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- 1. Multiple Choice
The following table shows the profits associated with the pricing strategies of two oligopolistic firms, Agronomia and Farmingdale. Each firm has two possible strategies: to charge a low price or a high price. The first entry in each cell shows the profits to Agronomia and the second the profits to Farmingdale. If the two firms do not cooperate, what will be the profit for each firm?Agronomia = $50; Farmingdale = $100Agronomia = $150; Farmingdale = $150Agronomia = $300; Farmindale = $50Agronomia = $100; Farmingdale = $100 - 2. Multiple ChoiceE Soda and R Soda are the only two firms in
the soft-drink industry. The companies cannot cooperate. Each firm can follow a high-price strategy or a low-price strategy for pricing its product. In the payoff, the first entry in each cell shows the profits to E Soda and the second entry shows the profits to R Soda. It can be concluded that:neither E Soda nor R Soda has a dominant strategyE Soda has a dominant strategy but R Soda does notBoth firms will choose the high-price strategyBoth firms will choose the low-price strategy - 3. Multiple ChoiceEvergreen and Nature View are bidding for
a landscaping contract. The payoff matrix shows what each firm’s total weekly profits from all its operations will be for each combination of bids. The first entry in each cell shows Evergreen’s profit, and the second entry in each cell shows Nature View’s profit. A Nash equilibrium results under which of the following conditions?When both firms bid lowWhen Evergreen bids high and Nature View bids lowWhen both firms bid high and when both firms bid lowWhen Evergreen bids low, no matter what Nature View’s bid is - 4. Multiple ChoiceAssume that Alpha and Beta are the only sellers of a product and they do not cooperate. Each firm has to decide whether to raise the product price. The payoff matrix gives the profits, in dollars, associated with each pair of pricing strategies. The first entry in each cell shows the profits to Alpha, and the second, the profits to Beta. What is the dominant strategy for each firm?Alpha: Do Not Raise; Beta: Do Not RaiseAlpha: Do Not Raise; Beta: RaiseAlpha: No Dominant Strategy; Beta: RaiseAlpha: Raise; Beta: Do Not Raise
- 5. Multiple ChoiceWhich of the following best describes an oligopolistic market?Many sellers with identical products and no barriers to entryNo competition among sellers and high barriers to entryA few competing sellers with similar products and high barriers to entryA few competing sellers of identical products and no barriers to entry
- 6. Multiple ChoiceThe payoff matrix shows the per-unit profits associated with the production strategies of two utility companies, UA and UB. Each firm has two choices: to reduce production by 10 percent or by 20 percent. The first entry in each cell indicates the profits to UA, and the second, the profits to UB. Assuming no cooperation, which statement is true?Neither company has a dominant strategyBoth companies have an incentive to reduce production by 10%
Both companies have an incentive to reduce production by 20%
Only UA has an incentive to reduce production by 20%
- 7. Multiple ChoiceThe table shows the profits associated with the strategies of two oligopolistic firms, Lock and Star, that must choose between a high price and a low price for their products. The first entry in each box is the profits received by Lock, and the second entry is the profits received by Star. If Lock chooses low price, Star should charge the:high price and earn a profit of $70high price and earn a profit of $50low price and earn a profit of $40low price and earn a profit of $50
- 8. Multiple ChoiceThe cartel model of oligopoly predicts that:all the firms in the industry act in unison to set a monopoly priceeach producer acts independently of othersfirms follow the low-price firm in the industry
differences in cost of production discourage individual firms from cheating
- 9. Multiple ChoiceSuppose that the two biggest producers of gold, Bmine and Gmine, form a cartel to set price. However, each has the option to cheat or to not cheat on the agreement. The table shows the payoffs from these strategies, with the first entry in each cell representing the payoff to Bmine and the second representing the payoff to Gmine. What is the dominant strategy for each firm?Neither Gmine nor Bmine has a dominant strategyGmine’s dominant strategy is to cheat; Bmine does not have a dominant strategyGmine’s dominant strategy is to not cheat; Bmine does not have a dominant strategyGmine’s dominant strategy is to not cheat; Bmine’s dominant strategy is to cheat
- 10. Multiple ChoiceThe characteristic of oligopolistic firms that makes them different from all other types of firms is that oligopolistic firms:Advertise their productsConsider each other's decisionsProduce differentiated productsFace high barriers to entry
- 11. Multiple ChoiceWhat are the main characteristics of oligopoly?Few firms, independent, high barriers of entryFew firms, interdependent, high barriers of entryMany firms, interdependent, low barriers of entryMany firm, independent, low barriers of entry
- 12. Multiple ChoiceWhat is a collusive oligopoly?Firms produce homogeneous productsFirms that act together to determine price or outputFirms that compete with each other in determining outputFirms that cheat to maximise profits
- 13. Multiple ChoiceWhat is the equilibrium of the below game?A,XA,YB,XB,Y
- 14. Multiple ChoiceThis is an illegal practice of an oligopoly working together to set prices.collusionmonopolistic competitioncompetitive pricingpriceline negotiation
- 15. Multiple ChoiceThe most recognizable form of non-price competition is?More LocationsBetter Customer ServiceAdvertisingLow Price
- 16. Multiple ChoiceAccording to the payoff matrix, what will YELLOW do if white goes high?highlow
- 17. Multiple ChoiceAccording to the payoff matrix, what is YELLOW'S dominant strategy?highlow
- 18. Multiple ChoiceWhich of the following usually results from colluding firms?more is producedprofit decreasesprices are highermore firms enter the market
- 19. Multiple Choice
One of the assumptions underlying the kinked demand curve is that oligopolists
Sell to consumers who are less sensitive to price increases than price decreases
Expect their rivals to match any reduction in price
Leave their prices unchanged if a competitor reduces his price
Increase their prices in response to an increase in the price charged by a competitor
- 20. Multiple Choice
In which one of the following market situations would a firm take account of the reactions of competitors before deciding to cut its price?
Monopoly
Oligopoly
Monopolistic Competition
Perfect Competition
- 21. Multiple Choice
Neither company has a dominant strategy
Both companies have an incentive to reduce production by %10
Both companies have an incentive to reduce production by %20
Only UA have an incentive to reduce production by %20
Only UB have an incentive to reduce production by %20
- 22. Multiple Choice
Which of the following best describes an oligopistic market?
Many sellers with identical barriers to entry
Many sellers, each with a clearly differentiated product, and no barriers to entry
A few competing sellers with similar products and high barriers to entry
A few competing sellers of identical products and no barriers to entry
No competition among sellers and high barriers to entry
- 23. Multiple Choice
Game theory is used to explain
why firms price discriminate
how monopolies evolve into oligopolies
strategic behavior of firms in oligopoly
profit maximization in monopoly
price leadership of monopolistic competition
- 24. Multiple Choice
Based on the payoff matrix, which of the following is correct?
Firm A always gets a smaller share of the industry profits.
Firm A’s dominant strategy is to advertise.
Firm B’s dominant strategy is not to advertise.
The dominant strategy for both firms is not to advertise.
Neither firm has a dominant strategy.
- 25. Multiple Choice
The combination where Firm A advertises and Firm B does not advertise is Nash equilibrium because
it is best for each firm given what the other firm has chosen
the total industry profits are maximized
Firm A has an incentive to change its strategy and chooses not to advertise
it is the best outcome for Firm B regardless of what firm A does
advertising is always the best strategy for Firm A
- 26. Multiple Choice
One difference between oligopolies and monopolistically competitive markets is that
there is no deadweight loss in monopolistically competitive markets, but there is in oligopolies
the products sold in monopolistically competitive markets are identical
oligopolies have fewer barriers to entry
firms maximize profits in monopolistically competitive markets but not in oligopolies
there are fewer firms in oligopolistic markets than in monopolistically competitive ones
- 27. Multiple ChoiceThe characteristic of oligopolistic firms that makes them different from all other types of firms is that oligopolistic firms:Advertise their productsConsider each other's decisionsProduce differentiated productsFace high barriers to entry
- 28. Multiple ChoiceA price war occurs when competing sellers________ their prices _____________________.drop, below the competitiondrop, above the competitionraise, below the competitionraise, below the competition
- 29. Multiple Choice___________ is an agreement among competing businesses to sell products for the same or similar prices.Price fixingPrice gougingPrice warsPrice discrimination
- 30. Multiple ChoiceWhen a major car company lowers its prices, other car makers will probablymaintain existing prices.raise their prices.go out of business.lower their prices.
- 31. Multiple Choice
The concentration ratio measures the
Number of plants owned by an oligopoly.
Percentage of total profits made by a firm in a specific market.
Proportion of total output produced by the four largest producers in a specific market.
Relative size of a firm compared to other industries.
- 32. Multiple Choice
A kinked demand curve indicates that rival oligopolists match all
Increased advertising.
Advertising reductions.
Price increases.
Price reductions.
- 33. Multiple Choice
The goal of a company in an oligopoly industry is to
Increase market share and profits.
Obtain the highest price possible.
Always follow rivals if they raise price.
Be the market leader in innovation.
- 34. Multiple Choice
The study of how decisions are made when strategic interaction between firms exists is known as
Game theory.
Contestable market theory.
Market power theory.
Predatory pricing theory.
- 35. Multiple ChoiceA formal organization of sellers or producers who regulate the production, pricing, and marketing of a productImperfect competitionMonopolyCartelMarket structure
- 36. Multiple ChoiceA group of firms combined in order to reduce competition in an industryTrustAntitrust legislationmarket shareoligopoly
- 37. Multiple Choice
A model of Game Theory of oligopoly is known as the:
a) Prisoner's Dilemma
b) Monopoly Cell
c) Jailhouse Sentence
d) Jury Box
- 38. Multiple Choice
Using the pizza store graphic, what market structure best fits the pizza industry?
Monopoly
Oligopoly
Perfect competition
Monopolistic competition
- 39. Multiple Choice
Markets like automobiles, cell phones, cable TV, and internet providers are examples of which market structure?
Monopoly
Oligopoly
Perfect competition
Monopolistic competition
- 40. Multiple ChoiceThis market structure has 3-4 firms who dominate 70-80% of the industry.MonopolyMonopolistic CompetitioPerfect CompetitioOligopoly
- 41. Multiple ChoiceList the four market structures in order from least competitive to most competitive.Oligopoly, Monopoly, Perfect Competition, Monopolistic CompetitionPerfect Competition, Oligopoly, Monopoly, Monopolistic CompetitionMonopoly, Oligopoly, Monopolistic Competition, Perfect CompetitionMonopoly, Monopolistic Competition, Perfect Competition, Oligopoly
- 42. Multiple ChoiceABC, CBS, FOX and NBC are a great example of this market structurePerfect CompetitionImperfect CompetitionOligopolyMonopoly
- 43. Multiple ChoiceWhat is the most predictable outcome in the Prisoner's Dilemma?both prisoners will remain silentprisoner A will testify against prisoner Bprisoner B will testify against prisoner Aboth will testify against each other
- 44. Multiple Choice
Game theory reveals that
each player looks after what is best for the industry.
firms in an oligopoly are not interdependent.
firms in an oligopoly choose their actions without regard for what other firms might do.
the equilibrium might not be the best solution for the parties involved.
if all firms in an oligopoly take the action that maximizes their profit, then the equilibrium will have the largest combined profit of all the firms.
- 45. Multiple Choice
In a kinked demand model oligopoly, firms tend to produce at
A.
B.
E.
no where, they would shut down.
the highest price.
- 46. Multiple Choice
In an oligopoly, firms will produce between quantities ____ and ____.
M;N
M;Q
N:R
N:Q
Q:R
- 47. Multiple Choice
The sum of the market share of the four largest firms in an industry where a ratio above 40% is good indicator of oligopoly is called
four firm concentration ratio.
Herfindahl index.
oligopoly rule.
profit maximizing industry.
non-collusive oligopoly.
- Answer choicesTagsAnswer choicesTags