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Resale price maintenance


A) can lead to efficiency by preventing low-price shops from being free riders.
B) can lead to inefficiency by preventing low-price shops from being free riders.
C) is always legal.
D) is a clear example of predatory pricing.
E) is an example of a tying arrangement.

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What is a cartel?

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A cartel is a group of firms acting toge...

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Describe the Department of Justice's claims against Microsoft.

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The Department of Justice claims that Mi...

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In an oligopoly,output is


A) less than the output in monopoly.
B) greater than the output in perfect competition.
C) in all circumstances the same as the output in perfect competition.
D) somewhere between the output in monopoly and that in perfect competition outcomes.
E) in all circumstances the same as the output in monopoly.

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What is a Nash equilibrium? Is this equilibrium the best outcome for the players? Give an example.

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John Nash proposed the concept of an equ...

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Which of the following is an example of a tying arrangement?


A) preventing a buyer from reselling a product outside a specific area
B) selling one product only if another product is purchased
C) forcing the purchase of all necessities from a single firm
D) prohibiting a seller from selling a competing item
E) selling different units of a good to the same buyer at different prices.

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In order for the Federal Trade Commission to consider an industry concentrated,the industry must have a Herfindahl-Hirschman Index of


A) less than 1,000.
B) between 1,000 and 1,400.
C) greater than 1,800.
D) less than zero.
E) between 1,400 and 1,800.

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The Clayton Act


A) replaced the Sherman Act.
B) along with its amendments, outlawed several business practices if they substantially lessened competition or created monopoly.
C) along with its amendments, prohibited all business practices that substantially lessen competition or create monopoly.
D) was the first anti-trust law in the United States.
E) was repealed in 1985.

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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.

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The efficient scale of one firm is 20 units and the average total cost at the efficient scale is $30.The quantity demanded in the market as a whole at $30 is 40 units.This market is


A) a natural duopoly.
B) a legal duopoly.
C) a natural monopoly.
D) a legal monopoly.
E) monopolistically competitive.

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Suppose two companies,Sony and Magnavox,are competing in a duopoly.If both companies charge a high price,they each make $700 million in economic profit.If both companies charge a low price,they each make $500 million in economic profit.If one company charges a high price and the other a low price,the company charging the higher price makes $450 million in economic profit and the company charging the lower price makes $800 million in economic profit. a.Complete the payoff matrix below for Sony and Magnavox. Suppose two companies,Sony and Magnavox,are competing in a duopoly.If both companies charge a high price,they each make $700 million in economic profit.If both companies charge a low price,they each make $500 million in economic profit.If one company charges a high price and the other a low price,the company charging the higher price makes $450 million in economic profit and the company charging the lower price makes $800 million in economic profit. a.Complete the payoff matrix below for Sony and Magnavox. b.Find the Nash equilibrium. b.Find the Nash equilibrium.

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blured image
a.The completed payoff matri...

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One of the main tools economists use to analyze strategic behavior is


A) the Herfindahl-Hirschman Index.
B) game theory.
C) cartel theory.
D) the collusion index.
E) dual theory, which is used to study duopolies.

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The Federal Trade Commission ________ the merger between AT&T and T-Mobile because the merger was projected to ________.


A) did not approve; increase the HHI by at least 700 points and reduce market competitiveness
B) approved; increase the HHI by only 700 points and not substantially affect market competitiveness
C) approved; decrease the HHI by almost 500 points
D) did not approve; increase the four-firm concentration ratio by 20 percent
E) did not approve; cause the firms to engage in predatory pricing

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The figure above shows the market for airplanes. -Suppose the airplane market is an oligopoly.According to the figure above,if the firms act as a monopolist,the quantity produced will be ________ planes per week,and if the firms act as competitors,the quantity produced will be ________ planes per week. A) 6; 12 B) 12; 6 C) 0; 6 D) 12; 0 E) None of the above answers is correct. The figure above shows the market for airplanes. -Suppose the airplane market is an oligopoly.According to the figure above,if the firms act as a monopolist,the quantity produced will be ________ planes per week,and if the firms act as competitors,the quantity produced will be ________ planes per week.


A) 6; 12
B) 12; 6
C) 0; 6
D) 12; 0
E) None of the above answers is correct.

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The Shiny Watch company,a manufacturer of expensive watches,requires all of its retailers to sell its watches for a specific price.Which of the following statements are true? i.The Shiny Watch company is engaged in predatory pricing. ii.The Shiny Watch company is definitely violating the law iii.The Shiny Watch company creates an efficient outcome it its retailers provide an efficient level of service.


A) i, ii and iii.
B) ii only.
C) iii only.
D) i and ii.
E) ii and iii.

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Suppose that an industry has an HHI of 1,900.Two firms in the industry want to merge.Under which conditions will the Federal Trade Commission challenge the merger?


A) The market is considered competitive, so the merger will not be challenged.
B) The merger will be challenged if it raises the HHI by 100 or more points.
C) The merger will be challenged if it raises the HHI by 50 or more points.
D) The merger will be challenged if it raises the HHI by 200 or more points.
E) The merger will be challenged if it raises the HHI by 500 or more points.

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The prisoners' dilemma is an example of


A) product differentiation.
B) collusion.
C) game theory.
D) monopolistic competition.
E) decision making in a monopoly.

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If Sony required all its retailers not to sell televisions from other companies,Sony would be engaging in what kind of activity? Is Sony's requirement legal or does it violate the Clayton Act?

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Sony is engaged in an exclusive deal.The...

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What is game theory and what light does it shed on the duopolists' dilemma?

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Game theory is a tool economists use to ...

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Tying arrangements


A) work only in perfectly competitive markets.
B) are illegal under the Sherman Act.
C) are illegal under the Clayton Act if they create monopoly.
D) are illegal under the Clayton Act and the Sherman Act only if they used along with predatory pricing.
E) are always illegal under the Clayton Act.

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