Question 1

Game theory would classify a cartel under the topic of

Accepted Answer

A)  zero-sum games. 
B)  cooperative games. 
C)  noncooperative games. 
D)  dominant-strategy games. 
A)  zero-sum games. 
B)  cooperative games. 
C)  noncooperative games. 
D)  dominant-strategy games.

Question 2

Monopolies and oligopolies both erect barriers to entry through the use of

Accepted Answer

A)  price cutting. 
B)  patents. 
C)  franchising. 
D)  advertising. 
A)  price cutting. 
B)  patents. 
C)  franchising. 
D)  advertising.

Question 3

When oligopolistic firms in an industry form a cartel, then it is most likely that

Accepted Answer

A)  both industry output and prices will increase. 
B)  both industry output and prices will decrease. 
C)  industry output will increase while prices will decrease. 
D)  industry output will decrease while prices will increase. 
A)  both industry output and prices will increase. 
B)  both industry output and prices will decrease. 
C)  industry output will increase while prices will decrease. 
D)  industry output will decrease while prices will increase.

Question 4

In a two-sided market, a firm that provides services that link together groups of consumers and producers is called a(n)

Accepted Answer

A)  end user. 
B)  platform. 
C)  monopoly. 
D)  tit-for-tat. 
A)  end user. 
B)  platform. 
C)  monopoly. 
D)  tit-for-tat.

Question 5

In industries in which strong network effects exist, which industry structure is likely to emerge?

Accepted Answer

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

Question 6

The higher the concentration ratio is in an industry, the more likely it is that

Accepted Answer

A)  the industry is perfectly competitive. 
B)  the market share of the smallest four firms is larger. 
C)  the market share of the largest four firms is smaller. 
D)  the industry has an oligopoly. 
A)  the industry is perfectly competitive. 
B)  the market share of the smallest four firms is larger. 
C)  the market share of the largest four firms is smaller. 
D)  the industry has an oligopoly.

Question 7

In a two-sided market, the platform may offer different prices to different group of end users due to

Accepted Answer

A)  the budget constraints of end users. 
B)  substitution effects between the end users and the platform. 
C)  different network effects between groups of end users. 
D)  a lack of product differentiation in the products sold. 
A)  the budget constraints of end users. 
B)  substitution effects between the end users and the platform. 
C)  different network effects between groups of end users. 
D)  a lack of product differentiation in the products sold.

Question 8

A market situation in which there are a few firms that recognize their mutual interdependence is

Accepted Answer

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

Question 9

All of the following can create an oligopolistic structure EXCEPT

Accepted Answer

A)  low barriers to entry. 
B)  economies of scale. 
C)  government licensing rules. 
D)  mergers. 
A)  low barriers to entry. 
B)  economies of scale. 
C)  government licensing rules. 
D)  mergers.

Question 10

People do NOT usually behave in a noncooperative fashion even when it is in their immediate interest to do so because

Accepted Answer

A)  they realize such behavior is immoral. 
B)  they know there can be 2 winners. 
C)  they know they will have repeated dealings with the other people. 
D)  they understand the difficulties with game theory. 
A)  they realize such behavior is immoral. 
B)  they know there can be 2 winners. 
C)  they know they will have repeated dealings with the other people. 
D)  they understand the difficulties with game theory.

Question 11

Which one of the following industries is best classified as an oligopoly?

Accepted Answer

A)  textbook publishers 
B)  retailing 
C)  wheat farms in the United States 
D)  fast food restaurants 
A)  textbook publishers 
B)  retailing 
C)  wheat farms in the United States 
D)  fast food restaurants

Question 12

Which of the following does NOT help explain why oligopolies exist?

Accepted Answer

A)  economies of scale 
B)  mergers 
C)  product homogeneity 
D)  barriers to entry 
A)  economies of scale 
B)  mergers 
C)  product homogeneity 
D)  barriers to entry

Question 13

An online dating firm is

Accepted Answer

A)  a platform in a shared-input market. 
B)  an end user in a matchmaking market. 
C)  a platform in a matchmaking market. 
D)  an end user in a shared-input market. 
A)  a platform in a shared-input market. 
B)  an end user in a matchmaking market. 
C)  a platform in a matchmaking market. 
D)  an end user in a shared-input market.

Question 14

Which of the following is NOT a reason why some industries are oligopolies?

Accepted Answer

A)  economies of scale 
B)  barriers to entry 
C)  independence in pricing behavior 
D)  mergers 
A)  economies of scale 
B)  barriers to entry 
C)  independence in pricing behavior 
D)  mergers

Question 15

Suppose an industry has total sales of $25 million per year. The two largest firms have sales of $6 million each, the third largest firm has sales of $2 million, and the fourth largest firm has sales of $1 million. The four-firm concentration ratio for this industry is

Accepted Answer

A)  36 percent. 
B)  60 percent. 
C)  50 percent. 
D)  25 percent. 
A)  36 percent. 
B)  60 percent. 
C)  50 percent. 
D)  25 percent.

Question 16

A concentration ratio gives

Accepted Answer

A)  the average size of the firms in an industry. 
B)  the total sales of four or eight of the mid-sized firms in the industry. 
C)  the percentage of all sales contributed by the four or eight largest firms in the industry. 
D)  the sales of the four largest firms in the industry divided by the sales of the eight largest firms in the industry. 
A)  the average size of the firms in an industry. 
B)  the total sales of four or eight of the mid-sized firms in the industry. 
C)  the percentage of all sales contributed by the four or eight largest firms in the industry. 
D)  the sales of the four largest firms in the industry divided by the sales of the eight largest firms in the industry.

Question 17

Which of the following is most likely to be sold in an oligopoly market?

Accepted Answer

A)  pizza 
B)  wireless service 
C)  electricity 
D)  cotton 
A)  pizza 
B)  wireless service 
C)  electricity 
D)  cotton

Question 18

Agriculture is an example of

Accepted Answer

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

Question 19

If Target were to merge with Wal-Mart, this would be referred to as a(n)

Accepted Answer

A)  horizontal merger. 
B)  vertical merger. 
C)  conglomerate merger. 
D)  anti-competitive merger. 
A)  horizontal merger. 
B)  vertical merger. 
C)  conglomerate merger. 
D)  anti-competitive merger.

Question 20

The prisoner's dilemma shows that

Accepted Answer

A)  players are better off if they act independently. 
B)  a game always ends in a positive sum condition. 
C)  people will always cheat. 
D)  players could be better off if they cooperated. 
A)  players are better off if they act independently. 
B)  a game always ends in a positive sum condition. 
C)  people will always cheat. 
D)  players could be better off if they cooperated.

Exam 26: Oligopoly and Strategic Behavior

Game theory would classify a cartel under the topic of

Monopolies and oligopolies both erect barriers to entry through the use of

When oligopolistic firms in an industry form a cartel, then it is most likely that

In a two-sided market, a firm that provides services that link together groups of consumers and producers is called a(n)

In industries in which strong network effects exist, which industry structure is likely to emerge?

The higher the concentration ratio is in an industry, the more likely it is that

In a two-sided market, the platform may offer different prices to different group of end users due to

A market situation in which there are a few firms that recognize their mutual interdependence is

All of the following can create an oligopolistic structure EXCEPT

People do NOT usually behave in a noncooperative fashion even when it is in their immediate interest to do so because

Which one of the following industries is best classified as an oligopoly?

Which of the following does NOT help explain why oligopolies exist?

An online dating firm is

Which of the following is NOT a reason why some industries are oligopolies?

Suppose an industry has total sales of $25 million per year. The two largest firms have sales of $6 million each, the third largest firm has sales of $2 million, and the fourth largest firm has sales of $1 million. The four-firm concentration ratio for this industry is

A concentration ratio gives

Which of the following is most likely to be sold in an oligopoly market?

Agriculture is an example of

If Target were to merge with Wal-Mart, this would be referred to as a(n)

The prisoner's dilemma shows that

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