Question : 18.6   Integrative Questions 1) A characteristic common in both oligopoly and : 1238873

18.6   Integrative Questions

1) A characteristic common in both oligopoly and monopolistic competition is

A) a small number of firms compete in the market.

B) natural or legal barriers prevent the entry of new firms into the market.

C) each firm faces a downward-sloping demand curve.

D) the firms in the market are interdependent.

E) each firm has a large share of the market.

2) If the HHI for an industry equals 3,200,

A) firms in the industry must enter a cartel in order to earn an economic profit.

B) firms in the industry are most likely to make zero economic profit.

C) the industry is probably an oligopoly.

D) firms in the industry are likely to act independently of each other.

E) the industry is almost surely monopolistic competition.

3) Which of the following are characteristics of an oligopoly?

i)The HHI for an oligopoly is between 100 and 1800.

ii)There are a few firms that compete.

iii)The firms can increase their profit by forming a cartel.

A) i and ii

B) i and iii

C) ii and iii

D) i, ii, and iii

E) i only.

4) When a market has barriers to entry,

A) then in the long run it is possible for the firms to incur economic losses.

B) then in the long run the only possible outcome for the firms to make zero economic profit.

C) then in the long run it might be possible for the firms to make a positive economic profit.

D) oligopolies cannot be created.

E) the HHI almost always falls below 1,000.

5) The figure above shows the market demand curve and the ATC curve for a firm. If all firms in the market have the same ATC curve, then ________ limit(s) the market to 3 firms.

A) economies of scale

B) a “tit for tat” strategy

C) collusion

D) a Nash equilibrium

E) legal requirements

6) The figure above shows the market demand curve and the ATC curve for a firm. Each firm in the market has the same ATC curve. If the firms in the industry agree to form a cartel, the firms in the industry make an economic profit if there are ________ firms, each producing ________ units per hour.

A) 3; 4,000

B) 4; 3,000

C) 2; 6,000

D) 2; 4,000

E) 2; 12,000

7) If a legal oligopoly exists,

A) the firms always engage in a “tit for tat” strategy.

B) there is the possibility that the market is large enough for more firms.

C) the firms never collude.

D) monopoly profits cannot be earned.

E) the firms may legally merge and become a monopoly.

8) A cartel is

A) another name for a firm in an oligopoly.

B) a collusive agreement among a number of firms.

C) a government body that regulates an industry.

D) an antitrust law.

E) a type of regulation that focuses on quantities rather than price.

9) Firms operating in an oligopoly

A) always compete on price.

B) always compete on price, product quality and marketing.

C) can make the same profit as a monopoly but there is no assurance that they will do so.

D) usually achieve the competitive outcome.

E) always make the same profit as a monopoly.

10) The range of output for a duopoly ranges between the

A) perfectly competitive outcome and the monopolistically competitive outcome.

B) efficient scale and the perfectly competitive outcome.

C) minimum of ATC and the efficient scale.

D) monopoly outcome and the perfectly competitive outcome.

E) short-run perfectly competitive outcome and the long-run perfectly competitive outcome.