Question 1

Section 1 of the Sherman Antitrust Act declares what to be illegal?

Accepted Answer

A)  every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations 
B)  mergers of a horizontal nature 
C)  any attempt to monopolize an industry 
D)  sharing of technology among competing firms or mergers where the effect is to lessen competition 
E)  exiting an industry if the remaining firm or firms have a market share that is too large. 
A)  every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations 
B)  mergers of a horizontal nature 
C)  any attempt to monopolize an industry 
D)  sharing of technology among competing firms or mergers where the effect is to lessen competition 
E)  exiting an industry if the remaining firm or firms have a market share that is too large.

Question 2

When firms in an oligopoly successfully collude and do not cheat on a cartel agreement,they can make a long-run economic profit similar to

Accepted Answer

A)  perfect competition. 
B)  monopoly. 
C)  monopolistic competition. 
D)  non-colluding oligopolies. 
E)  the firms in regulated industries. 
A)  perfect competition. 
B)  monopoly. 
C)  monopolistic competition. 
D)  non-colluding oligopolies. 
E)  the firms in regulated industries.

Question 3

Because it was found guilty of violating the Sherman Act,Microsoft will be subject to
A) rate of return regulation.
B) marginal cost pricing.
C) price cap regulation.
D) predatory pricing.
E) None of the above answers is correct.

Accepted Answer

The answer of Because it was found guilty of violating...

Question 4

If the Herfindahl-Hirschman Index in an industry is above 1,800,a merger that increases the Herfindahl-Hirschman Index by over 50 points will

Accepted Answer

A)  be allowed by the government. 
B)  be challenged by the government. 
C)  be encouraged by the government. 
D)  increase competition in that industry. 
E)  never be allowed to happen. 
A)  be allowed by the government. 
B)  be challenged by the government. 
C)  be encouraged by the government. 
D)  increase competition in that industry. 
E)  never be allowed to happen.

Question 5

The prisoners' dilemma is an example of

Accepted Answer

A)  product differentiation. 
B)  collusion. 
C)  game theory. 
D)  monopolistic competition. 
E)  decision making in a monopoly. 
A)  product differentiation. 
B)  collusion. 
C)  game theory. 
D)  monopolistic competition. 
E)  decision making in a monopoly.

Question 6

Explain what a cartel is and the difficulties faced in maintaining a cartel.

Accepted Answer

A cartel is a group of firms acting toge

Question 7

Which of the following is always a violation of the antitrust law?

Accepted Answer

A)  price fixing 
B)  price discrimination 
C)  resale price maintenance 
D)  predatory pricing 
E)  tying arrangements 
A)  price fixing 
B)  price discrimination 
C)  resale price maintenance 
D)  predatory pricing 
E)  tying arrangements

Question 8

In the United States,antitrust laws

Accepted Answer

A)  do not allow one person to be a director of two competing firms if being a member "substantially lessens competition." 
B)  break up a company if it is too large because "size itself is an offense." 
C)  do not always prosecute firms if they have fixed their prices. 
D)  regard excess competition as a felony under Section 3 of the Sherman Act. 
E)  place a maximum limit of 125 firms that are allowed to compete in any market. 
A)  do not allow one person to be a director of two competing firms if being a member "substantially lessens competition." 
B)  break up a company if it is too large because "size itself is an offense." 
C)  do not always prosecute firms if they have fixed their prices. 
D)  regard excess competition as a felony under Section 3 of the Sherman Act. 
E)  place a maximum limit of 125 firms that are allowed to compete in any market.

Question 9

"If firms in an oligopoly operate as a monopoly,the industry produces the most output and if they operate as perfect competitors,the industry produces the least output." Is the previous statement correct or incorrect? Why?

Accepted Answer

The statement is incorrect; it reverses

Question 10

Firms in oligopoly can achieve an economic profit

Accepted Answer

A)  always in the long run. 
B)  if they cooperate. 
C)  only if the demand for their products is inelastic. 
D)  only if the demand for their products is elastic. 
E)  if they reach the non-cooperative equilibrium. 
A)  always in the long run. 
B)  if they cooperate. 
C)  only if the demand for their products is inelastic. 
D)  only if the demand for their products is elastic. 
E)  if they reach the non-cooperative equilibrium.

Question 11

If a few oil-producing countries in the Middle East decide to jointly limit the production of oil,

Accepted Answer

A)  they are forming a cartel. 
B)  they would like the price of oil to be the same as if the market were perfectly competitive. 
C)  game theory does not apply to their actions because they are nations, not firms. 
D)  they will try to operate as a large, monopolistically competitive firm. 
E)  they will agree to lower the price of oil in order to increase their profits. 
A)  they are forming a cartel. 
B)  they would like the price of oil to be the same as if the market were perfectly competitive. 
C)  game theory does not apply to their actions because they are nations, not firms. 
D)  they will try to operate as a large, monopolistically competitive firm. 
E)  they will agree to lower the price of oil in order to increase their profits.

Question 12

The players in a game theory situation often do not act in their joint interest because of which of the following?

Accepted Answer

A)  They do not realize the benefit of cooperation. 
B)  Players strive to minimize their opponents' profits. 
C)  Players do not understand the game and its payoffs. 
D)  It is not in each player's self-interest to cooperate. 
E)  Players understand the game but they do not know which action(s) will benefit their joint interest. 
A)  They do not realize the benefit of cooperation. 
B)  Players strive to minimize their opponents' profits. 
C)  Players do not understand the game and its payoffs. 
D)  It is not in each player's self-interest to cooperate. 
E)  Players understand the game but they do not know which action(s) will benefit their joint interest.

Question 13

Tying arrangements are

Accepted Answer

A)  illegal if they substantially lessen competition. 
B)  used by regulators to force a monopoly to produce an efficient amount of production. 
C)  used by regulators to force a monopoly to charge an efficient price. 
D)  illegal according to the Sherman Act. 
E)  necessary in order for a firm to price discriminate. 
A)  illegal if they substantially lessen competition. 
B)  used by regulators to force a monopoly to produce an efficient amount of production. 
C)  used by regulators to force a monopoly to charge an efficient price. 
D)  illegal according to the Sherman Act. 
E)  necessary in order for a firm to price discriminate.

Question 14

A characteristic common in both oligopoly and monopolistic competition is

Accepted Answer

A)  a small number of firms compete in the market. 
B)  natural or legal barriers prevent the entry of new firms into the market. 
C)  each firm faces a downward-sloping demand curve. 
D)  the firms in the market are interdependent. 
E)  each firm has a large share of the market. 
A)  a small number of firms compete in the market. 
B)  natural or legal barriers prevent the entry of new firms into the market. 
C)  each firm faces a downward-sloping demand curve. 
D)  the firms in the market are interdependent. 
E)  each firm has a large share of the market.

Question 15

A cartel is

Accepted Answer

A)  a market structure with a small number of large firms. 
B)  a market structure with a large number of small firms. 
C)  a group of firms acting together to raise price, decrease output, and increase economic profit. 
D)  a market with only two firms. 
E)  another name for an oligopoly. 
A)  a market structure with a small number of large firms. 
B)  a market structure with a large number of small firms. 
C)  a group of firms acting together to raise price, decrease output, and increase economic profit. 
D)  a market with only two firms. 
E)  another name for an oligopoly.

Question 16

Which of the following is an example of a tying arrangement?

Accepted Answer

A)  preventing a buyer from reselling a product outside a specific area 
B)  selling one product only if another product is purchased 
C)  forcing the purchase of all necessities from a single firm 
D)  prohibiting a seller from selling a competing item 
E)  selling different units of a good to the same buyer at different prices. 
A)  preventing a buyer from reselling a product outside a specific area 
B)  selling one product only if another product is purchased 
C)  forcing the purchase of all necessities from a single firm 
D)  prohibiting a seller from selling a competing item 
E)  selling different units of a good to the same buyer at different prices.

Question 17

One way to identify oligopoly is to

Accepted Answer

A)  determine the market's minimum price. 
B)  determine the market's maximum price. 
C)  determine whether the firm's ATC exceeds price. 
D)  use the Herfindahl-Hirschman Index (HHI). 
E)  use the Efficiency test. 
A)  determine the market's minimum price. 
B)  determine the market's maximum price. 
C)  determine whether the firm's ATC exceeds price. 
D)  use the Herfindahl-Hirschman Index (HHI). 
E)  use the Efficiency test.

Question 18

If Polka Cola agrees to sell its cola to a retailer only if the retailer also buys a lemon-lime drink,Polka Up,then Polka Cola is engaged in

Accepted Answer

A)  a tying arrangement. 
B)  a requirement contracts. 
C)  an exclusive deal. 
D)  territorial confinement. 
E)  price discrimination. 
A)  a tying arrangement. 
B)  a requirement contracts. 
C)  an exclusive deal. 
D)  territorial confinement. 
E)  price discrimination.

Question 19

In the case against Microsoft,it was claimed that combining Internet Explorer and Windows was

Accepted Answer

A)  predatory pricing. 
B)  an illegal tying agreement. 
C)  creating one product that is convenient for the consumers. 
D)  illegal territorial confinement. 
E)  an inefficient resale maintenance agreement. 
A)  predatory pricing. 
B)  an illegal tying agreement. 
C)  creating one product that is convenient for the consumers. 
D)  illegal territorial confinement. 
E)  an inefficient resale maintenance agreement.

Question 20

In the above figure,the output of an oligopoly will range between

Accepted Answer

A)  0 and Q1. 
B)  Q1 and Q2. 
C)  Q1 and Q3. 
D)  Q2 and Q3. 
E)  0 and Q2. 
A)  0 and Q1. 
B)  Q1 and Q2. 
C)  Q1 and Q3. 
D)  Q2 and Q3. 
E)  0 and Q2.

Section 1 of the Sherman Antitrust Act declares what to be illegal?

When firms in an oligopoly successfully collude and do not cheat on a cartel agreement,they can make a long-run economic profit similar to

Because it was found guilty of violating the Sherman Act,Microsoft will be subject to A) rate of return regulation. B) marginal cost pricing. C) price cap regulation. D) predatory pricing. E) None of the above answers is correct.

If the Herfindahl-Hirschman Index in an industry is above 1,800,a merger that increases the Herfindahl-Hirschman Index by over 50 points will

The prisoners' dilemma is an example of

Explain what a cartel is and the difficulties faced in maintaining a cartel.

Which of the following is always a violation of the antitrust law?

In the United States,antitrust laws

"If firms in an oligopoly operate as a monopoly,the industry produces the most output and if they operate as perfect competitors,the industry produces the least output." Is the previous statement correct or incorrect? Why?

Firms in oligopoly can achieve an economic profit

If a few oil-producing countries in the Middle East decide to jointly limit the production of oil,

The players in a game theory situation often do not act in their joint interest because of which of the following?

Tying arrangements are

A characteristic common in both oligopoly and monopolistic competition is

A cartel is

Which of the following is an example of a tying arrangement?

One way to identify oligopoly is to

If Polka Cola agrees to sell its cola to a retailer only if the retailer also buys a lemon-lime drink,Polka Up,then Polka Cola is engaged in

In the case against Microsoft,it was claimed that combining Internet Explorer and Windows was

In the above figure,the output of an oligopoly will range between

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

Section 1 of the Sherman Antitrust Act declares what to be illegal?

When firms in an oligopoly successfully collude and do not cheat on a cartel agreement,they can make a long-run economic profit similar to

Because it was found guilty of violating the Sherman Act,Microsoft will be subject to A) rate of return regulation. B) marginal cost pricing. C) price cap regulation. D) predatory pricing. E) None of the above answers is correct.

If the Herfindahl-Hirschman Index in an industry is above 1,800,a merger that increases the Herfindahl-Hirschman Index by over 50 points will

The prisoners' dilemma is an example of

Explain what a cartel is and the difficulties faced in maintaining a cartel.

Which of the following is always a violation of the antitrust law?

In the United States,antitrust laws

"If firms in an oligopoly operate as a monopoly,the industry produces the most output and if they operate as perfect competitors,the industry produces the least output." Is the previous statement correct or incorrect? Why?

Firms in oligopoly can achieve an economic profit

If a few oil-producing countries in the Middle East decide to jointly limit the production of oil,

The players in a game theory situation often do not act in their joint interest because of which of the following?

Tying arrangements are

A characteristic common in both oligopoly and monopolistic competition is

A cartel is

Which of the following is an example of a tying arrangement?

One way to identify oligopoly is to

If Polka Cola agrees to sell its cola to a retailer only if the retailer also buys a lemon-lime drink,Polka Up,then Polka Cola is engaged in

In the case against Microsoft,it was claimed that combining Internet Explorer and Windows was

In the above figure,the output of an oligopoly will range between

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