Top of Form Q uestion 1 When two or more firms set prices or quantities in uniso
ID: 1198317 • Letter: T
Question
Top of Form
Question 1
When two or more firms set prices or quantities in unison, economists refer to them as a:
a.
monopolistically competitive market.
b.
predatory pricing unit.
c.
perfectly competitive market.
d.
monopoly.
e.
cartel.
3.3 points
Question 2
A monopolistically competitive market consists of __________ seller(s), an oligopoly consists of __________ seller(s), and a monopoly consists of one seller.
a.
many; one
b.
one; many
c.
many; a few
d.
one; two
e.
a few; many
3.3 points
Question 3
As new firms enter a monopolistically competitive industry, it can be expected that:
a.
the output of existing firms will rise.
b.
market price will rise.
c.
market demand will rise.
d.
profits of existing firms will fall.
e.
the profits of existing firms will rise.
3.3 points
Question 4
Which of the following industries is most likely an oligopoly?
a.
house-painting industry
b.
computer repair industry
c.
cellphone industry
d.
construction industry
e.
wheat industry
3.3 points
Question 5
Firm A and Firm B are duopolists. They are choosing the price for which they will sell their products and the quantity they will sell. Both firms make their decisions simultaneously. The __________ in this situation occurs when Firm B chooses a pricing strategy given the strategy that Firm A chooses, and Firm A chooses a pricing strategy given the strategy that Firm B chooses.
a.
Nash equilibrium
b.
Morgenstern equilibrium
c.
Von Neumman equilibrium
d.
antitrust equilibrium
e.
cartel equilibrium
3.3 points
Question 6
The fast-food, bottled water, and cereal markets are all examples of:
a.
monopolistically competitive markets.
b.
oligopolies.
c.
perfectly competitive markets.
d.
monopolies.
e.
homogeneously competitive markets.
3.3 points
Question 7
When two or more firms form a __________ agreement and set price and quantity in unison, economists refer to them as __________.
a.
monopolistically competitive; a cartel
b.
collusive; a cartel
c.
competitive; a cartel
d.
monopolistically competitive; social benefactors
e.
collusive; social benefactors
points
Question 8
A __________ externality exists when the number of customers who purchase a good or use it influences the quantity demanded.
a.
consumption
b.
production
c.
distribution
d.
network
e.
regulation
3.3 points
Question 9
1. Which of the following is an example of collusion?
a.
Dell and Gateway compete on quantity.
b.
Coca-Cola and Pepsi do not attempt to fix prices.
c.
Verizon builds more cellphone towers.
d.
Nike and Reebok compete on price.
e.
American Airlines and United Airlines agree to raise prices.
3.3 points
Question 10
One way to improve the social welfare of a society is to __________ competition and __________ monopoly practices through policy legislation.
a.
limit; limit
b.
ban; subsidize
c.
encourage; subsidize
d.
encourage; limit
e.
limit; encourage
3.3 points
Question 11
Product differentiation:
a.
refers to firms’ attempts to make their products look the same as other products in the industry.
b.
is a common characteristic of a perfectly competitive market structure.
c.
refers to firms’ attempts to make real or apparent differences in essentially substitutable products look different in the minds of consumers.
d.
is employed only in a monopoly market structure.
e.
refers to the advantage big firms have in research and development.
3.3 points
Question 12
Wal-Mart and Target are the only stores in a remote town that currently stock and sell the PlayStation 5 video game console. Managers at both stores are simultaneously deciding whether to charge a price of $1,000 or $1,500 for each console. If both stores charge $1,000, they earn a profit of $100,000 each. If both stores charge $1,500, they earn a profit of $200,000 each. If one store charges $1,000 and the other store charges $1,500, the store that charges $1,000 earns a profit of $250,000 and the firm that charges $1,500 earns a profit of $50,000. If Wal-Mart and Target __________, they can both charge $1,500 and earn the highest combined profit available.
a.
collude with each other
b.
engage in spirited price competition
c.
compete with each other only with regard to price and not quantity
d.
compete with each other only with regard to quantity and not price
e.
privately undercut each other after making an agreement
4 points
Question 13
If a monopolistically competitive firm is incurring losses, then at the profit-maximizing output amount:
a.
average total costs equals marginal cost.
b.
price is equal to marginal revenue.
c.
price is above the average total cost curve.
d.
price is below the average total cost curve.
e.
price is less than marginal revenue.
3.3 points
Question 14
Profit-maximizing, monopolistically competitive firms:
a.
take their price from the industry price, as do perfectly competitive firms.
b.
consider the actions of their competitors when determining price.
c.
do not consider the actions of their competitors when determining price.
d.
consider only marginal cost and marginal revenue, which determine the level of output—and the level of output determines price.
e.
consider only average total cost and average variable cost, which determine the level of output—and the level of output determines price.
3.3 points
Question 15
According to the Clayton Act, persons are not allowed to serve as the director on more than __________ board(s) in the same industry.
a.
one
b.
three
c.
two
d.
four
e.
five
3.3 points
Question 16
An example of a tying arrangement is:
a.
a car manufacturer installing expensive onboard GPS/navigation systems in all the cars it sells.
b.
a coffee shop offering customers the option of having cream with their coffee for an extra 25 cents.
c.
two companies competing on price.
d.
a landlord offering free rent for the first month when a tenant signs a one-year lease.
e.
a restaurant offering both Pepsi and Coca-Cola products.
3.3 points
Question 17
__________ have dominant strategies that make player decisions easy to predict.
a.
Only games involving firms
b.
Not all games
c.
All games
d.
Only two types of games
e.
Only prisoner’s dilemma games
3.3 points
Question 18
In the long run, both monopolistic competition and competitive markets result in:
a.
an inefficient allocation of resources.
b.
excess capacity.
c.
zero economic profit for firms.
d.
a wide variety of brand-name choices for consumers.
e.
insufficient capacity.
3.3 points
Question 19
Fast-food restaurants are a good illustration of:
a.
monopolistic competition.
b.
monopoly.
c.
oligopolistic competition.
d.
perfect competition.
e.
oligopoly.
3.3 points
Question 20
The branch of economics that studies strategic decision making is called:
a.
competitive theory.
b.
interdependence theory.
c.
strategic theory.
d.
noncompetitive theory.
e.
game theory.
3.3 points
Question 21
A __________ consists of a set of players, a set of strategies available to those players, and a specification of the payoffs to each player for each possible combination of strategies.
a.
tournament
b.
monopolistically competitive market
c.
competitive market
d.
game
e.
firm
3.3 points
Question 22
A __________ agreement among rival firms will most likely specify the price each firm will charge and the quantity each firm will produce/sell.
a.
price–quantity
b.
friendly
c.
competitive
d.
monopolistic
e.
collusive
3.3 points
Question 23
Economists are more likely to use game theory to analyze a(n):
a.
competitive market.
b.
monopoly.
c.
monopsony.
d.
oligopoly.
e.
monopolistically competitive market.
3.3 points
Question 24
If monopolistically competitive firms are making positive economic profits, then new firms would:
a.
begin to enter the industry.
b.
reduce their costs.
c.
charge higher prices.
d.
make demand more inelastic.
e.
leave the industry.
3.3 points
Question 25
Airline A and Airline B are the two largest airlines in the country. The chief executive officer of Airline A calls the chief executive officer of Airline B and says, “Why don’t we both raise prices 25% across the board next week?” This is an example of:
a.
attempted collusive behavior.
b.
a tying arrangement.
c.
predatory pricing.
d.
spirited competition.
e.
a corporate merger.
3.6 points
Question 26
Excess capacity best describes the fact that:
a.
monopolistically competitive firms could produce less if they wanted to, so they produce over the optimal capacity.
b.
monopolistically competitive firms produce more than the cost-minimizing level of output.
c.
monopolistically competitive firms produce less than the cost-minimizing level of output.
d.
perfectly competitive firms produce less than the cost-minimizing level of output, so they have excess capacity but monopolistically competitive firms do not.
e.
monopolistically competitive firms produce exactly the cost-minimizing level of output, but the monopolistically competitive industry produces more than that amount.
3.3 points
Question 27
When a particular strategy produces a better outcome for a person regardless of the strategies others choose, we say it is a(n):
a.
equilibrated strategy.
b.
dominated strategy.
c.
dominant strategy.
d.
surplus maximization strategy.
e.
efficient strategy.
3.3 points
Question 28
A firm operating in an oligopolistic market has __________ market power compared to a __________.
a.
more; monopolist
b.
less; monopolist
c.
the same amount of; firm operating in a perfectly competitive market
d.
the same amount of; monopolist
e.
less; firm operating in a perfectly competitive market
3.3 points
Question 29
When modeling economic situations using game theory, the economic participants are generally referred to as:
a.
dominators.
b.
managers.
c.
non-movers.
d.
gamers.
e.
players.
3.3 points
Question 30
Because Wal-Mart has never systematically raised prices, there is no evidence that Wal-Mart is engaged in:
a.
excusive dealings that restrict the ability of the buyer to deal with competitors.
b.
predatory pricing.
c.
illegal tying.
d.
price discrimination that lessens competition.
e.
mergers and acquisitions that lessen competition.
3.3 points
a.
monopolistically competitive market.
b.
predatory pricing unit.
c.
perfectly competitive market.
d.
monopoly.
e.
cartel.
Explanation / Answer
(Question 1) Option (e)
A cartel is a collusion between firms to mutually decide the price or quantity.
(Question 2) Option (c)
In monopolistic competition, there are many sellers and many buyers, while in oligopoly, few large firms dominate the market.
(Question 3) Option (d)
As new firms enter the market, demand for individual firms keep decreasing, therefore profit for existing firms keep falling. The process continues until each firm earns zero economic profit in long run equilibrium.
(Question 4) Option (c)
The cell-phone (mobile) industry is dominated by few large cellphone manufacturers.
NOTE: As per Chegg Answering Policy, first 4 questions are answered.