Question 1

Which of the following has not contributed to the development of oligopolies in the U.S.economy?

Accepted Answer

A)  mergers
B)  patents
C)  economies of scale
D)  interindustry competitionE) C) and D)
F) B) and D)

Question 2

The kinked-demand curve model of oligopoly is useful in explaining

Accepted Answer

A)  the way that collusion works.
B)  why oligopolistic prices and outputs are extremely sensitive to changes in marginal cost.
C)  why oligopolistic prices might change infrequently.
D)  the process by which oligopolists merge with one another.E) All of the above
F) A) and D)

Question 3

A Stackelberg duopoly (or leader-follower)  game may occur in a

Accepted Answer

A)  repeated game with reciprocity.
B)  repeated game without reciprocity.
C)  sequential game with preemption of entry.
D)  sequential game without preemption of entry.E) B) and C)
F) A) and D)

Question 4

The Herfindahl index for the industry described in this table is

Accepted Answer

A)  80.
B)  1,800.
C)  greater than it would be if there were only four firms in the industry.
D)  1,600.E) A) and B)
F) B) and C)

Question 5

In which of these continuums of degrees of competition (lowest to highest)  is oligopoly properly placed?

Accepted Answer

A)  pure monopoly, monopolistic competition, oligopoly, pure competition
B)  oligopoly, pure competition, monopolistic competition, pure monopoly
C)  monopolistic competition, pure competition, pure monopoly, oligopoly
D)  pure monopoly, oligopoly, monopolistic competition, pure competitionE) None of the above
F) A) and C)

Question 6

Homogeneous oligopolists tend to advertise more than do differentiated oligopolists.

Accepted Answer

A) True 
 B)False

Question 7

Obstacles to collusion among oligopolists include the following, except

Accepted Answer

A)  demand and costs differences among firms.
B)  long-lasting economic recession and poor industry performance.
C)  potential new entrants into the market.
D)  "gentlemen's agreements" among the firms.E) C) and D)
F) B) and D)

Question 8

Informal collusion to restrict output and increase prices is sometimes referred to as a

Accepted Answer

A)  merger.
B)  cartel.
C)  tacit understanding.
D)  kinked-demand oligopoly.E) All of the above
F) A) and D)

Question 9

Which constitutes an obstacle to collusion among oligopolists?

Accepted Answer

A)  a standardized product
B)  a large number of firms
C)  prosperous economic conditions
D)  trademarks and copyrightsE) B) and C)
F) A) and B)

Question 10

Two characteristics of oligopoly pricing that have frequently been observed are that

Accepted Answer

A)  oligopolistic prices tend to be "sticky" or inflexible, and when the firms do change their prices, they tend to do so together.
B)  oligopolistic firms' prices tend to fluctuate a lot, and these prices tend to move together with each other.
C)  oligopolists tend to practice a lot of price discrimination, and there tends to be a wide variance in oligopoly pricing.
D)  oligopolistic firms' prices tend to fluctuate a lot, and there tends to be a wide variance in oligopoly pricing.E) A) and B)
F) None of the above

Question 11

Unlike a monopoly, an oligopoly tends to achieve allocative efficiency due to the rivalry among several firms.

Accepted Answer

A) True 
 B)False

Question 12

A statement of coercion by one firm is

Accepted Answer

A)  an empty threat if it is believed by the other firm.
B)  a credible threat if it is not believed by the other firm.
C)  always a credible threat whether or not it is believed by the other firm.
D)  a credible threat if it is believed by the other firm.E) B) and C)
F) C) and D)

Question 13

The consumer Wi-Fi-service providers' market is best described as a

Accepted Answer

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

Question 14

Repeated games may involve either simultaneous or sequential decision making.

Accepted Answer

A) True 
 B)False

Question 15

If an oligopolist's several rivals exactly match any price changes it initiates, the demand curve will be less elastic than if its price changes are ignored by its rivals.

Accepted Answer

A) True 
 B)False

Question 16

Suppose that total sales in an industry in a particular year are $600 million and sales by the top four sellers are $200 million, $150 million, $100 million, and $50 million, respectively.We can conclude that

Accepted Answer

A)  price leadership exists in this industry.
B)  the concentration ratio is more than 80 percent.
C)  this industry is a differentiated oligopoly.
D)  the firms in this industry face a kinked demand curve.E) A) and B)
F) All of the above

Question 17

If neither player has an incentive to deviate from the outcome of a game, the outcome is a Nash equilibrium.

Accepted Answer

A) True 
 B)False

Question 18

The kinked-demand curve model applies to a noncollusive oligopoly situation.

Accepted Answer

A) True 
 B)False

Question 19

If a product such as cement or bricks is costly to ship and, therefore, markets are very localized, the national concentration ratio for that industry

Accepted Answer

A)  will be greater than 50 percent.
B)  may understate the degree of monopoly.
C)  may overstate the degree of monopoly.
D)  will yield an accurate impression of the degree of monopoly.E) C) and D)
F) B) and D)

Question 20

A homogeneous oligopoly means that the few firms in the industry have identical cost and demand curves.

Accepted Answer

A) True 
 B)False

Exam 14: Oligopoly and Strategic Behavior

The Herfindahl index for the industry described in this table is

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Informal collusion to restrict output and increase prices is sometimes referred to as a

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In which of these continuums of degrees of competition (lowest to highest) is oligopoly properly placed?

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Suppose that total sales in an industry in a particular year are $600 million and sales by the top four sellers are $200 million, $150 million, $100 million, and $50 million, respectively.We can conclude that

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Repeated games may involve either simultaneous or sequential decision making.

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Unlike a monopoly, an oligopoly tends to achieve allocative efficiency due to the rivalry among several firms.

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If neither player has an incentive to deviate from the outcome of a game, the outcome is a Nash equilibrium.

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If a product such as cement or bricks is costly to ship and, therefore, markets are very localized, the national concentration ratio for that industry

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Obstacles to collusion among oligopolists include the following, except

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A Stackelberg duopoly (or leader-follower) game may occur in a

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The kinked-demand curve model of oligopoly is useful in explaining

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The consumer Wi-Fi-service providers' market is best described as a

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A statement of coercion by one firm is

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Which constitutes an obstacle to collusion among oligopolists?

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Which of the following has not contributed to the development of oligopolies in the U.S.economy?

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The kinked-demand curve model applies to a noncollusive oligopoly situation.

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Two characteristics of oligopoly pricing that have frequently been observed are that

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If an oligopolist's several rivals exactly match any price changes it initiates, the demand curve will be less elastic than if its price changes are ignored by its rivals.

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A homogeneous oligopoly means that the few firms in the industry have identical cost and demand curves.

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Homogeneous oligopolists tend to advertise more than do differentiated oligopolists.

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