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Microeconomics Study Set 30

Business

Quiz 15 :

Oligopoly and Antitrust Policy

Quiz 15 :

Oligopoly and Antitrust Policy

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Firms base decisions on the decisions of other firms in the market in:
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Multiple Choice
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Answer:

B

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The oligopoly model is the only model that explicitly considers how the pricing and output decisions of one firm affect other firms.
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True False
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Answer:

True

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In the 1945 ALCOA case, the court used company performance rather than the structure of the market to determine whether the company was in violation of antitrust laws.
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True False
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Answer:

False

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According to the contestable market model, if there are no barriers to entry or exit, the price an oligopolist sets will be equivalent to average total cost.
True False
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The only way to judge monopoly is to use both structure and performance criterion simultaneously.
True False
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Which of the following market structures does not have predictable price and output decisions at which the firms will arrive rationally?
Multiple Choice
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When government uses the judgment by structure criterion, a firm is considered a monopoly only if, for example, it charges excessive prices.
True False
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Suppose there are only four airlines that service the air route between two cities. If there is a barrier to entering the market (such as a limited number of gates), the market is best characterized as:
Multiple Choice
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The cartel model of oligopoly assumes that firms jointly behave as a monopolist in order to maximize joint profits.
True False
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The Herfindahl index is calculated by adding the squared value of the market shares of all the firms in the industry.
True False
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According to the contestable market model, the higher an industry's concentration ratio, the more profitable the industry.
True False
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Under oligopoly:
Multiple Choice
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The higher an industry's concentration ratio is, the more competitive the industry is.
True False
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When government uses the judgment by performance criterion, a firm is considered a monopoly if it controls a significant segment of the market.
True False
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According to the contestable market model, if there are no barriers to entry or exit, the price an oligopolist sets will provide no economic profits in the long run.
True False
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When the FTC investigated whether firms conspired to fix prices of computer memory called dynamic random-access memory (DRAM) chips, Samsung, Micron Technology, Hynix Semiconductor, and Infineon controlled more than 75 percent of the market for DRAM chips. The market for these chips is most likely:
Multiple Choice
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Implicit collusion occurs when oligopolistic firms negotiate a common price.
True False
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Taking explicit account of a rival's expected response to a decision you are making is called:
Multiple Choice
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The central element of the oligopoly model is that each firm produces a differentiated product.
True False
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Strategic decision making is most likely to occur in which market structure?
Multiple Choice
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