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Chapter 17 Oligopoly QUESTIONS AND 100% CORRECTANSWERS|2024
Chapter 17 Oligopoly QUESTIONS AND 100% CORRECTANSWERS|2024
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lOMoAR cPSD| 37668344lOMoARcPSD|37668344
OLIGOPOLY - TEST BANK
Chapter 17 Oligopoly QUESTIONS AND 100% CORRECTANSWERS|2024
Student name:
1) Economics
MULTIPLE CHOICE
1.Which of the following statements about oligopolies is not correct?
An oligopolistic market has only a few sellers.
a.
The actions of any one seller can have a large impact on the profits of all other sellers.
b.
Oligopolistic firms are interdependent in a way that competitive firms are not.
c.
Unlike monopolies and monopolistically competitive markets, oligopolies
d.
prices do not exceed their marginal revenues.
ANS: D PTS: 1 DIF: 1 REF: 17-0
NAT: Analytic LOC: Oligopoly TOP: Oligopoly |
Markets MSC: Definitional
In the language of game theory, a situation in which each person must consider how
2.
others might respond to his or her own actions is called a
a. quantifiable situation.
b. cooperative situation.
c. strategic situation.
d. tactical situation.
ANS: C PTS: 1 DIF: 1 REF: 17-
0
NAT: Analytic LOC: Oligopoly TOP: Game
theory
MSC: Definitional
In general, game theory is the study of
3.
how people behave in strategic situations.
a.
how people behave when the possible actions of other people are irrelevant.
b.
oligopolistic markets.
c.
all types of markets, including competitive markets, monopolistic markets,
d.
and oligopolistic markets.
ANS A PTS: 1 DIF: 2 REF: 17-
: 0
NAT Analytic LOC: Oligopoly TOP: Game
: theory
MSC Definitiona
: l
Which of the following statements is correct?
4.
a. Strategic situations are more likely to arise when the number of decision-makers is
very large rather than very small.
b. Strategic situations are more likely to arise in monopolistically competitive
markets than in oligopolistic markets.
c. Game theory is useful in understanding certain business decisions, but it is not
really applicable to ordinary games such as chess or tic-tac-toe.
d. Game theory is not necessary for understanding competitive or monopoly markets.
ANS D PTS: 1 DIF: 2 REF: 17-
: 0
, lOMoAR cPSD| 37668344
NAT Analytic LOC: Oligopoly TOP: Game
: theory
MSC Interpretive
:
5. In which of the following markets are strategic interactions among firms most likely to occur?
a.markets to which patent and copyright laws apply
b.the market for piano lessons
c.the market for tennis balls
d.the market for corn
ANS: C PTS: 1 DIF: 2 REF: 17-0
NAT: Analytic LOC: Oligopoly TOP: Game
theory MSC: Interpretive
1
2 ❖ Chapter 17/Oligopoly
6. Game theory is important for understanding which of the following market types?
perfectly competitive and oligopolistic markets
a.
perfectly competitive markets but not oligopolistic markets
b.
oligoplistic but not perfectly competitive markets
c.
neither oligopolistic nor perfectly competitive markets.
d.
ANS: C PTS: 1 DIF: 1 REF: 17-0
NAT: Analytic LOC: Oligopoly TOP: Game
theory MSC: Definitional
7.In choosing among alternative courses of action, Raj must consider how others might
respond to the action he takes. In the language of game theory, we say that Raj must think
a. openly.
b. strategicall
y.
c. dominantly
.
d. cooperative
ly.
ANS B PTS: 1 DIF: 1 REF: 17-
: 0
NA Analytic LOC The study of economics and definitions in
T: : economics
TOP Game theory MSC: Definitional
:
8.We must be knowledgeable of how people behave in strategic situations if we are to
understand
a. perfectly competitive markets.
b. monopolistically competitive markets.
c. oligopolistic markets.
d. All of the above are correct.
ANS: C PTS: 1 DIF: 1 REF: 17-0
NAT: Analytic LOC: Oligopoly TOP: Game theory |
Markets MSC: Interpretive
9. In an oligopoly, each firm knows that its profits
, lOMoAR cPSD| 37668344
depend only on how much output it produces.
a.
depend only on how much output its rival firms produce.
b.
depend on both how much output it produces and how much output its rival firms
c.
produce.
d. will be zero in the long run because of free entry.
ANS: C PTS: 1 DIF: 2 REF: 17-0
NAT: Analytic LOC: Oligopoly TOP: Oligopoly |
Interdependence MSC: Interpretive
MARKETS WITH ONLY A FEW SELLERS
A distinguishing feature of an oligopolistic industry is the tension between
1.
profit maximization and cost minimization.
a.
cooperation and self interest.
b.
producing a small amount of output and charging a price above marginal cost.
c.
short-run decisions and long-run decisions.
d.
ANS: B PTS: 1 DIF: 2 REF: 17-1
NAT: Analytic LOC: Oligopoly TOP: Oligopoly MSC:
Interpretive
2.In studying oligopolistic markets, economists assume that
there is no conflict or tension between cooperation and self-interest.
a.
it is easy for a group of firms to cooperate and thereby establish and maintain a monopoly
b.
outcome.
c. each oligopolist cares only about its own profit.
d. strategic decisions do not play a role in such markets.
ANS: C PTS: 1 DIF: 2 REF: 17-1
NAT: Analytic LOC: Oligopoly TOP: Oligopoly |
Cooperation MSC: Interpretive
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.
, lOMoAR cPSD| 37668344
Chapter 17/Oligopoly
❖3
3.The simplest type of oligopoly is
monopoly.
a.
duopoly.
b.
monopolistic competition.
c.
oligopolistic
d.
competition. ANS: B
PTS: 1 DIF: 1 REF: 17-1
NAT: Analytic LOC: Oligopoly TOP: Duopoly MSC: Interpretive
4. A special kind of imperfectly competitive market that has only two firms is called
a. a two-tier competitive
structure.
b. an incidental monopoly.
c. a doublet.
d. a duopoly.
ANS: D PTS: 1 DIF: 1 REF: 17-1
NAT: Analytic LOC: Oligopoly TOP: Duopoly MSC: Definitional
An agreement between two duopolists to function as a monopolist usually breaks down
5.
because
a. they cannot agree on the price that a monopolist would charge.
b. they cannot agree on the output that a monopolist would produce.
c. each duopolist wants a larger share of the market in order to capture more profit.
d. each duopolist wants to charge a higher price than the monopoly price.
ANS: C PTS: 1 DIF: 2 REF: 17-1
NAT: Analytic LOC: Oligopoly TOP: Duopoly MSC:
Interpretive
An agreement among firms in a market about quantities to produce or prices to charge is
6.
called
a. collusion.
b. a strategic situation.
c. excess capacity.
d. tying.
ANS: A PTS: 1
DIF: 1 REF: 17-1
NAT: Analytic LOC: Oligopoly TOP: Collusion MSC:
Definitional
Which of the following statements is correct?
7.
a. If duopolists successfully collude, then their combined output will be equal to the
output that would be observed if the market were a monopoly.
b. Although the logic of self-interest decreases a duopoly’s price below the monopoly price,
it does
not push the duopolists to reach the competitive price.
c. Although the logic of self-interest increases a duopoly’s level of output above the
monopoly level, it does not push the duopolists to reach the competitive level.
d. All of the above are correct.
ANS: D PTS: 1 DIF: 2 REF: 17-1
NAT: Analytic LOC: Oligopoly TOP: Duopoly MSC:
Interpretive
8. Suppose that Jay-Z and Beyonce are duopolists in the music industry. In January, they
agree to work together as a monopolist, charging the monopoly price for their music and
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