Question :
7) If a legal oligopoly exists,
A) the firms always : 1241323
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.
11) What is the conclusion in the prisoners’ dilemma?
A) Firms should not enter a legal duopoly.
B) Two prisoners acting in their own best interest harm their joint interest.
C) There is no Nash equilibrium available to the prisoners.
D) Prisoners do not act interdependently.
E) Duopolies almost always reach their best outcome.
12) Which of the following can be games played by firms in an oligopoly?
i.choosing how much to spend on advertising
ii.choosing how much to spend on R&D
iii.choosing to enter a legal duopoly
A) i and ii
B) i and iii
C) ii and iii
D) ii only
E) iii only
13) Tying arrangements are
A) illegal if they substantially lessen competition.
B) used by regulators to force a monopoly to produce an efficient amount of production.
C) used by regulators to force a monopoly to charge an efficient price.
D) illegal according to the Sherman Act.
E) necessary in order for a firm to price discriminate.
14) Resale price maintenance is a form of
A) regulation.
B) marginal cost pricing.
C) average cost pricing.
D) agreeing about the price that will be charged.
E) setting the price cap under price cap regulation.
15) If a firm engages in predatory pricing, it
A) is following marginal cost pricing.
B) is following average cost pricing.
C) sets a low price to drive rivals out of business.
D) has been regulated using a price cap.
E) is guilty of price fixing.
16) Because it was found guilty of violating the Sherman Act, Microsoft will be subject to
A) rate of return regulation.
B) marginal cost pricing.
C) price cap regulation.
D) predatory pricing.
E) None of the above answers is correct.
17) When the Federal Trade Commission decides whether to allow firms in an industry to merge, it uses the ________ to guide its decision.
A) social interest theory
B) HHI
C) capture theory
D) Sherman Act
E) predatory pricing theory
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