Question 1

Table 17-9
Only two firms,Acme and Pinnacle,sell a particular product.The table below shows the demand curve for their product.Each firm has the same constant marginal cost of $10 and zero fixed cost.
 
-Refer to Table 17-9.If Acme and Pinnacle operate to jointly maximize profits and agree to share the profit equally,then how much profit will each of them earn?

Accepted Answer

A)   $9,000
B)   $8,750
C)   $8,000
D)   $6,750E) A) and B)
F) B) and C)

Question 2

Suppose that two poker players believe that they are superior players to the rest of the people at their table.Further suppose that the two players make an agreement to concede hands to each other in order to drive the other players from the game first.Economists would model such behavior as

Accepted Answer

A)   monopolistic competition.
B)   game theory.
C)   predatory pricing.
D)   a dominant strategy.E) B) and C)
F) B) and D)

Question 3

The Sherman Antitrust Act states that if a person can prove that he was damaged by an illegal arrangement to restrain trade,he could sue and recover three times the damages he sustained.

Accepted Answer

A) True 
 B)False

Question 4

In a game,a dominant strategy is

Accepted Answer

A)   the best strategy for a player to follow only if other players are cooperative.
B)   the best strategy for a player to follow,regardless of the strategies followed by other players.
C)   a strategy that must appear in every game.
D)   a strategy that leads to one player's interests dominating the interests of the other players.E) B) and C)
F) All of the above

Question 5

If the output effect from increased production is larger than the price effect,then an oligopolist would increase production.

Accepted Answer

A) True 
 B)False

Question 6

In a typical cartel agreement,the cartel maximizes profit when it

Accepted Answer

A)   behaves as a monopolist.
B)   behaves as a duopolist.
C)   is flexible in enforcing production targets.
D)   behaves as a perfectly competitive firm.E) A) and D)
F) None of the above

Question 7

Table 17-3.The information in the table below shows the total demand for premium-channel digital cable TV subscriptions in a small urban market.Assume that each digital cable TV operator pays a fixed cost of $200,000 (per year) to provide premium digital channels in the market area and that the marginal cost of providing the premium channel service to a household is zero.
 
-Refer to Table 17-3.Assume there are two profit-maximizing digital cable TV companies operating in this market.Further assume that they are not able to collude on the price and quantity of premium digital channel subscriptions to sell.How many premium digital channel cable TV subscriptions will be sold altogether when this market reaches a Nash equilibrium?

Accepted Answer

A)   6,000
B)   9,000
C)   12,000
D)   15,000E) A) and B)
F) B) and D)

Question 8

Which of the following is correct? When oligopolies collude

Accepted Answer

A)   they make higher profits and consumers of the product are better off.
B)   they make higher profits but consumers of the product are worse off.
C)   they make lower profits and consumers of the product are better off.
D)   they make lower profits and consumers of the product are worse off.E) B) and C)
F) A) and D)

Question 9

Define collusion.

Accepted Answer

Collusion is an agre...

Question 10

An agreement between two duopolists to function as a monopolist usually breaks down because

Accepted Answer

A)   they cannot agree on the price that a monopolist would charge.
B)   they cannot agree on the output that a monopolist would produce.
C)   each duopolist wants a larger share of the market in order to capture more profit.
D)   each duopolist wants to charge a higher price than the monopoly price.E) A) and B)
F) None of the above

Question 11

When strategic interactions are important to pricing and production decisions,a typical firm will

Accepted Answer

A)   set the price of its product equal to marginal cost.
B)   consider how competing firms might respond to its actions.
C)   generally operate as if it is a monopolist.
D)   consider exiting the market.E) A) and C)
F) B) and D)

Question 12

Hot dog vendors on the beach fail to cooperate with one another on the quantity of hot dogs they should sell to earn monopoly profits.A consequence of their failure is that,relative to the outcome the vendors would like, (i) 
The quantity of hot dogs supplied is closer to the socially optimal level.
(ii) 
The price of hot dogs is closer to marginal cost.
(iii) 
The hot dog market at the beach is less competitive.

Accepted Answer

A)   (i) and (ii) 
B)   (ii) and (iii) 
C)   (i) and (iii) 
D)   (iii) onlyE) B) and C)
F) B) and D)

Question 13

Which of the following statements is correct?

Accepted Answer

A)   When duopoly firms reach a Nash equilibrium,their combined level of output is the monopoly level of output.
B)   When oligopoly firms collude,they are behaving as a cartel.
C)   In an oligopoly,self-interest drives the market to the competitive outcome.
D)   An oligopoly is an example of monopolistic competition.E) B) and D)
F) B) and C)

Question 14

Explain the practice of tying and discuss why it is controversial.

Accepted Answer

Tying is the practice of bundling goods ...

Question 15

When prisoners' dilemma games are repeated over and over,sometimes the threat of penalty causes both parties to cooperate.

Accepted Answer

A) True 
 B)False

Question 16

In the prisoners' dilemma game,confessing is a dominant strategy for each of the two prisoners.

Accepted Answer

A) True 
 B)False

Question 17

There are two types of markets in which firms face some competition yet are still able to have some control over the prices of their products.Those two types of market are

Accepted Answer

A)   monopolistic competition and oligopoly.
B)   duopoly and triopoly.
C)   perfect competition and monopolistic competition.
D)   duopoly and imperfect competition.E) A) and B)
F) A) and C)

Question 18

Table 17-10
The table shows the town of Driveaway's demand schedule for gasoline.Assume the town's gasoline seller(s) incurs a cost of $2 for each gallon sold,with no fixed cost.
 
-Refer to Table 17-10.If the market for gasoline in Driveaway is a monopoly,then the monopolist's maximum profit is

Accepted Answer

A)   $350.
B)   $400.
C)   $450.
D)   $500.E) All of the above
F) A) and D)

Question 19

Table 17-9
Only two firms,Acme and Pinnacle,sell a particular product.The table below shows the demand curve for their product.Each firm has the same constant marginal cost of $10 and zero fixed cost.
 
-Refer to Table 17-9.What is the socially efficient quantity of the product?

Accepted Answer

A)   700
B)   1000
C)   1200
D)   1400E) A) and B)
F) None of the above

Question 20

One way that public policy encourages cooperation among oligopolists is through antitrust law.

Accepted Answer

A) True 
 B)False

Exam 17: Oligopoly

Correct Answer
verified

Suppose that two poker players believe that they are superior players to the rest of the people at their table.Further suppose that the two players make an agreement to concede hands to each other in order to drive the other players from the game first.Economists would model such behavior as

Correct Answer
verified

Which of the following is correct? When oligopolies collude

Correct Answer
verified

In the prisoners' dilemma game,confessing is a dominant strategy for each of the two prisoners.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

When prisoners' dilemma games are repeated over and over,sometimes the threat of penalty causes both parties to cooperate.

Correct Answer
verified

Table 17-10 The table shows the town of Driveaway's demand schedule for gasoline.Assume the town's gasoline seller(s) incurs a cost of $2 for each gallon sold,with no fixed cost. -Refer to Table 17-10.If the market for gasoline in Driveaway is a monopoly,then the monopolist's maximum profit is

Correct Answer
verified

Correct Answer
verified

The Sherman Antitrust Act states that if a person can prove that he was damaged by an illegal arrangement to restrain trade,he could sue and recover three times the damages he sustained.

Correct Answer
verified

One way that public policy encourages cooperation among oligopolists is through antitrust law.

Correct Answer
verified

Table 17-9 Only two firms,Acme and Pinnacle,sell a particular product.The table below shows the demand curve for their product.Each firm has the same constant marginal cost of $10 and zero fixed cost. -Refer to Table 17-9.What is the socially efficient quantity of the product?

Correct Answer
verified

Define collusion.

Correct Answer
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Collusion is an agre...
View Answer

There are two types of markets in which firms face some competition yet are still able to have some control over the prices of their products.Those two types of market are

Correct Answer
verified

If the output effect from increased production is larger than the price effect,then an oligopolist would increase production.

Correct Answer
verified

Explain the practice of tying and discuss why it is controversial.

Correct Answer
verified
Tying is the practice of bundling goods ...
View Answer

When strategic interactions are important to pricing and production decisions,a typical firm will

Correct Answer
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In a game,a dominant strategy is

Correct Answer
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An agreement between two duopolists to function as a monopolist usually breaks down because

Correct Answer
verified

Correct Answer
verified

In a typical cartel agreement,the cartel maximizes profit when it

Correct Answer
verified

Exam 17: Oligopoly

Correct AnswerverifiedShow Answer

Suppose that two poker players believe that they are superior players to the rest of the people at their table.Further suppose that the two players make an agreement to concede hands to each other in order to drive the other players from the game first.Economists would model such behavior as

Correct AnswerverifiedShow Answer

Which of the following is correct? When oligopolies collude

Correct AnswerverifiedShow Answer

In the prisoners' dilemma game,confessing is a dominant strategy for each of the two prisoners.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

When prisoners' dilemma games are repeated over and over,sometimes the threat of penalty causes both parties to cooperate.

Correct AnswerverifiedShow Answer

Table 17-10 The table shows the town of Driveaway's demand schedule for gasoline.Assume the town's gasoline seller(s) incurs a cost of $2 for each gallon sold,with no fixed cost. -Refer to Table 17-10.If the market for gasoline in Driveaway is a monopoly,then the monopolist's maximum profit is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Sherman Antitrust Act states that if a person can prove that he was damaged by an illegal arrangement to restrain trade,he could sue and recover three times the damages he sustained.

Correct AnswerverifiedShow Answer

One way that public policy encourages cooperation among oligopolists is through antitrust law.

Correct AnswerverifiedShow Answer

Table 17-9 Only two firms,Acme and Pinnacle,sell a particular product.The table below shows the demand curve for their product.Each firm has the same constant marginal cost of $10 and zero fixed cost. -Refer to Table 17-9.What is the socially efficient quantity of the product?

Correct AnswerverifiedShow Answer

Define collusion.

Correct AnswerverifiedCollusion is an agre...View AnswerShow Answer

There are two types of markets in which firms face some competition yet are still able to have some control over the prices of their products.Those two types of market are

Correct AnswerverifiedShow Answer

If the output effect from increased production is larger than the price effect,then an oligopolist would increase production.

Correct AnswerverifiedShow Answer

Explain the practice of tying and discuss why it is controversial.

Correct AnswerverifiedTying is the practice of bundling goods ...View AnswerShow Answer

When strategic interactions are important to pricing and production decisions,a typical firm will

Correct AnswerverifiedShow Answer

In a game,a dominant strategy is

Correct AnswerverifiedShow Answer

An agreement between two duopolists to function as a monopolist usually breaks down because

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a typical cartel agreement,the cartel maximizes profit when it

Correct AnswerverifiedShow Answer

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Collusion is an agre...
View Answer

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Correct Answer
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Correct Answer
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Tying is the practice of bundling goods ...
View 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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