Question 1

When price is above marginal cost,selling one more unit at the current price will increase profit.This concept is known as the

Accepted Answer

A)  income effect.
B)  price effect.
C)  output effect.
D)  cartel effect.E) A) and D)
F) A) and C)

Question 2

For cartels,as the number of firms (members of the cartel) increases,

Accepted Answer

A)  the monopoly outcome becomes more likely.
B)  the magnitude of the price effect decreases.
C)  the more concerned each seller is about its own impact on the market price.
D)  the easier it becomes to observe members violating their agreements.E) A) and B)
F) A) and C) B

Question 3

From society's standpoint,cooperation among oligopolists is

Accepted Answer

A)  desirable,because it leads to less conflict among firms and a wider variety of products for consumers.
B)  desirable,because it leads to an outcome closer to the competitive outcome than what would be observed in the absence of cooperation.
C)  undesirable,because it leads to output levels that are too low and prices that are too high.
D)  undesirable,because it leads to output levels that are too high and prices that are too high.E) A) and B)
F) All of the above

Question 4

Policymakers should be aggressive in using their powers to place limits on firm behavior,because business practices that appear to reduce competition never have any legitimate purposes.

Accepted Answer

A) True 
 B)False  False

Question 5

Table 17-22 
-Refer to Table 17-22.Which of the following statements is correct if Brian and Matt will play this game only once?

Accepted Answer

A)  The Nash equilibrium is the high price.
B)  A Nash equilibrium cannot be established unless Brian and Matt collude.
C)  A Nash equilibrium cannot be established without the players repeating the game.
D)  The Nash equilibrium price is the low price.E) A) and B)
F) A) and C)

Question 6

Resale price maintenance prevents retailers from competing on price.

Accepted Answer

A) True 
 B)False

Question 7

Games that are played more than once generally

Accepted Answer

A)  lead to outcomes dominated purely by self-interest.
B)  lead to outcomes that do not reflect joint rationality.
C)  encourage cheating on cartel production quotas.
D)  make collusive arrangements easier to enforce.E) A) and B)
F) A) and C)

Question 8

In a duopoly if the firms have agreed to jointly maximize profits,then each firm can increase its current profits by producing more.

Accepted Answer

A) True 
 B)False

Question 9

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) All of the above
F) C) and D)

Question 10

Outline the purpose of antitrust laws.What do they accomplish?

Accepted Answer

The purpose of antitrust laws ...

Question 11

In studying oligopolistic markets,economists assume that

Accepted Answer

A)  there is no conflict or tension between cooperation and self-interest.
B)  it is easy for a group of firms to cooperate and thereby establish and maintain a monopoly outcome.
C)  each oligopolist cares only about its own profit.
D)  strategic decisions do not play a role in such markets.E) All of the above
F) B) and C)

Question 12

In general,game theory is the study of

Accepted Answer

A)  how people behave in strategic situations.
B)  how people behave when the possible actions of other people are irrelevant.
C)  oligopolistic markets.
D)  all types of markets,including competitive markets,monopolistic markets,and oligopolistic markets.E) B) and D)
F) C) and D)

Question 13

Economists claim that a resale price maintenance agreement is not anti-competitive because

Accepted Answer

A)  suppliers are never able to exercise noncompetitive market power.
B)  if a supplier has market power,it will be likely to exert that power through wholesale price rather than retail price.
C)  retail markets are inherently noncompetitive.
D)  retail cartel agreements cannot increase retail profits.E) B) and D)
F) A) and B)

Question 14

Scenario 17-1.Assume that the countries of Irun and Urun are the only two producers of crude oil.Further assume that both countries have entered into an agreement to maintain certain production levels in order to maximize profits.In the world market for oil,the demand curve is downward sloping.
-Refer to Scenario 17-1.The fact that both countries have colluded to earn higher profit shows their desire to keep their combined level of output

Accepted Answer

A)  above the monopoly level.
B)  below the Nash equilibrium level.
C)  equal to the Nash equilibrium level.
D)  above the Nash equilibrium level.E) None of the above
F) All of the above B

Question 15

The prisoners' dilemma game

Accepted Answer

A)  provides insight into why cooperation is individually rational.
B)  provides insight into why cooperation is difficult.
C)  is a game in which neither player has a dominant strategy.
D)  is a game in which exactly one of the two players has a dominant strategy.E) A) and C)
F) None of the above

Question 16

Much of the research on game theory in recent decades was driven by attempts to analyze actions of players during

Accepted Answer

A)  the Great Depression of the 1930s.
B)  World War II.
C)  the Cold War between the United States and the Soviet Union.
D)  the ascendancy of the conservative movement in the United States in the 1970s and 1980s.E) A) and B)
F) A) and C)

Question 17

After initial success,the OPEC cartel saw the price of oil and the revenues of its members decline due,in part,to

Accepted Answer

A)  the low elasticity of demand for oil in the short run.
B)  the large number of buyers from each member nation.
C)  surging demand for oil in the early 1980s.
D)  OPEC members failing to produce their agreed-upon production levels.E) None of the above
F) A) and C)

Question 18

A group of firms that collude is called a cartel.

Accepted Answer

A) True 
 B)False

Question 19

A special kind of imperfectly competitive market that has only two firms is called

Accepted Answer

A)  a two-tier competitive structure.
B)  an incidental monopoly.
C)  a doublet.
D)  a duopoly.E) All of the above
F) A) and D)

Question 20

Predatory pricing refers to

Accepted Answer

A)  a firm selling certain products together rather than separately.
B)  a monopoly firm reducing its price in an attempt to maintain its monopoly.
C)  firms colluding to set prices.
D)  All of the above are examples of predatory pricing.E) All of the above
F) C) and D)

Exam 17: Oligopoly

When price is above marginal cost,selling one more unit at the current price will increase profit.This concept is known as the

Correct Answer
verified

For cartels,as the number of firms (members of the cartel) increases,

Correct Answer
verified
B

From society's standpoint,cooperation among oligopolists is

Correct Answer
verified

Policymakers should be aggressive in using their powers to place limits on firm behavior,because business practices that appear to reduce competition never have any legitimate purposes.

Correct Answer
verified
False

Table 17-22 -Refer to Table 17-22.Which of the following statements is correct if Brian and Matt will play this game only once?

Correct Answer
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Resale price maintenance prevents retailers from competing on price.

Correct Answer
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Games that are played more than once generally

Correct Answer
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In a duopoly if the firms have agreed to jointly maximize profits,then each firm can increase its current profits by producing more.

Correct Answer
verified

In a game,a dominant strategy is

Correct Answer
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Outline the purpose of antitrust laws.What do they accomplish?

Correct Answer
verified
The purpose of antitrust laws ...
View Answer

In studying oligopolistic markets,economists assume that

Correct Answer
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In general,game theory is the study of

Correct Answer
verified

Economists claim that a resale price maintenance agreement is not anti-competitive because

Correct Answer
verified

Correct Answer
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B

The prisoners' dilemma game

Correct Answer
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Much of the research on game theory in recent decades was driven by attempts to analyze actions of players during

Correct Answer
verified

After initial success,the OPEC cartel saw the price of oil and the revenues of its members decline due,in part,to

Correct Answer
verified

A group of firms that collude is called a cartel.

Correct Answer
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A special kind of imperfectly competitive market that has only two firms is called

Correct Answer
verified

Predatory pricing refers to

Correct Answer
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Exam 17: Oligopoly

When price is above marginal cost,selling one more unit at the current price will increase profit.This concept is known as the

Correct AnswerverifiedShow Answer

For cartels,as the number of firms (members of the cartel) increases,

Correct AnswerverifiedB

From society's standpoint,cooperation among oligopolists is

Correct AnswerverifiedShow Answer

Policymakers should be aggressive in using their powers to place limits on firm behavior,because business practices that appear to reduce competition never have any legitimate purposes.

Correct AnswerverifiedFalse

Table 17-22 -Refer to Table 17-22.Which of the following statements is correct if Brian and Matt will play this game only once?

Correct AnswerverifiedShow Answer

Resale price maintenance prevents retailers from competing on price.

Correct AnswerverifiedShow Answer

Games that are played more than once generally

Correct AnswerverifiedShow Answer

In a duopoly if the firms have agreed to jointly maximize profits,then each firm can increase its current profits by producing more.

Correct AnswerverifiedShow Answer

In a game,a dominant strategy is

Correct AnswerverifiedShow Answer

Outline the purpose of antitrust laws.What do they accomplish?

Correct AnswerverifiedThe purpose of antitrust laws ...View AnswerShow Answer

In studying oligopolistic markets,economists assume that

Correct AnswerverifiedShow Answer

In general,game theory is the study of

Correct AnswerverifiedShow Answer

Economists claim that a resale price maintenance agreement is not anti-competitive because

Correct AnswerverifiedShow Answer

Correct AnswerverifiedB

The prisoners' dilemma game

Correct AnswerverifiedShow Answer

Much of the research on game theory in recent decades was driven by attempts to analyze actions of players during

Correct AnswerverifiedShow Answer

After initial success,the OPEC cartel saw the price of oil and the revenues of its members decline due,in part,to

Correct AnswerverifiedShow Answer

A group of firms that collude is called a cartel.

Correct AnswerverifiedShow Answer

A special kind of imperfectly competitive market that has only two firms is called

Correct AnswerverifiedShow Answer

Predatory pricing refers to

Correct AnswerverifiedShow Answer

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B

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False

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The purpose of antitrust laws ...
View Answer

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B

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