategic behavior and game theory are features of which market structure?

Accepted Answer

A)  perfect competition 
B)  monopoly 
C)  monopolistic competition 
D)  oligopoly 
A)  perfect competition 
B)  monopoly 
C)  monopolistic competition 
D)  oligopoly

Question 10

What is a cartel? Can cartels generate long-term profits without the existence of barriers to entry?

Accepted Answer

A cartel is an association of producers

Question 11

If a retail food chain merged with a meat packing company, this would be an example of a

Accepted Answer

A)  horizontal merger. 
B)  conglomerate merger. 
C)  vertical merger. 
D)  diagonal merger. 
A)  horizontal merger. 
B)  conglomerate merger. 
C)  vertical merger. 
D)  diagonal merger.

Question 12

Which of the following is NOT a common characteristic of oligopoly?

Accepted Answer

A)  strategic dependence among firms in the industry 
B)  product differentiation 
C)  barriers to entry 
D)  marginal cost pricing. 
A)  strategic dependence among firms in the industry 
B)  product differentiation 
C)  barriers to entry 
D)  marginal cost pricing.

Question 13

Which of the following statements concerning the prisoner's dilemma is TRUE?

Accepted Answer

A)  The player who moves last will always win. 
B)  Confessing is the dominant strategy for both players. 
C)  Neither player will pick the dominant strategy. 
D)  The player who moves first will always win. 
A)  The player who moves last will always win. 
B)  Confessing is the dominant strategy for both players. 
C)  Neither player will pick the dominant strategy. 
D)  The player who moves first will always win.

Question 14

In the mobile device industry, an example of a platform firm is

Accepted Answer

A)  a mobile apps developer. 
B)  a developer of mobile device operation systems. 
C)  a retailer of mobile device accessories. 
D)  a provider of wifi networks. 
A)  a mobile apps developer. 
B)  a developer of mobile device operation systems. 
C)  a retailer of mobile device accessories. 
D)  a provider of wifi networks.

Question 15

Any rule that is used to make a choice is a

Accepted Answer

A)  positive-sum game. 
B)  zero-sum game. 
C)  strategy. 
D)  rational decision. 
A)  positive-sum game. 
B)  zero-sum game. 
C)  strategy. 
D)  rational decision.

Question 16

Firms faced with prisoners' dilemma can always make more profits by engaging in opportunistic behavior. Why is this type of behavior NOT commonly found even in oligopolistic markets?

Accepted Answer

The prisoners' dilemma describes noncoop

Question 17

Suppose two firms are in a game situation, and they each must decide on a strategy regarding whether to select a high price or a low price. Profits for a firm are highest when it selects a low price, while the other selects a high price; profits are lowest if one selects a high price, while the other selects a low price; profits are in between when both select low prices; and profits are slightly higher when both select high prices. In the absence of collusion we expect

Accepted Answer

A)  one of the firms to select a high price and the other a low price. 
B)  one firm to select a high price and the other a low price in the first period, followed by a reversal in the second period. 
C)  both to select high prices. 
D)  both to select low prices. 
A)  one of the firms to select a high price and the other a low price. 
B)  one firm to select a high price and the other a low price in the first period, followed by a reversal in the second period. 
C)  both to select high prices. 
D)  both to select low prices.

Question 18

In game theory, behavior that results in cooperation as long as the other players continue to cooperate, is referred to as

Accepted Answer

A)  nice behavior. 
B)  tit-for-tat strategic behavior. 
C)  simple behavior. 
D)  opportunistic behavior. 
A)  nice behavior. 
B)  tit-for-tat strategic behavior. 
C)  simple behavior. 
D)  opportunistic behavior.

Question 19

Monopolistically competitive markets and oligopolies are similar in that

Accepted Answer

A)  the number of firms is identical. 
B)  the kinked demand curve can be used to analyze the firms' pricing decisions. 
C)  there is mutual interdependence amongst the firms. 
D)  nonprice competition is a tool used. 
A)  the number of firms is identical. 
B)  the kinked demand curve can be used to analyze the firms' pricing decisions. 
C)  there is mutual interdependence amongst the firms. 
D)  nonprice competition is a tool used.

Question 20

-Refer to the above table. The four-firm concentration ratio is

Accepted Answer

A)  85.8 percent. 
B)  75 percent. 
C)  72.5 percent. 
D)  59.2 percent. 
A)  85.8 percent. 
B)  75 percent. 
C)  72.5 percent. 
D)  59.2 percent.

Exam 26: Oligopoly and Strategic Behavior

In which market structures is there product differentiation?

A market with few sellers, some influence over price, high barriers to entry, a differentiated product, and non-price competition is known as

Between 1986 and 1998 the De Beers company controlled the world diamond market. De Beers and its affiliated association of producers restricted diamond sales to maximize profits. De Beers and its association was "the only game in town" and had what is

How can network effects lead an industry to become an oligopoly?

-According to the above table, the four-firm concentration ratio of this industry is

According to game theory, a cartel of several firms is an example of a(n)

A noncooperative game is

A market situation in which there are very few sellers is

Strategic behavior and game theory are features of which market structure?

What is a cartel? Can cartels generate long-term profits without the existence of barriers to entry?

If a retail food chain merged with a meat packing company, this would be an example of a

Which of the following is NOT a common characteristic of oligopoly?

Which of the following statements concerning the prisoner's dilemma is TRUE?

In the mobile device industry, an example of a platform firm is

Any rule that is used to make a choice is a

Firms faced with prisoners' dilemma can always make more profits by engaging in opportunistic behavior. Why is this type of behavior NOT commonly found even in oligopolistic markets?

In game theory, behavior that results in cooperation as long as the other players continue to cooperate, is referred to as

Monopolistically competitive markets and oligopolies are similar in that

-Refer to the above table. The four-firm concentration ratio is

The Nature of Economics

Scarcity and the World of Trade-Offs

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The Firm: Cost and Output Determination

Perfect Competition

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