Question 1

What effect does the number of firms in an oligopoly have on the characteristics of the market?

Accepted Answer

As the number of firms increas...

Question 2

A market structure in which many firms sell products that are similar but not identical is known as

Accepted Answer

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

Question 3

Nike and Adidas are considering whether to advertise heavily during the football World Cup. Devise a simple prisoners' dilemma game to demonstrate the strategic considerations that are relevant to this decision. Does the repeated game scenario differ from a single period game? Is it possible that a repeated game (without collusive agreements) could lead to an outcome that is better than a single-period game? Explain the circumstances in which this may be true.

Accepted Answer

The answer should show that if both comp...

Question 4

As a group, oligopolists would always earn the highest profit if they would

Accepted Answer

A)   produce the perfectly competitive quantity of output.
B)   produce more than the perfectly competitive quantity of output.
C)   charge the same price that a monopolist would charge if the market were a monopoly.
D)   operate according to their own individual self-interests.E) B) and C)
F) A) and B)

Question 5

As a group, oligopolists would always earn the highest profit if they would

Accepted Answer

A)   produce the perfectly competitive quantity of output.
B)   produce more than the perfectly competitive quantity of output.
C)   charge the same price that a monopolist would charge if the market were a monopoly.
D)   operate according to their own individual self-interests.E) B) and C)
F) A) and D)

Question 6

The dominant strategy for an oligopolist is to cooperate with the group and maintain low production regardless of what the other oligopolists do.

Accepted Answer

A) True 
 B)False

Question 7

Laws that make it illegal for firms to conspire to raise prices or reduce production are known as

Accepted Answer

A)   antimonopoly laws.
B)   all of these answers.
C)   anti-collusion laws.
D)   pro-competition laws.
E)   competition laws.F) A) and B)
G) C) and D)

Question 8

The greater the number of firms in the oligopoly, the more the outcome of the market looks like that generated by a monopoly.

Accepted Answer

A) True 
 B)False

Question 9

As the number of sellers in an oligopoly increases,

Accepted Answer

A)   output in the market tends to fall because each firm must cut back on production.
B)   the price in the market moves further from marginal cost.
C)   collusion is more likely to occur because a larger number of firms can place pressure on any firm that defects.
D)   the price in the market moves closer to marginal cost.E) B) and D)
F) B) and C)

Question 10

A distinguishing feature of an oligopolistic industry is the tension between

Accepted Answer

A)   profit maximization and cost minimization.
B)   cooperation and self-interest.
C)   producing a small amount of output and charging a price above marginal cost.
D)   short-run decisions and long-run decisions.E) None of the above
F) All of the above

Question 11

Game theory is important for understanding which of the following market types?

Accepted Answer

A)   perfectly competitive and oligopolistic markets
B)   perfectly competitive markets but not oligopolistic markets
C)   oligopolistic but not perfectly competitive markets
D)   neither oligopolistic nor perfectly competitive markets.E) All of the above
F) None of the above

Question 12

The simplest type of oligopoly is

Accepted Answer

A)   monopoly.
B)   duopoly.
C)   monopolistic competition.
D)   oligopolistic competition.E) A) and B)
F) None of the above

Question 13

Outline the purpose of competition laws. What do they accomplish?

Accepted Answer

The purpose of competition law...

Question 14

Describe the output and price effects that influence the profit-maximizing decision faced by a firm in an oligopoly market. How does this differ from output and price effects in a monopoly market?

Accepted Answer

Output effect: Price > Marginal cost => ...

Question 15

In general, game theory is the study of

Accepted Answer

A)   how people behave in strategic situations.
B)   how people behave when the possible actions of other people are irrelevant.
C)   oligopolistic markets.
D)   all types of markets, including competitive markets, monopolistic markets, and oligopolistic markets.E) C) and D)
F) B) and C)

Question 16

A situation in which oligopolists interacting with one another each choose their best strategy given the strategies that all the other oligopolists have chosen is known as a

Accepted Answer

A)   Nash equilibrium.
B)   dominant strategy.
C)   cartel.
D)   collusion solution.E) All of the above
F) A) and B)

Question 17

Assume that demand for a product that is produced at zero marginal cost is reflected in the table below.
$\begin{array}{|c|c|}
\hline \text { Quantity } & \text { Price } \
\hline 0 & € 36 \
\hline 200 & € 33 \
\hline 400 & € 30 \
\hline 600 & € 27 \
\hline 800 & € 24 \
\hline 1000 & € 21 \
\hline 1200 & € 18 \
\hline 1400 & € 15 \
\hline 1600 & € 12 \
\hline 1800 & € 9 \
\hline 2000 & € 6 \
\hline 2200 & € 3 \
\hline 2400 & € 0 \
\hline
\end{array}$
a. What is the profit-maximizing level of production for a group of oligopolistic firms that operate as a cartel?
b. Assume that this market is characterized by a duopoly in which collusive agreements are illegal. What market price and quantity will be associated with a Nash equilibrium?

Accepted Answer

a. Q = 120...

Question 18

In an oligopoly, each firm knows that its profits

Accepted Answer

A)   depend only on how much output it produces.
B)   depend only on how much output its rival firms produce.
C)   depend on both how much output it produces and how much output its rival firms produce.
D)   will be zero in the long run because of free entry.E) B) and D)
F) B) and C)

Question 19

In the language of game theory, a situation in which each person must consider how others might respond to his or her own actions is called a

Accepted Answer

A)   quantifiable situation.
B)   cooperative situation.
C)   strategic situation.
D)   tactical situation.E) A) and B)
F) A) and C)

Question 20

As the number of firms in an oligopoly increases, the magnitude of the

Accepted Answer

A)   output effect increases.
B)   output effect decreases.
C)   price effect increases.
D)   price effect decreases.E) A) and C)
F) A) and D)

Exam 16: Market Structures Iii: Oligopoly

Correct Answer
verified
a. Q = 120...
View Answer

A distinguishing feature of an oligopolistic industry is the tension between

Correct Answer
verified

Outline the purpose of competition laws. What do they accomplish?

Correct Answer
verified
The purpose of competition law...
View Answer

As the number of sellers in an oligopoly increases,

Correct Answer
verified

Laws that make it illegal for firms to conspire to raise prices or reduce production are known as

Correct Answer
verified

What effect does the number of firms in an oligopoly have on the characteristics of the market?

Correct Answer
verified
As the number of firms increas...
View Answer

As a group, oligopolists would always earn the highest profit if they would

Correct Answer
verified

The simplest type of oligopoly is

Correct Answer
verified

A market structure in which many firms sell products that are similar but not identical is known as

Correct Answer
verified

A situation in which oligopolists interacting with one another each choose their best strategy given the strategies that all the other oligopolists have chosen is known as a

Correct Answer
verified

Describe the output and price effects that influence the profit-maximizing decision faced by a firm in an oligopoly market. How does this differ from output and price effects in a monopoly market?

Correct Answer
verified
Output effect: Price > Marginal cost => ...
View Answer

In general, game theory is the study of

Correct Answer
verified

In the language of game theory, a situation in which each person must consider how others might respond to his or her own actions is called a

Correct Answer
verified

The dominant strategy for an oligopolist is to cooperate with the group and maintain low production regardless of what the other oligopolists do.

Correct Answer
verified

As a group, oligopolists would always earn the highest profit if they would

Correct Answer
verified

As the number of firms in an oligopoly increases, the magnitude of the

Correct Answer
verified

Correct Answer
verified
The answer should show that if both comp...
View Answer

In an oligopoly, each firm knows that its profits

Correct Answer
verified

Game theory is important for understanding which of the following market types?

Correct Answer
verified

The greater the number of firms in the oligopoly, the more the outcome of the market looks like that generated by a monopoly.

Correct Answer
verified

Exam 16: Market Structures Iii: Oligopoly

Correct Answerverifieda. Q = 120...View AnswerShow Answer

A distinguishing feature of an oligopolistic industry is the tension between

Correct AnswerverifiedShow Answer

Outline the purpose of competition laws. What do they accomplish?

Correct AnswerverifiedThe purpose of competition law...View AnswerShow Answer

As the number of sellers in an oligopoly increases,

Correct AnswerverifiedShow Answer

Laws that make it illegal for firms to conspire to raise prices or reduce production are known as

Correct AnswerverifiedShow Answer

What effect does the number of firms in an oligopoly have on the characteristics of the market?

Correct AnswerverifiedAs the number of firms increas...View AnswerShow Answer

As a group, oligopolists would always earn the highest profit if they would

Correct AnswerverifiedShow Answer

The simplest type of oligopoly is

Correct AnswerverifiedShow Answer

A market structure in which many firms sell products that are similar but not identical is known as

Correct AnswerverifiedShow Answer

A situation in which oligopolists interacting with one another each choose their best strategy given the strategies that all the other oligopolists have chosen is known as a

Correct AnswerverifiedShow Answer

Describe the output and price effects that influence the profit-maximizing decision faced by a firm in an oligopoly market. How does this differ from output and price effects in a monopoly market?

Correct AnswerverifiedOutput effect: Price > Marginal cost => ...View AnswerShow Answer

In general, game theory is the study of

Correct AnswerverifiedShow Answer

In the language of game theory, a situation in which each person must consider how others might respond to his or her own actions is called a

Correct AnswerverifiedShow Answer

The dominant strategy for an oligopolist is to cooperate with the group and maintain low production regardless of what the other oligopolists do.

Correct AnswerverifiedShow Answer

As a group, oligopolists would always earn the highest profit if they would

Correct AnswerverifiedShow Answer

As the number of firms in an oligopoly increases, the magnitude of the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe answer should show that if both comp...View AnswerShow Answer

In an oligopoly, each firm knows that its profits

Correct AnswerverifiedShow Answer

Game theory is important for understanding which of the following market types?

Correct AnswerverifiedShow Answer

The greater the number of firms in the oligopoly, the more the outcome of the market looks like that generated by a monopoly.

Correct AnswerverifiedShow Answer

Correct Answer
verified
a. Q = 120...
View Answer

Correct Answer
verified

Correct Answer
verified
The purpose of competition law...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
As the number of firms increas...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Output effect: Price > Marginal cost => ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The answer should show that if both comp...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified