Question 1

Price leadership works only if there is a single,dominant firm in the oligopoly.

Accepted Answer

A) True 
 B)False

Question 2

At any given airport,the airlines hold long-term leases for passenger loading gates.New gates cannot be added without approval of the airlines.Frequent flier programs are also common in the industry.It is,therefore,more difficult for a new airline to enter a given airport (market) .Such factors:

(i)  are called barriers to entry.
(ii)  tend to decrease the contestability of the air travel market

Accepted Answer

A)  i and ii
B)  i not ii
C)  ii not i
D)  neither i nor ii

Question 3

Oligopolists almost always cooperate in making price and output decisions.

Accepted Answer

A) True 
 B)False

Question 4

One indication that an industry might be oligopolistic is that prices change

Accepted Answer

A)  infrequently.
B)  frequently.
C)  in rhythmic patterns.
D)  on a regular, periodic basis.

Question 5

The analysis of oligopolistic behavior is difficult because

Accepted Answer

A)  there are few real-world examples of oligopolies for economists to study.
B)  oligopolists make decisions independently of each other.
C)  firms in oligopolistic industries react to each other's behavior in many ways.
D)  economists have paid little attention to the topic in recent years and so have not yet applied to it the techniques of modern economic theory.

Question 6

Markets in which the behavior of the firms theoretically leads to an efficient allocation of resources that maximizes the benefits to consumers given the resources available to consumers are

Accepted Answer

A)  monopolistic competition and oligopoly.
B)  monopoly and oligopoly.
C)  monopolistic competition and monopoly.
D)  perfect competition and perfectly contestable.

Question 7

An oligopoly can be characterized by production of either identical goods or different goods.

Accepted Answer

A) True 
 B)False

Question 8

Probably the simplest approach to the problem of oligopolistic interdependence is to

Accepted Answer

A)  conduct market experiments.
B)  assume that rivals will pursue a course most detrimental to the firm concerned.
C)  ignore the actions of rivals.
D)  increase the firm's advertising outlay considerably.

Question 9

The entry of new firms into a monopolistically competitive industry will cause the long-run equilibrium price to rise.

Accepted Answer

A) True 
 B)False

Question 10

Firms that maximize sales always produce more than profit-maximizing firms.

Accepted Answer

A) True 
 B)False

Question 11

Industries,where economies of scale dictate that only a few firms produce,will be efficient if the markets in which they sell are

Accepted Answer

A)  perfect.
B)  contestable.
C)  close to each other.
D)  protected from entry.

Question 12

Baumol and Blinder argue that oligopolies are interdependent firms.What do they mean by this? Give three examples of the types of interdependence which might occur.

Accepted Answer

Oligopolists are few in number,and they ...

Question 13

What quantity of output and price do they try to set,when a group of oligopoly firms form a cartel? Will there be any changes in the price and quantity supplied if the cartel gets broken down?

Accepted Answer

By forming cartels,oligopoly f...

Question 14

An oligopoly using a maximin strategy must believe that the losses from underestimating a competitor's skill are worse than those from overestimating it.

Accepted Answer

A) True 
 B)False

Question 15

The theory of the kinked demand curve is used to explain

Accepted Answer

A)  bizarre corporate behavior.
B)  sales maximization.
C)  the maximin criterion.
D)  sticky prices in oligopolies.

Question 16

Firms in a perfectly contestable market will earn higher profits than firms in markets that are not perfectly contestable.

Accepted Answer

A) True 
 B)False

Question 17

An oligopoly is a market structure in which a few large firms dominate the sale of a single product.

Accepted Answer

A) True 
 B)False

Question 18

Unlike a perfectly competitive firm,a monopolistically competitive firm

Accepted Answer

A)  faces a perfectly inelastic demand curve.
B)  can earn positive economic profit in the short run and in the long run.
C)  cannot earn positive economic profit even in the short run.
D)  does not have the same marginal revenue at every output level.

Question 19

The excess capacity theorem states that society would clearly benefit from a reduction in the number of monopolistic competitors.

Accepted Answer

A) True 
 B)False

Question 20

The excess capacity theorem states that

Accepted Answer

A)  society is worse off with fewer monopolistic competitors.
B)  costs of production under monopolistic competition can be lowered by reducing the number of producers.
C)  lack of excess capacity leads to shortages during periods of unexpected growth in demand for goods produced by monopolistic competition.
D)  there is too much choice in our economy.

Exam 12: Between Competition and Monopoly

What quantity of output and price do they try to set,when a group of oligopoly firms form a cartel? Will there be any changes in the price and quantity supplied if the cartel gets broken down?

Correct Answer
verified
By forming cartels,oligopoly f...
View Answer

Firms that maximize sales always produce more than profit-maximizing firms.

Correct Answer
verified

Markets in which the behavior of the firms theoretically leads to an efficient allocation of resources that maximizes the benefits to consumers given the resources available to consumers are

Correct Answer
verified

An oligopoly is a market structure in which a few large firms dominate the sale of a single product.

Correct Answer
verified

Oligopolists almost always cooperate in making price and output decisions.

Correct Answer
verified

The analysis of oligopolistic behavior is difficult because

Correct Answer
verified

Correct Answer
verified

The entry of new firms into a monopolistically competitive industry will cause the long-run equilibrium price to rise.

Correct Answer
verified

One indication that an industry might be oligopolistic is that prices change

Correct Answer
verified

The excess capacity theorem states that

Correct Answer
verified

Industries,where economies of scale dictate that only a few firms produce,will be efficient if the markets in which they sell are

Correct Answer
verified

Price leadership works only if there is a single,dominant firm in the oligopoly.

Correct Answer
verified

Firms in a perfectly contestable market will earn higher profits than firms in markets that are not perfectly contestable.

Correct Answer
verified

An oligopoly using a maximin strategy must believe that the losses from underestimating a competitor's skill are worse than those from overestimating it.

Correct Answer
verified

Probably the simplest approach to the problem of oligopolistic interdependence is to

Correct Answer
verified

The theory of the kinked demand curve is used to explain

Correct Answer
verified

Unlike a perfectly competitive firm,a monopolistically competitive firm

Correct Answer
verified

The excess capacity theorem states that society would clearly benefit from a reduction in the number of monopolistic competitors.

Correct Answer
verified

Baumol and Blinder argue that oligopolies are interdependent firms.What do they mean by this? Give three examples of the types of interdependence which might occur.

Correct Answer
verified
Oligopolists are few in number,and they ...
View Answer

An oligopoly can be characterized by production of either identical goods or different goods.

Correct Answer
verified

Exam 12: Between Competition and Monopoly

What quantity of output and price do they try to set,when a group of oligopoly firms form a cartel? Will there be any changes in the price and quantity supplied if the cartel gets broken down?

Correct AnswerverifiedBy forming cartels,oligopoly f...View AnswerShow Answer

Firms that maximize sales always produce more than profit-maximizing firms.

Correct AnswerverifiedShow Answer

Markets in which the behavior of the firms theoretically leads to an efficient allocation of resources that maximizes the benefits to consumers given the resources available to consumers are

Correct AnswerverifiedShow Answer

An oligopoly is a market structure in which a few large firms dominate the sale of a single product.

Correct AnswerverifiedShow Answer

Oligopolists almost always cooperate in making price and output decisions.

Correct AnswerverifiedShow Answer

The analysis of oligopolistic behavior is difficult because

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The entry of new firms into a monopolistically competitive industry will cause the long-run equilibrium price to rise.

Correct AnswerverifiedShow Answer

One indication that an industry might be oligopolistic is that prices change

Correct AnswerverifiedShow Answer

The excess capacity theorem states that

Correct AnswerverifiedShow Answer

Industries,where economies of scale dictate that only a few firms produce,will be efficient if the markets in which they sell are

Correct AnswerverifiedShow Answer

Price leadership works only if there is a single,dominant firm in the oligopoly.

Correct AnswerverifiedShow Answer

Firms in a perfectly contestable market will earn higher profits than firms in markets that are not perfectly contestable.

Correct AnswerverifiedShow Answer

An oligopoly using a maximin strategy must believe that the losses from underestimating a competitor's skill are worse than those from overestimating it.

Correct AnswerverifiedShow Answer

Probably the simplest approach to the problem of oligopolistic interdependence is to

Correct AnswerverifiedShow Answer

The theory of the kinked demand curve is used to explain

Correct AnswerverifiedShow Answer

Unlike a perfectly competitive firm,a monopolistically competitive firm

Correct AnswerverifiedShow Answer

The excess capacity theorem states that society would clearly benefit from a reduction in the number of monopolistic competitors.

Correct AnswerverifiedShow Answer

Baumol and Blinder argue that oligopolies are interdependent firms.What do they mean by this? Give three examples of the types of interdependence which might occur.

Correct AnswerverifiedOligopolists are few in number,and they ...View AnswerShow Answer

An oligopoly can be characterized by production of either identical goods or different goods.

Correct AnswerverifiedShow Answer

Correct Answer
verified
By forming cartels,oligopoly f...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Oligopolists are few in number,and they ...
View Answer

Correct Answer
verified