Quiz 12: Oligopoly and Strategic Behavior
Business
Q 1Q 1
Oligopoly is a market:
A)with one firm and many different products.
B)with many firms and a homogeneous product.
C)with a few firms and the actions of one firm have a large impact on the others.
D)with a few firms and the actions of one firm have a small impact on the others.
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Multiple Choice
C
Q 2Q 2
Which of the following is the best example of an oligopolistic industry?
A)cleaning services
B)airline services
C)local water utility
D)designer shoes
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Multiple Choice
B
Q 3Q 3
The market structure in which the behavior of any given firm depends on the behavior of the other firms in the industry is:
A)perfect competition.
B)monopoly.
C)monopolistic competition.
D)oligopoly.
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Multiple Choice
D
Q 4Q 4
Which of the following is a characteristic of an oligopoly market?
A)control over price
B)diseconomies of scale in production
C)firms act independently without regard to each other
D)all of the above
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Multiple Choice
Q 5Q 5
An oligopoly could occur for the following reasons:
A)advertising campaigns.
B)economics of scale in production.
C)government barriers to entry.
D)all of the above
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Multiple Choice
Q 6Q 6
Table 12.1
-Refer to Table 12.1.The four-firm concentration ratio of the cigarette industry is equal to:
A)48%.
B)54%.
C)71%.
D)81%.
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Multiple Choice
Q 7Q 7
Table 12.1
-Refer to Table 12.1.If Firms L and M were to merge,the four-firm concentration ratio would:
A)rise to 71%.
B)fall to 82%.
C)fall to 40%.
D)rise to 82%.
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Multiple Choice
Q 8Q 8
If the five-firm concentration ratio in an oligopolistic industry is 100 percent and each firm has an equal share of the market,the Herfindahl-Hirschman Index is:
A)10,000.
B)2,000.
C)2,500.
D)400.
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Multiple Choice
Q 9Q 9
Assume six firms comprising an industry have market shares of 30,30,10,10,10,and 10 percent.The Herfindahl-Hirschman Index for this industry is ________.
A)80
B)2,200
C)1,600
D)2000
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Multiple Choice
Q 10Q 10
An arrangement in which firms conspire to fix prices is called:
A)a cartel.
B)price-ceiling.
C)price-fixing.
D)a duopoly.
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Multiple Choice
Q 11Q 11
A cartel is:
A)a group of firms that coordinate their pricing and quantity decisions.
B)a type of oligopoly in which the demand curve is "kinked."
C)a duopoly market where firms have the exact product.
D)a group of firms that all produce the same level of output.
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Multiple Choice
Q 12Q 12
-Refer to Figure 12.1.Six firms that produce chewing gum have formed a cartel.The cartel faces the market demand curve given by D.To maximize profits,the cartel should produce ________ packs of chewing gum and the price should be ________.
A)12,000;$.25
B)12,000;$.40
C)14,000;$.30
D)$16,000;$.35
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Multiple Choice
Q 13Q 13
-Refer to Figure 12.1.Assume the firms have formed a cartel.If the cartel is maximizing profits,the cartel's profits are:
A)$0.
B)$1,080.
C)$1,800.
D)indeterminate from this information.
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Multiple Choice
Q 14Q 14
Suppose four firms in the airline industry have gotten together and formed a cartel.Which of the following is true?
A)The firms will set a price that is equal to minimum average total cost.
B)The firms will produce where the marginal cost curve intersects the average total cost curve.
C)The firms will produce where marginal cost is equal to marginal revenue.
D)The firms will set a price equal to marginal revenue.
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Multiple Choice
Q 15Q 15
Assume that firms in an oligopoly are currently colluding to set price and output to maximize total industry profit.If the oligopolies are forced to stop colluding,the price charged by the oligopolies would ________ and the total output produced will ________.
A)increase;increase
B)increase;decrease
C)decrease;increase
D)decrease;decrease
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Multiple Choice
Q 16Q 16
Firms in an oligopoly can increase profit by:
A)jointly acting to reduce output and increase prices.
B)independently acting to increase price.
C)acting alone and refusing to join the group.
D)none of the above.
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Multiple Choice
Q 17Q 17
Consider four types of markets: monopoly,perfect competition,oligopoly,and monopolistic competition.If they were ranked from the lowest number of firms to the largest number of firms the ranking would be:
A)monopoly,oligopoly,monopolistic competition,perfect competition.
B)oligopoly,monopoly,monopolistic competition,perfect competition.
C)monopoly,monopolistic competition,oligopoly,perfect competition.
D)perfect competition,oligopoly,monopoly,monopolistic competition.
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Multiple Choice
Q 18Q 18
In game theory,a strategy that represents the best choice for a firm no matter what the other firm does is termed:
A)a dominant strategy.
B)a Nash equilibrium.
C)a prisoners' dilemma.
D)a duopolists' dilemma.
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Multiple Choice
Q 19Q 19
-Figure 12.2 shows the decision tree for setting price for the only two firms in a market.How many dominant strategies are there for firm A?
A)0
B)1
C)2
D)It cannot be determined without knowing what firm B does.
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Multiple Choice
Q 20Q 20
-Figure 12.2 shows the decision tree for setting price for the only two firms in a market.If both firms follow their dominant strategies:
A)both firms will set price high.
B)both firms will set price low.
C)only one firm will set price low.
D)The firms' dominant strategies cannot be determined without more information.
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Multiple Choice
Q 21Q 21
-Figure 12.2 shows the decision tree for setting price for the only two firms in a market.One way for both firms to charge a high price is for both firms to:
A)play their dominant strategies.
B)collude.
C)expand output.
D)any of the above
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Multiple Choice
Q 22Q 22
-Figure 12.2 shows the decision tree for setting price for the only two firms in a market.The dominant strategy for firm A:
A)is to set price low.
B)is to set price high.
C)depends on what B does.
D)is to do the opposite of whatever B does.
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Multiple Choice
Q 23Q 23
-Refer to Figure 12.2.If A adopts a strategy of price fixing then the best choice for A is to choose the ________ price and the best choice for B is to choose the ________ price.
A)high;high
B)high;low
C)low;high
D)low;low
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Multiple Choice
Q 24Q 24
-A duopolists' dilemma occurs when two firms in a market would be better off if:
A)both choose the high price but instead each chooses the low price.
B)both firms act jointly as a cartel and chooses the best price.
C)one firm refuses to participate in the cartel.
D)both firms adopt price matching.
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Multiple Choice
Q 25Q 25
-Refer to Figure 12.3.The decision tree shows the payoffs for two firms based on the strategies they choose.If they agree to collude and hold prices at $10,and both stand by the agreement,each will earn profits of $5 million.If one firm cheats and the other does not,the firm that cheats will earn profits of $8 million and the other firm will have losses of $2 million.If they both cheat and cut prices,they will each earn profits of only $2 million.In this game the dominant strategy for A is to:
A)cheat.
B)stand by the agreement.
C)cheat only if B cheats.
D)maximize the maximum losses.
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Multiple Choice
Q 26Q 26
-Refer to Figure 12.3.The decision tree shows the payoffs for two firms based on the strategies they choose.If they agree to collude and hold prices at $10,and both stand by the agreement,each will earn profits of $5 million.If one firm cheats and the other does not,the firm that cheats will earn profits of $8 million and the other firm will have losses of $2 million.If they both cheat and cut prices,they will each earn profits of only $2 million.In this game the dominant strategy for B is to:
A)cheat.
B)stand by the agreement.
C)cheat only if A cheats.
D)maximize the maximum losses.
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Multiple Choice
Q 27Q 27
-Refer to Figure 12.3.The decision tree shows the payoffs for two firms based on the strategies they choose.If they agree to collude and hold prices at $10,and both stand by the agreement,each will earn profits of $5 million.If one firm cheats and the other does not,the firm that cheats will earn profits of $8 million and the other firm will have losses of $2 million.If they both cheat and cut prices,they will each earn profits of only $2 million.If both firms follow their dominant strategies,Firm B's profits will be:
A)-$2 million.
B)$ 2 million.
C)$5 million.
D)$ 8 million.
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Multiple Choice
Q 28Q 28
The Nash equilibrium is an outcome of a game:
A)when each player is doing the best he or she can,given the actions of the other players.
B)each player has a competitive advantage over the other players.
C)in which there are no winners only losers.
D)when all the possibilities are revealed to the players.
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Multiple Choice
Q 29Q 29
Recall the application about the failure of the salt cartel,why did the salt cartels around the 19th century fail to get established,even though they paid new firms not to produce salt for a year?
A)Individual firms cheated on the cartel by selling outside the cartel.
B)Artificially high price also caused new firms to enter the market.
C)Salt consumers found substitutes and brought the price of salt down.
D)A and B are correct.
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Multiple Choice
Q 30Q 30
The small number of firms is what differentiates oligopoly markets from the other three market structure types (perfect competition,monopoly,and monopolistic competition).
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True False
Q 31Q 31
According to one rule of thumb,a four-firm concentration ratio of greater than 40 percent for the industry is considered to be an oligopoly.
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True False
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True False
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True False
Q 34Q 34
Oligopoly is a market structure where many firms are competing by selling an identical product.
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True False
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True False
Q 36Q 36
Many cartels exist in the U.S.because cartels and price-fixing are legal under United States law.
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True False
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True False
Q 38Q 38
If firms in an oligopoly form a cartel,the outcome is the same as it would be under monopolistic competition.
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True False
Q 39Q 39
A dominant strategy exists when a firm's choice is the best regardless of other firms' decisions.
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True False
Q 40Q 40
Game tree is a graphical representation of the consequences of different actions in a strategic setting.
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True False
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True False
Q 42Q 42
The type of product sold is what differentiates oligopoly markets from the other three market structure types (perfect competition,monopoly,and monopolistic competition).
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True False
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True False
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True False
Q 45Q 45
In an oligopolistic market,the government may limit the number of firms in a market by issuing patents.
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True False
Q 46Q 46
In an oligopoly,the behavior of any one firm depends on the reaction it expects of all the others in the industry.
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True False
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True False
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Essay
Q 49Q 49
Under what conditions does an oligopoly market result in the same outcome as monopoly? What does this imply for the oligopoly's long-run profits?
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Essay
Q 50Q 50
Assuming that firms do not collude,compare the market outcome under oligopoly with the outcome under monopoly.
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Essay
Q 51Q 51
-Consider the decision tree depicted in Figure 12.4 concerning a collusive agreement between firms owned by Bob and Donna.Each participant has the option of following the terms of the agreement or cheating on the terms of the agreement,but neither knows what the other will do.What is the dominant strategy for Bob? For Donna? Which strategy should player,Bob and Donna,choose to maximize the potential gain? What do you think the outcome of this game will be? Carefully explain your answers.
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Essay
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Essay
Q 53Q 53
What is one way that firms can overcome the duopolists' dilemma and promote cartel pricing?
A)One firm can guarantee it will match a lower price of a competitor.
B)Firms can come to an agreement to be at Nash equilibrium.
C)Firms create a cartel to control prices.
D)none of the above
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Multiple Choice
Q 54Q 54
In a two-person,repeated game,a tit-for-tat strategy starts with:
A)non-cooperation and then each player follows his or her own self-interest.
B)non-cooperation and then each player cooperates only if the other player cooperates.
C)cooperation and then each player follows his or her own self-interest.
D)cooperation and then each player repeats the other player's previous move.
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Multiple Choice
Q 55Q 55
In a two-person,repeated game,a grim-trigger strategy results in:
A)each firm following its own self-interest choice.
B)each firm earning economic profits.
C)one firm choosing a price so low that no firm earns an economic profit.
D)one firm earning economic profits while the other does not.
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Multiple Choice
Q 56Q 56
A duopoly pricing strategy results in a(n)________ profitable outcome than cartel pricing.
A)less
B)more
C)equally
D)indeterminate
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Multiple Choice
Q 57Q 57
Low-price guarantees in a duopoly:
A)lead to higher prices.
B)lead to lower prices.
C)make cartel pricing possible.
D)A and C are correct.
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Multiple Choice
Q 58Q 58
Which of the following industries was NOT charged with price fixing?
A)industrial diamonds
B)electric generators
C)music distribution
D)none of the above
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Multiple Choice
Q 59Q 59
Recall the application about low-price guarantee with tire prices in Florida,what happen to the prices of the tires after the low-price guarantee advertising was included in the newspaper ad?
A)The prices soar.
B)The prices decrease
C)The prices stayed the same.
D)Some tire companies exit the market.
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Multiple Choice
Q 60Q 60
Explicit price fixing was outlawed by the ________ Act.
A)Fair Labor Standards
B)Alien and Sedition
C)Sherman Antitrust
D)Freedom of Information
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Multiple Choice
Q 61Q 61
Under price leadership,when firm A suddenly drops its price what could its competitors interpret by the drop in price?
A)Firm A is breaking an explicit pricing agreement.
B)Firm A is forming a cartel.
C)Firm A is not cooperating with the price fixing.
D)Firm A observed a change in demand or production.
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Multiple Choice
Q 62Q 62
Suppose that Sun beach only has three movie theaters.One movie theater decreases its movie ticket price and later that same day,the other two do the same.Which of the following is true?
A)This is illegal because the movie theater are colluding.
B)This is an example of explicit price fixing.
C)The first movie theater to lower price is probably the implicit price leader.
D)All of the above are true.
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Multiple Choice
Q 63Q 63
Additional Application
Late in the day on August 7,2006 numerous U.S.airlines cut their fares on leisure travelers.These included American Airlines,Delta,Continental,and Southwest.This fare cut,which was approximately 4 to 8 percent,occurred during a period of rising fuel costs and a record number of seats being filled.If costs are up and demand is strong,why did these airlines reduce their prices on this class of passengers? The explanation is that they were following the lead of United.United Airlines is the implicit price leader in this industry and many other carriers watch closely what the leader does and base their decisions on the leader's actions.Such behavior is not uncommon in an industry dominated by a few large firms.
"United Airlines sparks fare war," August 9,2006,retrieved November 3,2006 from http://money.cnn.com/2006/08/09/news/companies/airfares/index.htm.
-What market structure does the airline industry most likely resemble?
A)monopoly
B)oligopoly
C)monopolistic competition
D)perfect competition
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Multiple Choice
Q 64Q 64
In this article on airlines,when the firms experienced an increase in cost of production,their price ________.
A)increased
B)decreased
C)did not change
D)change was ambiguous
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Multiple Choice
Q 65Q 65
In this article on airlines,when the firms experienced an increase in demand,their price ________.
A)increased
B)decreased
C)did not change
D)change was ambiguous
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Multiple Choice
Q 66Q 66
In the U.S. ,price leadership,as in the article above,is ________.
A)illegal
B)unprofitable
C)seldom used
D)legal
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Multiple Choice
Q 67Q 67
-Refer to Figure 12.5.The model of oligopoly in this diagram is the:
A)price leadership model.
B)kinked demand curve model.
C)cartel model.
D)competitive oligopoly.
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Multiple Choice
Q 68Q 68
-Refer to Figure 12.5.Section of the demand curve assumes that competing firms will:
A)raise their price in response to this firm's price increase.
B)decrease their price in response to this firm's price increase.
C)not change their price in response to this firm's price increase.
D)raise their price in response to this firm's price decrease.
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Multiple Choice
Q 69Q 69
-Refer to Figure 12.5.Section of the demand curve assumes that competing firms will:
A)lower their price in response to this firm's price reduction.
B)increase their price in response to this firm's price reduction.
C)not change their price in response to this firm's price reduction.
D)raise their price in response to this firm's price increase.
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Multiple Choice
Q 70Q 70
-Refer to Figure 12.6.The segment of the demand curve from $9 to $12 is:
A)relatively inelastic.
B)positively sloped.
C)relatively elastic.
D)not realistic.
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Multiple Choice
Q 71Q 71
-Refer to Figure 12.6.Assume the firm represented is selling its product at $12.It could increase its revenue by:
A)raising its price.
B)by lowering its price.
C)by producing more.
D)None of these are correct.
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Multiple Choice
Q 72Q 72
AACSB: Reflective Thinking Skills
Learning Outcome: Micro-16
-Low-price guarantees mean lower prices for consumers.
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True False
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True False
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True False
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True False
Q 76Q 76
If a firm uses a grim trigger retaliation strategy,all firms could end up with zero economic profit.
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True False
Q 77Q 77
Under tit-for-tat retaliation,a firm will mimic the other firm's choice from the preceding period.
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True False
Q 78Q 78
Firms participating in implicit price leadership openly discuss their pricing strategies with one another.
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True False
Q 79Q 79
Explain the underlying assumptions of the price leadership model.What conclusions can be made about the price charged and the output produced in an industry that has an implicit price leader?
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Essay
Q 80Q 80
-Refer to Figure 12.7.The numerical data show daily profits for each of the two firms when they choose a specific pricing strategy.If both firms choose a high-price strategy:
A)Omega will earn $300 daily profit and Zeta will earn $100 daily profit.
B)Omega will earn $100 daily profit and Zeta will earn $300 daily profit.
C)Both will earn $200 daily profit.
D)Both will earn $150 daily profit.
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Multiple Choice
Q 81Q 81
-Refer to Figure 12.7.The numerical data show daily profits for each of the two firms when they choose a specific pricing strategy.If Zeta commits to charging a high price Omega can earn the largest profit by:
A)also charging a high price.
B)charging a low price.
C)convincing Zeta to charge a low price and then matching it.
D)doing none of the above.
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Multiple Choice
Q 82Q 82
-Refer to Figure 12.7.The numerical data show daily profits for each of the two firms when they choose a specific pricing strategy.If both firms follow their individual dominant strategy:
A)Omega will earn $300 daily profit and Zeta will earn $100 daily profit.
B)Omega will earn $100 daily profit and Zeta will earn $300 daily profit.
C)Both will earn $200 daily profit.
D)Both will earn $150 daily profit.
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Multiple Choice
Q 83Q 83
-Refer to Figure 12.7 The numerical data show daily profits for each of the two firms when they choose a specific pricing strategy.In the Nash equilibrium:
A)both firms would a high price.
B)both firms would charge a low price.
C)only Zeta would charge a low price.
D)only Omega would charge a low price.
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Multiple Choice
Q 84Q 84
Table 12.2
-Refer to Table 12.2.Jeri and Tom are arrested for having committed a crime.They are being interrogated individually and need to decide if they should confess or not confess.The police have enough information to put them in jail for 5 years.They also know the pair have committed a more egregious crime but without the help of one of the suspects they will not be able to convict them on this charge.The first number in each cell refers to the number of years of prison time Jeri will receive if she confesses or does not confess and the second number in each cell refers to the number of years of prison time Tom will receive if he confesses or does not confess.The dominant strategy for Jeri is to ________ and the dominant strategy for Tom is to ________.
A)confess;confess
B)not confess;not confess
C)confess;not confess
D)not confess;confess
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Multiple Choice
Q 85Q 85
Table 12.2
-Refer to Table 12.2.Jeri and Tom are arrested for having committed a crime.They are being interrogated individually and need to decide if they should confess or not confess.The police have enough information to put them in jail for 5 years.They also know the pair have committed a more egregious crime but without the help of one of the suspects they will not be able to convict them on this charge.The first number in each cell refers to the number of years of prison time Jeri will receive if she takes that action and the second number in each cell refers to the number of years of prison time Tom will receive if he takes that action.If Jeri and Tom can decide jointly then the best strategy is for Jeri to ________ and Tom to ________.
A)confess;confess
B)not confess;not confess
C)not confess;confess
D)confess;not confess
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Multiple Choice
Q 86Q 86
Recall the application about cheating on the final exam,three students were caught cheating on their final exam.Did the three students confess when the professor put them through the prisoners' dilemma?
A)one student confessed.
B)two students confessed.
C)three students confessed.
D)none of the students confessed.
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Multiple Choice
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True False
Q 88Q 88
If firm A and B do not have dominant strategies,the payoff matrix can be used to predict the Nash equilibrium between firms A and B.
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True False
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True False
Q 90Q 90
The prisoners' dilemma shows that the players' dominant strategies often lead them to less than optimal outcomes.Explain the Nash equilibrium and why both prisoners confessing is the Nash equilibrium.
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Essay
Q 91Q 91
An insecure monopolist can:
A)always deter entry by lowering the price of output.
B)deter entry in the short run but not the long run.
C)deter entry in the long run but not the short run.
D)deter entry if the minimum entry quantity is relatively large.
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Multiple Choice
Q 92Q 92
Consider a college that has only ever had one on-campus bookstore.Over the last two years you have observed that book prices are 20% lower.You conclude that:
A)the cost of producing books must have fallen.
B)the college ordered the bookstore to lower prices.
C)competition from online stores has encouraged the bookstore to behave as an insecure monopolist.
D)fewer students are opting to buy books and supply has decreased.
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Multiple Choice
Q 93Q 93
If an insecure monopolist needs to determine what strategy will be best to prevent a second firm from entering the market,what could be the key variable to use when determining the best strategy?
A)minimum entry quantity
B)minimum exit quantity
C)maximum entry quantity
D)maximum exit quantity
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Multiple Choice
Q 94Q 94
When a company increases output and accepts a lower price to keep new companies from entering the market,it is engaging in:
A)cartel team up.
B)limit pricing.
C)collusion.
D)price ceiling.
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Multiple Choice
Q 95Q 95
A single firm selling its output in a contestable market will:
A)establish a monopoly.
B)be able to maintain high prices indefinitely.
C)be able to earn high economic profits indefinitely.
D)be threatened constantly by the entry of new firms.
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Multiple Choice
Q 96Q 96
A single firm selling its output in a contestable market can raise its prices and:
A)insure higher profits.
B)guarantee monopoly profits.
C)give other firms the incentive to enter that market.
D)keep other firms out of the industry with its market power.
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Multiple Choice
Q 97Q 97
In perfectly contestable markets,large oligopolistic firms end up pricing like:
A)monopolistically competitive firms.
B)a monopoly.
C)competitive firms.
D)a cartel.
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Multiple Choice
Q 98Q 98
Recall the application about Microsoft having a virtual monopoly in the market for personal-computer operating systems and business software.Which of the following best represents the way Microsoft keeps other firms from entering the market?
A)Microsoft buys out small firms that have the potential to make a similar product.
B)Microsoft uses limit pricing to deter entry.
C)Microsoft has a patent that prohibits any firm from producing a similar product.
D)Microsoft is a pure monopoly where it is impossible for other firms to enter the market.
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Multiple Choice
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True False
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True False
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True False
Q 102Q 102
Deterring entry into an industry will be more profitable than sharing the market with another firm.
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True False
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True False
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True False
Q 105Q 105
Explain what a "perfectly contestable" market means.Explain why the outcome in a perfectly contestable market is that firms produce efficiently.
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Essay
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Essay
Q 107Q 107
Do firms in a perfectly contestable market earn positive economic profit in the long run? Explain.
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Essay
Q 108Q 108
Which of the following best defines the advertisers' dilemma?
A)Firms A and B will be better off spending money on advertising,however each firm decides not to advertise.
B)Firms A and B will be better off not spending money on advertising,however each firm decides to advertise.
C)Firm A advertises,but firm B does not advertise.
D)Firm B advertises,but firm A does not advertise.
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Multiple Choice
Q 109Q 109
Which of the following strategic behaviors do firms in an oligopoly market usually engage?
A)price fixing
B)entry deterrence
C)advertising
D)all of the above
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Multiple Choice
Q 110Q 110
Which of the following firms will find it most useful to engage in advertising?
A)perfectly competitive firms
B)monopolistically competitive firms
C)monopolies
D)members of a cartel
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Multiple Choice
Q 111Q 111
A profit-maximizing firm will choose the level of advertisements such that:
A)the marginal cost of advertising is equal to the marginal benefit from advertising.
B)the marginal benefit from advertising exceeds the marginal cost of advertising.
C)the marginal cost of advertising exceeds the marginal benefit from advertising.
D)the firm receives the greatest marginal benefit from advertising.
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Multiple Choice
Q 112Q 112
Because of the advertisers' dilemma,an industry,as a whole would,if legal have an incentive to ________ advertising to ________ competition among sellers.
A)restrict;increase
B)encourage;increase
C)restrict;reduce
D)encourage;reduce
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Multiple Choice
Q 113Q 113
If a firm in a monopolistically competitive market uses advertising to lower the price elasticity of demand for its product:
A)it will likely increase its price.
B)it will likely lead to a monopoly,as other firms exit the market.
C)it will increase the level of competition in the market.
D)none of the above
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Multiple Choice
Q 114Q 114
-Refer to Figure 12.8.If both firms follow their dominant strategies,Firm A will earn profits equal to:
A)$500.
B)$700.
C)$200.
D)$100.
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Multiple Choice
Q 115Q 115
-Refer to Figure 12.8.If both firms follow their dominant strategies,Firm B will earn profits equal to:
A)$500.
B)$700.
C)$200.
D)$100.
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Multiple Choice
Q 116Q 116
-Refer to Figure 12.8.Which of the following would be a Nash equilibrium?
A)Both A and B advertise.
B)Both A and B do not advertise.
C)A advertises and B does not.
D)B advertises and A does not.
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Multiple Choice
Q 117Q 117
-Refer to Figure 12.9.If both firms follow their dominant strategies,Firm X will earn profits equal to:
A)$300.
B)$400.
C)$200.
D)$600.
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Multiple Choice
Q 118Q 118
-Refer to Figure 12.9.If both firms follow their dominant strategies,Firm Y will earn profits equal to:
A)$400.
B)$600.
C)$200.
D)$300.
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Multiple Choice
Q 119Q 119
-Refer to Figure 12.10.The data in the boxes are the annual profits for each company whether they choose to advertise or not.If Big Box follows its dominant strategy it will:
A)earn$ 6 million.
B)earn $4 million.
C)earn $10 million.
D)earn $5 million.
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Multiple Choice
Q 120Q 120
-Refer to Figure 12.10.The data in the boxes are the annual profits for each company whether they choose to advertise or not.If Lil Box follows its dominant strategy it will:
A)earn$ 6 million.
B)earn $4 million.
C)earn $10 million.
D)earn $5 million.
Free
Multiple Choice
Q 121Q 121
-Refer to Figure 12.10.The data in the boxes are the annual profits for each company whether they choose to advertise or not.If Lil Box decides not to advertise:
A)Big Box should not advertise.
B)Big Box should advertise.
C)Lil Box will make $6 million.
D)Lil Box will make $10 million.
Free
Multiple Choice
Q 122Q 122
The advertisers' dilemma suggests that firms would be worse off if they did not advertise,even though advertising only raises total output in an industry by only a small amount.
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True False
Q 123Q 123
Recall the application about the Got Milk? advertising.the generic,non-brand advertising campaign is benefits all the milk firms so they share the cost and the benefits of the Got Milk? campaign.
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True False
Free
Essay
Q 125Q 125
-Refer to Figure 12.11.What is Firm A's dominant strategy? What is Firm B's dominant strategy? Explain.
Free
Essay