Question 1

-If two duopolists can stick to a cartel agreement to boost their prices, then both

Accepted Answer

A)  make greater economic profits than if they did not collude.
B)  price at marginal cost.
C)  price below average total cost.
D)  decrease their economic profits.
E)  increase their production so that each produces more than if they did not collude.

Question 2

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.

Question 3

________ is an agreement between a manufacturer and a distributor on the price at which a product will be resold.

Accepted Answer

A)  Resale price maintenance
B)  Price discrimination
C)  Price fixing
D)  Predatory pricing
E)  A tying arrangement

Question 4

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.

Question 5

-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 efficient scale for one firm is ________ units per hour.

Accepted Answer

A)  2,000
B)  4,000
C)  8,000
D)  10,000
E)  more than 10,000

Question 6

-If an oligopolistic game is repeatedly played, which of the following can occur?

Accepted Answer

A)  Players can learn ways to cooperate and make an economic profit.
B)  The competitive price and output consistently is the final result.
C)  Firms can learn how to cheat more effectively on the other player.
D)  One firm will be driven out of business.
E)  An implicit agreement is reached in which one firm constantly cheats on the cartel and the other firm complies with it.

Question 7

Suppose that an industry has an HHI of 1,900.Two firms in the industry want to merge.Under which conditions will the Federal Trade Commission challenge the merger?

Accepted Answer

A)  The market is considered competitive, so the merger will not be challenged.
B)  The merger will be challenged if it raises the HHI by 100 or more points.
C)  The merger will be challenged if it raises the HHI by 50 or more points.
D)  The merger will be challenged if it raises the HHI by 200 or more points.
E)  The merger will be challenged if it raises the HHI by 500 or more points.

Question 8

The government believes that which entry barrier has allowed Microsoft to gain monopoly power?

Accepted Answer

A)  ownership of the entire supply of a resource
B)  patents
C)  trademarks
D)  economies of scale and network economies
E)  territorial confinement

Question 9

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.

Question 10

-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.In the Nash equilibrium, Firm A will set a price of ________ and Firm B will set a price of ________.

Accepted Answer

A)  $10; $20
B)  $20; $10
C)  $10; $10
D)  $20; $20
E)  $20; something, but more information is needed to determine Firm B's price

Question 11

All games have which features?

Accepted Answer

A)  prices, rules, and payoffs
B)  rules, markets, and prices
C)  rules, strategies, and payoffs
D)  rules, strategies, and costs
E)  equilibrium, prices, and quantities

Question 12

Daryl's Inc.has formed a cartel with the two other firms in its industry.In which of the following market structures does Daryl's operate?

Accepted Answer

A)  monopolistic competition.
B)  oligopoly.
C)  perfect competition.
D)  monopoly.
E)  legally protected monopoly.

Question 13

Which of the following is found ONLY in oligopoly?

Accepted Answer

A)  producers who sell identical products
B)  one firm's actions affect another firm's profit
C)  entry into the industry is blocked
D)  sellers face a downward sloping demand curve for their product
E)  the firm's demand curve is horizontal

Question 14

In a prisoners' dilemma game, in the Nash equilibrium

Accepted Answer

A)  neither player gets his or her best outcome.
B)  both players get their best outcome.
C)  one player gets his or her best outcome and the other player does not.
D)  collusion would not alter the outcome.
E)  Either answer A or C might be correct depending on whether the players communicate with each other or do not communicate with each other.

Question 15

-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

Question 16

A Nash equilibrium
I∙is named after the Nobel prize winning economist, John Nash.
Ii∙occurs when each player chooses the best strategy given the strategy of the other player.
Iii∙must give the best possible outcome for both players.

Accepted Answer

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

Question 17

Setting a price so low that competitors are driven out of a market and then boosting the price is called

Accepted Answer

A)  predatory pricing.
B)  a tying arrangement.
C)  resale price maintenance.
D)  price fixing.
E)  price discrimination.

Question 18

When a city licenses only 3 taxi firms to serve the market, the city has created a

Accepted Answer

A)  cartel.
B)  legal monopoly.
C)  monopolistically competitive market.
D)  legal oligopoly.
E)  natural oligopoly.

Question 19

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 20

If a legal oligopoly exists,

Accepted Answer

A)  the firms always engage in a "tit for tat" strategy.
B)  there is the possibility that the market is large enough for more firms.
C)  the firms never collude.
D)  monopoly profits cannot be earned.
E)  the firms may legally merge and become a monopoly.

Exam 18: Oligopoly

-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 efficient scale for one firm is ________ units per hour.

Correct Answer
verified

When a city licenses only 3 taxi firms to serve the market, the city has created a

Correct Answer
verified

Setting a price so low that competitors are driven out of a market and then boosting the price is called

Correct Answer
verified

In a prisoners' dilemma game, in the Nash equilibrium

Correct Answer
verified

-If two duopolists can stick to a cartel agreement to boost their prices, then both

Correct Answer
verified

________ is an agreement between a manufacturer and a distributor on the price at which a product will be resold.

Correct Answer
verified

-If an oligopolistic game is repeatedly played, which of the following can occur?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Daryl's Inc.has formed a cartel with the two other firms in its industry.In which of the following market structures does Daryl's operate?

Correct Answer
verified

-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.

Correct Answer
verified

Correct Answer
verified
In order to keep oil prices high, as has...
View Answer

All games have which features?

Correct Answer
verified

-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.In the Nash equilibrium, Firm A will set a price of and Firm B will set a price of .

Correct Answer
verified

If a legal oligopoly exists,

Correct Answer
verified

Suppose that an industry has an HHI of 1,900.Two firms in the industry want to merge.Under which conditions will the Federal Trade Commission challenge the merger?

Correct Answer
verified

The government believes that which entry barrier has allowed Microsoft to gain monopoly power?

Correct Answer
verified

Which of the following is found ONLY in oligopoly?

Correct Answer
verified

A Nash equilibrium I∙is named after the Nobel prize winning economist, John Nash. Ii∙occurs when each player chooses the best strategy given the strategy of the other player. Iii∙must give the best possible outcome for both players.

Correct Answer
verified

Exam 18: Oligopoly

-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 efficient scale for one firm is ________ units per hour.

Correct AnswerverifiedShow Answer

When a city licenses only 3 taxi firms to serve the market, the city has created a

Correct AnswerverifiedShow Answer

Setting a price so low that competitors are driven out of a market and then boosting the price is called

Correct AnswerverifiedShow Answer

In a prisoners' dilemma game, in the Nash equilibrium

Correct AnswerverifiedShow Answer

-If two duopolists can stick to a cartel agreement to boost their prices, then both

Correct AnswerverifiedShow Answer

________ is an agreement between a manufacturer and a distributor on the price at which a product will be resold.

Correct AnswerverifiedShow Answer

-If an oligopolistic game is repeatedly played, which of the following can occur?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Daryl's Inc.has formed a cartel with the two other firms in its industry.In which of the following market structures does Daryl's operate?

Correct AnswerverifiedShow Answer

-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.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIn order to keep oil prices high, as has...View AnswerShow Answer

All games have which features?

Correct AnswerverifiedShow Answer

-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.In the Nash equilibrium, Firm A will set a price of ________ and Firm B will set a price of ________.

Correct AnswerverifiedShow Answer

If a legal oligopoly exists,

Correct AnswerverifiedShow Answer

Suppose that an industry has an HHI of 1,900.Two firms in the industry want to merge.Under which conditions will the Federal Trade Commission challenge the merger?

Correct AnswerverifiedShow Answer

The government believes that which entry barrier has allowed Microsoft to gain monopoly power?

Correct AnswerverifiedShow Answer

Which of the following is found ONLY in oligopoly?

Correct AnswerverifiedShow Answer

A Nash equilibrium I∙is named after the Nobel prize winning economist, John Nash. Ii∙occurs when each player chooses the best strategy given the strategy of the other player. Iii∙must give the best possible outcome for both players.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
In order to keep oil prices high, as has...
View Answer

Correct Answer
verified

-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.In the Nash equilibrium, Firm A will set a price of and Firm B will set a price of .

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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