Econ102: Chapter 17 Quiz

From society's standpoint, cooperation among oligopolists is a. desirable, because it leads to an outcome closer to the b. competitive outcome than what would be observed in the absence of cooperation. b. undesirable, because it leads to output levels that are too high and prices that are too high. c. undesirable, because it leads to output levels that are too low and prices that are too high. d. desirable, because it leads to less conflict among firms and a wider variety of products for consumers.

Cartels are difficult to maintain because a. antitrust laws are difficult to enforce. b. firms pay little attention to the decisions made by other firms. c. there is always tension between cooperation and self-interest in a cartel. d. cartel agreements are conducive to monopoly outcomes.

The equilibrium price in a market characterized by oligopoly is a. lower than in monopoly markets and lower than in perfectly competitive markets. b. lower than in monopoly markets and higher than in perfectly competitive markets. c. higher than in monopoly markets and lower than in perfectly competitive markets. d. higher than in monopoly markets and higher than in perfectly competitive markets.

An agreement among firms in a market about quantities to produce or prices to charge is called a. excess capacity. b. collusion. c. tying. d. a strategic situation.

As the number of firms in an oligopoly increases, the a. individual firms' profits increase. b. price and quantity approach the monopoly levels. c. price effect exceeds the output effect. d. price approaches marginal cost, and the quantity approaches the socially efficient level.

When oligopolistic firms interacting with one another each choose their best strategy given the strategies chosen by other firms in the market, we have a. a group of oligopolists behaving as a monopoly. b. a cartel. c. a Nash equilibrium. d. the perfectly competitive outcome.

Antitrust laws in general are used to a. prevent oligopolists from acting in ways that make markets less competitive. b. encourage all firms to cut production levels and cut prices. c. encourage oligopolists to pursue cooperative-interest at the expense of self-interest. d. encourage frivolous lawsuits among competitive firms.

Predatory pricing occurs when a firm a. exercises its monopoly power by raising its price. b. cuts its prices temporarily in order to drive out any competition. c. exercises its oligopoly power by raising its price through the formation of a cartel. d. cuts its prices in order make itself more competitive.

In the language of game theory, a situation in which each person must consider how others might respond to his or her own actions is called a a. strategic situation. b. tactical situation. c. cooperative situation. d. quantifiable situation.

When firms are faced with making strategic choices in order to maximize profit, economists typically use a. the theory of aggressive competition to model their behavior. b. cartel theory to model their behavior. c. game theory to model their behavior. d. the theory of monopoly to model their behavior.

The Sherman Act made cooperative agreements a. a crime, but did not give direction on possible penalties. b. enforceable with proper judicial review. c. unenforceable outside of established judicial review processes. d. a criminal conspiracy.

An oligopoly is a market in which a. the actions of one seller in the market have no impact on the other sellers' profits. b. there are many price-taking firms, each offering a product similar or identical to the products offered by other firms in the market. c. firms are price takers. d. there are only a few sellers, each offering a product similar or identical to the products offered by other firms in the market.

The higher the concentration ratio, the a. less competitive the industry. b. Both a and c are correct. c. more control an individual firm has to set prices. d. more competitive the industry.

Which of the following industries has the highest concentration ratio? a. wheat b. dog food c. novels d. cigarettes

Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. What is the four firm concentration ratio in Industry X? a. 90% b. 99% c. 6% d. 44%

The equilibrium quantity in markets characterized by oligopoly is a. higher than in monopoly markets and higher than in perfectly competitive markets. b. higher than in monopoly markets and lower than in perfectly competitive markets. c. lower than in monopoly markets and higher than in perfectly competitive markets. d. lower than in monopoly markets and lower than in perfectly competitive markets.

In the prisoners' dilemma game with Bonnie and Clyde as the players, the likely outcome is one a. in which both Bonnie and Clyde confess. b. that is ideal in terms of Bonnie's self-interest and in terms of Clyde's self-interest. c. that involves neither Bonnie nor Clyde pursuing a dominant strategy. d. in which neither Bonnie nor Clyde confesses.

A dominant strategy is one that a. increases the total payoff for the player. b. is best for the player, regardless of what strategies other players follow. c. makes every player better off. c. makes at least one player better off without hurting the competitiveness of any other player.

Two CEOs from different firms in the same market collude to fix the price in the market. This action violates the a. Sherman Antitrust Act of 1890. b. Jackson-Microsoft ruling of 2000. c. Clayton Act of 1914. d. Crandall-Putnam ruling of 1983.

In the U.S. government's 1998 suit against the Microsoft Corporation, a central issue was whether Microsoft should be allowed to integrate its Internet browser into its Windows operating system. Microsoft responded that a. this integration of products is an example of tying, and the U.S. Supreme Court has consistently ruled that tying is a perfectly acceptable and legal business practice. b. putting new features into old products is a natural part of technological practice. c. this integration of products is an example of resale price maintenance, and the U.S. Supreme Court has consistently ruled that fair trade is a perfectly acceptable and legal business practice. d. it would discontinue this integration of products, provided a speedy resolution of the government's case could be reached.