Question 1

-Which of the following is true? In the above figure,if the market is

Accepted Answer

A)  a monopoly, output will be Q1 and price will be P3. 
B)  a monopoly, output will be Q3 and price will be P3. 
C)  perfect competition, output will be Q2 and price will be P2. 
D)  perfect competition, output will be Q1 and price will be P1. 
E)  perfect competition, output will be Q3 and price will be P3. 
A)  a monopoly, output will be Q1 and price will be P3. 
B)  a monopoly, output will be Q3 and price will be P3. 
C)  perfect competition, output will be Q2 and price will be P2. 
D)  perfect competition, output will be Q1 and price will be P1. 
E)  perfect competition, output will be Q3 and price will be P3.

Question 2

If Sony required all its retailers not to sell televisions from other companies,Sony would be engaging in what kind of activity? Is Sony's requirement legal or does it violate the Clayton Act?

Accepted Answer

Sony is engaged in an exclusive deal.The

Question 3

A Nash equilibrium is defined as

Accepted Answer

A)  making zero economic profit in the long run. 
B)  forming a cartel with strong penalties for cheaters. 
C)  relying on other game players to realize the benefit of cooperation. 
D)  each player taking the best possible action given the action of the other player. 
E)  each player taking the action that is best for all the players. 
A)  making zero economic profit in the long run. 
B)  forming a cartel with strong penalties for cheaters. 
C)  relying on other game players to realize the benefit of cooperation. 
D)  each player taking the best possible action given the action of the other player. 
E)  each player taking the action that is best for all the players.

Question 4

-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 Federal Trade Commission challenge the merger?
b.If firms A and B wanted to merge,according to the Federal Trade Commission guidelines,would the Federal Trade Commission challenge the merger?

Accepted Answer

a.The decision whether to challenge the

Question 5

-Suppose two companies,Sony and Magnavox,are competing in a duopoly.If both companies charge a high price,they each make $700 million in economic profit.If both companies charge a low price,they each make $500 million in economic profit.If one company charges a high price and the other a low price,the company charging the higher price makes $450 million in economic profit and the company charging the lower price makes $800 million in economic profit.
a.Complete the payoff matrix below for Sony and Magnavox.
   
b.Find the Nash equilibrium.

Accepted Answer

@#IMG-DLM& 
a.The completed payoff matri

Question 6

A Nash equilibrium in the duopoly game

Accepted Answer

A)  means that one player has greater market power. 
B)  occurs when each player takes the best possible action regardless of the strategy chosen by other firms. 
C)  will always lead to equilibrium in which the firms' total profit is the largest. 
D)  can occur only if firms cooperate with each other. 
E)  means that a firm must be able to determine its actions and the actions of its competitor. 
A)  means that one player has greater market power. 
B)  occurs when each player takes the best possible action regardless of the strategy chosen by other firms. 
C)  will always lead to equilibrium in which the firms' total profit is the largest. 
D)  can occur only if firms cooperate with each other. 
E)  means that a firm must be able to determine its actions and the actions of its competitor.

Question 7

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,the figure shows a ________ can profitably operate.

Accepted Answer

A)  natural monopoly in which 1 firm 
B)  natural oligopoly in which 2 firms 
C)  natural oligopoly in which 3 firms 
D)  natural oligopoly in which 4 firms 
E)  natural oligopoly in which 5 or more firms 
A)  natural monopoly in which 1 firm 
B)  natural oligopoly in which 2 firms 
C)  natural oligopoly in which 3 firms 
D)  natural oligopoly in which 4 firms 
E)  natural oligopoly in which 5 or more firms

Question 8

OPEC,the Organization of Petroleum Exporting Countries,was formed in Baghdad in 1960.Since its formation,this cartel has suffered from a major problem with respect to the quota (limit)of output it assigns each member nation.What is OPEC's goal and what sort of quota do you think the cartel assigns? How and why do nations cheat on their quota? What happens when a nation cheats on its quota?

Accepted Answer

In order to keep oil prices high,as has

Question 9

-The above figure shows the market demand curve for long-distance land-based telephone calls.Suppose the marginal cost of a long-distance telephone call is 2¢ a minute for a call no matter how many minutes of calls are made and there are 3 firms in the industry.If the firms in the industry operate as perfect competitors,there are ________ minutes of calls made per hour.

Accepted Answer

A)  between 0 and 3 million 
B)  more than 3 million and less than or equal to 5 million 
C)  more than 5 million and less than or equal to 7 million 
D)  more than 7 million and less than or equal to 9 million 
E)  more than 9 million 
A)  between 0 and 3 million 
B)  more than 3 million and less than or equal to 5 million 
C)  more than 5 million and less than or equal to 7 million 
D)  more than 7 million and less than or equal to 9 million 
E)  more than 9 million

Question 10

A cartel is most likely to occur in

Accepted Answer

A)  perfect competition as firms compete by reducing cost. 
B)  oligopoly as firms act together to raise prices and increase profits. 
C)  monopolistic competition where firms collude to increase profits. 
D)  oligopoly as firms compete to lower price and increase their own profits. 
E)  monopoly because it faces no competition. 
A)  perfect competition as firms compete by reducing cost. 
B)  oligopoly as firms act together to raise prices and increase profits. 
C)  monopolistic competition where firms collude to increase profits. 
D)  oligopoly as firms compete to lower price and increase their own profits. 
E)  monopoly because it faces no competition.

Question 11

Which of the following does antitrust law prohibit if it substantially lessens competition or creates a monopoly?
i.acquiring a competitor's shares or assets
ii.territorial confinement
iii.becoming a director of a competing firm

Accepted Answer

A)  i only 
B)  iii only 
C)  i and iii 
D)  i and ii 
E)  i, ii, and iii 
A)  i only 
B)  iii only 
C)  i and iii 
D)  i and ii 
E)  i, ii, and iii

Question 12

The prisoners' dilemma game

Accepted Answer

A)  shows that prisoners are better off if they cooperate. 
B)  shows it is easy to cooperate. 
C)  has an equilibrium in which both prisoners are made as well off as possible. 
D)  would have the same outcome even if the prisoners can communicate and cooperate. 
E)  has an equilibrium in which one prisoner is made as well off as possible and the other prisoner is made as worse off as possible. 
A)  shows that prisoners are better off if they cooperate. 
B)  shows it is easy to cooperate. 
C)  has an equilibrium in which both prisoners are made as well off as possible. 
D)  would have the same outcome even if the prisoners can communicate and cooperate. 
E)  has an equilibrium in which one prisoner is made as well off as possible and the other prisoner is made as worse off as possible.

Question 13

Under the Clayton Act and its amendments,which of the following activities is illegal if it creates monopoly?

Accepted Answer

A)  exit of a firm from a market with 4 or fewer surviving firms 
B)  price hikes among competing firms 
C)  price discrimination 
D)  patents that result in price hikes 
E)  entry of a firm into a new market 
A)  exit of a firm from a market with 4 or fewer surviving firms 
B)  price hikes among competing firms 
C)  price discrimination 
D)  patents that result in price hikes 
E)  entry of a firm into a new market

Question 14

Does an oligopoly produce the efficient quantity of output or does it create a deadweight loss? Do the firms want to produce the efficient quantity of output? Explain your answer.

Accepted Answer

An oligopoly might or might not operate

Question 15

When the Federal Trade Commission decides whether to allow firms in an industry to merge,it uses the ________ to guide its decision.
A) social interest theory
B) HHI
C) capture theory
D) Sherman Act
E) predatory pricing theory

Accepted Answer

The answer of When the Federal Trade Commission decides whether...

Question 16

In an oligopoly,there are

Accepted Answer

A)  many firms and barriers to entry. 
B)  many firms and no barriers to entry. 
C)  few firms and barriers to entry. 
D)  few firms and no barriers to entry. 
E)  barriers to entry and only one firm. 
A)  many firms and barriers to entry. 
B)  many firms and no barriers to entry. 
C)  few firms and barriers to entry. 
D)  few firms and no barriers to entry. 
E)  barriers to entry and only one firm.

Question 17

In an oligopoly,output is

Accepted Answer

A)  less than the output in monopoly. 
B)  greater than the output in perfect competition. 
C)  in all circumstances the same as the output in perfect competition. 
D)  somewhere between the output in monopoly and that in perfect competition outcomes. 
E)  in all circumstances the same as the output in monopoly. 
A)  less than the output in monopoly. 
B)  greater than the output in perfect competition. 
C)  in all circumstances the same as the output in perfect competition. 
D)  somewhere between the output in monopoly and that in perfect competition outcomes. 
E)  in all circumstances the same as the output in monopoly.

Question 18

The focus of antitrust legislation is to

Accepted Answer

A)  encourage cartels to form because they are easier to regulate. 
B)  maintain competition. 
C)  force society to act in the best interest of producers. 
D)  limit the power of regulatory bodies. 
E)  ensure that producers earn enough profit to stay in business so that consumers are not harmed by too many businesses closing. 
A)  encourage cartels to form because they are easier to regulate. 
B)  maintain competition. 
C)  force society to act in the best interest of producers. 
D)  limit the power of regulatory bodies. 
E)  ensure that producers earn enough profit to stay in business so that consumers are not harmed by too many businesses closing.

Question 19

-The only two firms in a market are trying to decide what price to charge.The payoff matrix for this duopoly game is shown above.The payoffs are thousands of dollars of economic profit.Which of the following statements is correct?

Accepted Answer

A)  If the firms play this game repeatedly, one would end up charging $20 and the other $10. 
B)  If the firms cooperate, both could make $55,000 in economic profit. 
C)  The Nash equilibrium in this game is for both firms to set P = $20 because that maximizes their combined profit. 
D)  Firm B's strategy is to always set P = $20 because that gives Firm B the highest possible profit. 
E)  If Firm B sets P = $20, then Firm A will maximize its profit by setting its P = $20. 
A)  If the firms play this game repeatedly, one would end up charging $20 and the other $10. 
B)  If the firms cooperate, both could make $55,000 in economic profit. 
C)  The Nash equilibrium in this game is for both firms to set P = $20 because that maximizes their combined profit. 
D)  Firm B's strategy is to always set P = $20 because that gives Firm B the highest possible profit. 
E)  If Firm B sets P = $20, then Firm A will maximize its profit by setting its P = $20.

Question 20

Predatory pricing occurs when a firm sets a ________ price to drive competitors out of business with the intention of then setting a ________ price.

Accepted Answer

A)  monopoly; high 
B)  monopoly; low 
C)  low; monopoly 
D)  low; low 
E)  high; monopoly 
A)  monopoly; high 
B)  monopoly; low 
C)  low; monopoly 
D)  low; low 
E)  high; monopoly

-Which of the following is true? In the above figure,if the market is

If Sony required all its retailers not to sell televisions from other companies,Sony would be engaging in what kind of activity? Is Sony's requirement legal or does it violate the Clayton Act?

A Nash equilibrium is defined as

A Nash equilibrium in the duopoly game

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,the figure shows a ________ can profitably operate.

A cartel is most likely to occur in

Which of the following does antitrust law prohibit if it substantially lessens competition or creates a monopoly? i.acquiring a competitor's shares or assets ii.territorial confinement iii.becoming a director of a competing firm

The prisoners' dilemma game

Under the Clayton Act and its amendments,which of the following activities is illegal if it creates monopoly?

Does an oligopoly produce the efficient quantity of output or does it create a deadweight loss? Do the firms want to produce the efficient quantity of output? Explain your answer.

When the Federal Trade Commission decides whether to allow firms in an industry to merge,it uses the ________ to guide its decision. A) social interest theory B) HHI C) capture theory D) Sherman Act E) predatory pricing theory

In an oligopoly,there are

In an oligopoly,output is

The focus of antitrust legislation is to

-The only two firms in a market are trying to decide what price to charge.The payoff matrix for this duopoly game is shown above.The payoffs are thousands of dollars of economic profit.Which of the following statements is correct?

Predatory pricing occurs when a firm sets a price to drive competitors out of business with the intention of then setting a price.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Markets for Factors of Production

Economic Inequality

Filters

Exam 18: Oligopoly

-Which of the following is true? In the above figure,if the market is

If Sony required all its retailers not to sell televisions from other companies,Sony would be engaging in what kind of activity? Is Sony's requirement legal or does it violate the Clayton Act?

A Nash equilibrium is defined as

A Nash equilibrium in the duopoly game

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,the figure shows a ________ can profitably operate.

A cartel is most likely to occur in

Which of the following does antitrust law prohibit if it substantially lessens competition or creates a monopoly? i.acquiring a competitor's shares or assets ii.territorial confinement iii.becoming a director of a competing firm

The prisoners' dilemma game

Under the Clayton Act and its amendments,which of the following activities is illegal if it creates monopoly?

Does an oligopoly produce the efficient quantity of output or does it create a deadweight loss? Do the firms want to produce the efficient quantity of output? Explain your answer.

When the Federal Trade Commission decides whether to allow firms in an industry to merge,it uses the ________ to guide its decision. A) social interest theory B) HHI C) capture theory D) Sherman Act E) predatory pricing theory

In an oligopoly,there are

In an oligopoly,output is

The focus of antitrust legislation is to

-The only two firms in a market are trying to decide what price to charge.The payoff matrix for this duopoly game is shown above.The payoffs are thousands of dollars of economic profit.Which of the following statements is correct?

Predatory pricing occurs when a firm sets a ________ price to drive competitors out of business with the intention of then setting a ________ price.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Markets for Factors of Production

Economic Inequality

Filters

Predatory pricing occurs when a firm sets a price to drive competitors out of business with the intention of then setting a price.