Question 1

An oligopoly is a market situation in which

Accepted Answer

A)  there are many firms producing differentiated products.
B)  there is a single firm producing several varieties of a product.
C)  all the sellers act independently of the others.
D)  there are very few sellers and they recognize their strategic dependence on one another.E) A) and B)
F) C) and D)

Question 2

One of the fundamental problems a cartel faces is

Accepted Answer

A)  to determine how much each producer will decrease its output.
B)  to determine how much each producer will increase its output.
C)  to determine how much each producer will lower it price.
D)  to determine how much each producer will lower its profit.E) All of the above
F) B) and C)

Question 3

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)  OligopolyE) A) and D)
F) B) and D)

Question 4

For years,your parents claimed they had no desire to join a social web site.Recently,however,they joined one and said they did so because all their relatives have joined the same site with them.Your parents' behavior is an example of

Accepted Answer

A)  a switching cost.
B)  a network effect.
C)  the impact of positive market feedback.
D)  the impact of negative market feedback.E) A) and B)
F) B) and C)

Question 5

Which of the following is likely among the most concentrated industries in the United States?

Accepted Answer

A)  printing and publishing
B)  soft drinks
C)  tobacco products
D)  household vacuum cleanersE) B) and D)
F) A) and B)

Question 6

Games can be judged according to the payoffs

Accepted Answer

A)  as zero-sum,negative-sum,and positive-sum games.
B)  as collusive or noncollusive games.
C)  as competitive or noncompetitive games.
D)  whether all companies participate or not.E) A) and B)
F) B) and C)

Question 7

When Goodyear increases its production when Michelin reduces its production,Goodyear is playing a

Accepted Answer

A)  negative-sum game.
B)  cooperative game.
C)  non-cooperative game.
D)  reaction function game.E) A) and B)
F) A) and C)

Question 8

Between World War II and the 1970s,three firms-General Motors,Chrysler,and Ford-produced and sold nearly all the output of the U.S.auto industry.These three firms had

Accepted Answer

A)  an oligopoly.
B)  monopolistic competition.
C)  colluded.
D)  a pure monopoly.E) B) and D)
F) B) and C)

Question 9

Long-run economic profits are possible under

Accepted Answer

A)  perfect competition and oligopoly.
B)  monopolistic competition and monopoly.
C)  oligopoly and monopoly.
D)  monopolistic competition and oligopoly.E) A) and B)
F) A) and C)

Question 10

Four-Firm Concentration Ratios   Industry  Ratio (percent)   W 72 X 30 Y 84 Z 55\begin{array} { c c } 	ext { Industry } & 	ext { Ratio (percent)  } \\hline 	ext { W } & 72 \	ext { X } & 30 \	ext { Y } & 84 \	ext { Z } & 55\end{array} Industry  W  X  Y  Z ​ Ratio (percent)  72308455​​ 
-The most competitive industry of those presented in the above table is likely to be industry

Accepted Answer

A)  W.
B)  X.
C)  Y.
D)  Z. E) B) and C)
F) B) and D)

Question 11

Which of the following is an example of a horizontal merger?

Accepted Answer

A)  Northeastern Illinois University merging with McDonald's.
B)  Northeastern Illinois University merging with a training academy for new professors.
C)  Northeastern Illinois University merging with Roosevelt University.
D)  Northeastern Illinois University going from a public to a private university.E) A) and C)
F) A) and B)

Question 12

Straight Cut beauty salon merges with Clean-Cut beauty salon.This is an example of

Accepted Answer

A)  conglomerate merger.
B)  concentration ratio.
C)  vertical merger.
D)  horizontal merger.E) A) and B)
F) B) and C)

Question 13

Vertical merger occurs when

Accepted Answer

A)  two firms merge where one had sold its output to the other as an input.
B)  the merger moves the combined firm onto the horizontal portion of its long-run average cost curve.
C)  two firms merge where each is about the same size.
D)  two firms producing a similar product merge.E) A) and C)
F) All of the above

Question 14

Horizontal merger occurs when

Accepted Answer

A)  two firms merge where one had sold its output to the other as an input.
B)  the merger moves the combined firm onto the horizontal portion of its long-run average cost curve.
C)  two firms merge where each is about the same size.
D)  two firms producing a similar product merge.E) All of the above
F) A) and D)

Question 15

Which of the following is NOT subject to a network effect?

Accepted Answer

A)  the layout of the keys on your keyboard
B)  rotating your tires every six months
C)  using a fax machine
D)  purchasing a new high-definition DVD playerE) None of the above
F) A) and B)

Question 16

The joining of a firm with another to which it sells an output or from which it buys an input is known as

Accepted Answer

A)  a conglomerate merger.
B)  a horizontal merger.
C)  a vertical merger.
D)  economies to scale.E) A) and D)
F) A) and C)

Question 17

The prisoner's dilemma shows that

Accepted Answer

A)  players are better off if they act independently.
B)  monopolies are beneficial to society.
C)  people will always cheat.
D)  players would be better off if they cooperated.E) B) and C)
F) A) and D)

Question 18

Which of the following combinations would constitute a vertical merger?

Accepted Answer

A)  General Motors and Bridgestone Tire Company
B)  General Motors and Ford Motor Company
C)  Philip Morris and RJ Reynolds
D)  Philip Morris and Barnes & Nobles BooksellersE) A) and B)
F) All of the above

Question 19

A game in which players collectively lose is known as a

Accepted Answer

A)  zero-sum game.
B)  positive-sum game.
C)  negative-sum game.
D)  cooperative game.E) None of the above
F) B) and C)

Question 20

The manner in which one oligopolist reacts to a change in price,output,or quality made by another oligopolist in the industry is

Accepted Answer

A)  a cooperative game.
B)  the reaction function.
C)  a zero-sum game.
D)  the concentration ratio.E) B) and D)
F) C) and D)

Exam 13: Oligopoly and Strategic Behavior

Which of the following is likely among the most concentrated industries in the United States?

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Games can be judged according to the payoffs

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An oligopoly is a market situation in which

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Which of the following combinations would constitute a vertical merger?

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When Goodyear increases its production when Michelin reduces its production,Goodyear is playing a

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Horizontal merger occurs when

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The manner in which one oligopolist reacts to a change in price,output,or quality made by another oligopolist in the industry is

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Straight Cut beauty salon merges with Clean-Cut beauty salon.This is an example of

Correct AnswerverifiedShow Answer

Between World War II and the 1970s,three firms-General Motors,Chrysler,and Ford-produced and sold nearly all the output of the U.S.auto industry.These three firms had

Correct AnswerverifiedShow Answer

For years,your parents claimed they had no desire to join a social web site.Recently,however,they joined one and said they did so because all their relatives have joined the same site with them.Your parents' behavior is an example of

Correct AnswerverifiedShow Answer

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

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Which of the following is NOT subject to a network effect?

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A game in which players collectively lose is known as a

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Long-run economic profits are possible under

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The joining of a firm with another to which it sells an output or from which it buys an input is known as

Correct AnswerverifiedShow Answer

Vertical merger occurs when

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The prisoner's dilemma shows that

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One of the fundamental problems a cartel faces is

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Which of the following is an example of a horizontal merger?

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