Question : 91) The process of “creative destruction” in an oligopolistic industry : 1384255

91) The process of “creative destruction” in an oligopolistic industry suggests that

A) profits are driven to zero by the entry of new firms.

B) no firm can survive in the long run.

C) firms can enter and leave without incurring any sunk costs of entry.

D) there are no costs of exit in oligopoly.

E) the prospect of keeping the resulting profits provides an incentive for firms to innovate.

92) The theory of oligopoly suggests that

A) entry into the industry is an important force preventing the exploitation of market power by existing firms.

B) oligopoly may be the best of the feasible alternative market structures when major scale economies exist.

C) the tendency toward joint maximization of profits is greater for a large number of sellers than for a small number of sellers.

D) game theory is interesting theory but not useful for real corporate managers.

E) innovation is weak when there is no price competition.

93) Both empirical evidence and everyday observation suggest that oligopolies contribute to economic growth in the very-long-run by

A) achieving allocative efficiency.

B) consistently producing at full-capacity output.

C) achieving technological improvements and innovations through research and development.

D) decreasing minimum efficient scale.

E) rarely laying off workers.

94) The following statements describe a cooperative equilibrium in an oligopoly where the firms are jointly maximizing profits by restricting output. Which statement is false?

A) An individual firm could increase profits by cheating.

B) P > MC for each individual firm.

C) MR > MC for each individual firm.

D) The firms in the industry will jointly be earning monopoly profits.

E) No individual firm will have an incentive to change output.

95) In an oligopolistic industry, which of the following is an example of a firm-created entry barrier?

A) LRAC curve negatively sloped over a large range of output

B) large set-up costs

C) brand proliferation

D) decreasing demand for the product

E) price competition

96) In a typical oligopolistic market, there are

A) no barriers to entry, but firms sell differentiated products.

B) substantial barriers to entry and firms interact strategically with each other.

C) no barriers to entry and firms sell homogeneous products.

D) substantial entry barriers, and firms are too large to strategically interact with each other.

E) no barriers to entry and firms interact strategically with each other.

97) An oligopolistic firm can earn positive profits

A) because there are barriers to entry.

B) only in the long run.

C) only in the short run.

D) only if it advertises its own product.

E) only if it maintains excess capacity in the production of it product.

98) One reason an oligopolistic firm may have market power is that

A) it always makes positive profits.

B) it produces a significant fraction of total industry output.

C) the market may be “contestable.”

D) it has dis-economies of scale.

E) there are many similar producers.

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

A) an incidental monopoly.

B) a two-tier competitive structure.

C) a duopoly.

D) a dublet.

E) a natural monopoly.

100) Consider the three largest cell-phone service providers in Canada – Bell, Telus, and Rogers. If we observe that all three companies increase their monthly service fees simultaneously, we might conclude that

A) there is tacit collusion among these firms.

B) these firms have monopolized the industry.

C) they are perfect competitors and they are unable to set the price.

D) they are engaged in predatory pricing.

E) they are creating entry barriers to prevent entry by new firms.