Question 1

Explain the behavioral and structural approaches to government antitrust policy.Identify one practical problem with each approach.

Accepted Answer

Two approaches to identifying potential ...

Question 2

In the article "AT&T Plan to Buy T-Mobile Means Higher Prices,Fewer Phones," the opportunity cost of the merger between AT&T and T-Mobile is

Accepted Answer

A)  Better service quality.
B)  Increased coverage.
C)  Reduced phone selection.

Question 3

A high concentration ratio is the only way to achieve market power.

Accepted Answer

A) True 
 B)False

Question 4

Explain how market power is measured.

Accepted Answer

The standard measure of market power is ...

Question 5

An industry's market structure refers to

Accepted Answer

A)  The number and size of the firms in the industry.
B)  How much firms spend on advertising.
C)  What types of products are produced in that industry.

Question 6

The Herfindahl-Hirshman Index is the sum of the

Accepted Answer

A)  Squared market shares of the firms in the market.
B)  Market shares of all the firms in the market.
C)  Market shares of the top four firms in the market.

Question 7

Oligopolies can be characterized as a strategic game among rival companies.

Accepted Answer

A) True 
 B)False

Question 8

An oligopoly will maximize profits where price equals marginal cost,just like a perfectly competitive firm.

Accepted Answer

A) True 
 B)False

Question 9

The shape of the demand curve facing an oligopolist depends on the responses of its rivals to a change in the price of its own output.

Accepted Answer

A) True 
 B)False

Question 10

Monopolistic competition is an industry in which products are differentiated,but in oligopolies products are standardized.

Accepted Answer

A) True 
 B)False

Question 11

The pricing strategy in which one firm is allowed by its rivals to establish the market price for all firms in the market is called

Accepted Answer

A)  Overt collusion.
B)  Price leadership.
C)  Pattern pricing.

Question 12

Product differentiation

Accepted Answer

A)  Involves charging different prices to different customers.
B)  Is commonly practiced in perfect competition and monopoly markets.
C)  Involves advertising unique product features.

Question 13

Suppose the larger firm of a duopoly has sales of $900 million and the smaller firm has sales of $100 million.The market share of the larger firm is

Accepted Answer

A)  90 percent.
B)  80 percent.
C)  10 percent.

Question 14

Oligopolists have a mutual interest in coordinating production decisions in order to maximize joint

Accepted Answer

A)  Costs.
B)  Profits.
C)  Revenues.

Question 15

Game theory is

Accepted Answer

A)  The study of price-fixing and collusion.
B)  The study of how decisions are made when interdependence exists between firms.
C)  An explanation of how oligopolists become monopolists.

Question 16

For an oligopoly,a few firms cannot dominate in the long run unless

Accepted Answer

A)  A cartel is formed.
B)  A firm has a high concentration ratio.
C)  Barriers to entry exist.

Question 17

Oligopoly is a type of industry in which firms are independent.

Accepted Answer

A) True 
 B)False

Question 18

Market share is the percentage of total

Accepted Answer

A)  Market output produced by the largest firm in an industry.
B)  Market output produced by a single firm.
C)  Market output produced by the four largest firms in an industry.

Question 19

Market share can be computed by dividing

Accepted Answer

A)  The amount that a buyer buys by the total amount that is produced in the market.
B)  Profit by total cost.
C)  The amount sold by a single firm by the total sold in the market.

Question 20

The Herfindahl-Hirshman Index is

Accepted Answer

A)  Used to identify cases worthy of antitrust concern.
B)  A barrier to entry.
C)  An example of government failure.

Exam 25: Oligopoly

In the article "AT&T Plan to Buy T-Mobile Means Higher Prices,Fewer Phones," the opportunity cost of the merger between AT&T and T-Mobile is

Correct AnswerverifiedShow Answer

Oligopolists have a mutual interest in coordinating production decisions in order to maximize joint

Correct AnswerverifiedShow Answer

Market share is the percentage of total

Correct AnswerverifiedShow Answer

Oligopoly is a type of industry in which firms are independent.

Correct AnswerverifiedShow Answer

The pricing strategy in which one firm is allowed by its rivals to establish the market price for all firms in the market is called

Correct AnswerverifiedShow Answer

An oligopoly will maximize profits where price equals marginal cost,just like a perfectly competitive firm.

Correct AnswerverifiedShow Answer

The Herfindahl-Hirshman Index is the sum of the

Correct AnswerverifiedShow Answer

Explain the behavioral and structural approaches to government antitrust policy.Identify one practical problem with each approach.

Correct AnswerverifiedTwo approaches to identifying potential ...View AnswerShow Answer

Game theory is

Correct AnswerverifiedShow Answer

For an oligopoly,a few firms cannot dominate in the long run unless

Correct AnswerverifiedShow Answer

Oligopolies can be characterized as a strategic game among rival companies.

Correct AnswerverifiedShow Answer

An industry's market structure refers to

Correct AnswerverifiedShow Answer

Product differentiation

Correct AnswerverifiedShow Answer

The Herfindahl-Hirshman Index is

Correct AnswerverifiedShow Answer

Monopolistic competition is an industry in which products are differentiated,but in oligopolies products are standardized.

Correct AnswerverifiedShow Answer

Market share can be computed by dividing

Correct AnswerverifiedShow Answer

Explain how market power is measured.

Correct AnswerverifiedThe standard measure of market power is ...View AnswerShow Answer

A high concentration ratio is the only way to achieve market power.

Correct AnswerverifiedShow Answer

The shape of the demand curve facing an oligopolist depends on the responses of its rivals to a change in the price of its own output.

Correct AnswerverifiedShow Answer

Suppose the larger firm of a duopoly has sales of $900 million and the smaller firm has sales of $100 million.The market share of the larger firm is

Correct AnswerverifiedShow Answer

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Two approaches to identifying potential ...
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The standard measure of market power is ...
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