In an oligopoly, each firm knows that its profits

depend on both how much output it produces and how much output its rival firms produce.

depend only on how much output it produces.

depend only on how much output its rival firms produce.

will be zero in the long run because of free entry.

A distinguishing feature of an oligopolistic industry is the tension between

profit maximization and cost minimization.

producing a small amount of output and charging a price above marginal cost.

short-run decisions and long-run decisions.

In studying oligopolistic markets, economists assume that

there is no conflict or tension between cooperation and self-interest.

it is easy for a group of firms to cooperate and thereby establish and maintain a monopoly outcome

Which of the following statements do economists assume that there is no conflict or tension between cooperation and self-interest?

each oligopolist cares only about its own profit.

there is no conflict or tension between cooperation and self-interest.

it is easy for a group of firms to cooperate and thereby establish and maintain a monopoly outcome.

strategic decisions do not play a role in such markets.

A special kind of imperfectly competitive market that has only two firms is called

a two-tier competitive structure.

An agreement between two duopolists to function as a monopolist usually breaks down because

each duopolist wants a larger share of the market in order to capture more profit.

they cannot agree on the price that a monopolist would charge.

they cannot agree on the output that a monopolist would produce.

each duopolist wants to charge a higher price than the monopoly price.

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 producing the monopoly quantity of songs. By February, each singer is considering breaking the agreement. What would you expect to happen next?

Jay-Z and Beyonce will each break the agreement. The new equilibrium quantity of songs will increase, and the new equilibrium price will decrease.

Jay-Z and Beyonce will determine that it is in each singer's best self interest to maintain the agreement.

Jay-Z and Beyonce will each break the agreement. The new equilibrium quantity of songs will decrease, and the new equilibrium price will increase.

Jay-Z and Beyonce will each break the agreement. The new equilibrium quantity of songs will increase, and the new equilibrium price also will increase.

As the number of firms in an oligopoly increases, the

price approaches marginal cost, and the quantity approaches the socially efficient level.

price and quantity approach the monopoly levels.

price effect exceeds the output effect.

individual firms' profits increase.

If a certain market were a monopoly, then the monopolist would maximize its profit by producing 1,000 units of output. If, instead, that market were a duopoly, then which of the following outcomes would be most likely if the duopolists successfully collude?

One duopolist produces 400 units of output and the other produces 600 units of output.

Each duopolist produces 1,000 units of output.

Each duopolist produces 600 units of output.

One duopolist produces 800 units of output and the other produces 400 units of output.

As the number of sellers in an oligopoly becomes very large,

the quantity of output approaches the socially efficient quantity.

the price approaches marginal cost.

the price effect is diminished.

In markets characterized by oligopoly,

the oligopolists earn the highest profit when they cooperate and behave like a monopolist.

collusive agreements will always prevail.

collective profits are always lower with cartel arrangements than they are without cartel arrangements.

pursuit of self-interest by profit-maximizing firms always maximizes collective profits in the market.

As a group, oligopolists would always be better off if they would act collectively

as if they were each seeking to maximize their own individual profits.

in a manner that would prohibit collusive agreements.

as a single perfectly competitive firm.

As a group, oligopolists would always earn the highest profit if they would

charge the same price that a monopolist would charge if the market were a monopoly.

produce the perfectly competitive quantity of output.

produce more than the perfectly competitive quantity of output.

operate according to their own individual self-interests.

Because each oligopolist cares about its own profit rather than the collective profit of all the oligopolists together,

they are unable to maintain the same degree of monopoly power enjoyed by a monopolist.

each firm's profit always ends up being zero.

society is worse off as a result.

When an oligopoly market reaches a Nash equilibrium,

a firm will have chosen its best strategy, given the strategies chosen by other firms in the market.

the market price will be different for each firm.

the firms will not have behaved as profit maximizers.

a firm will not take into account the strategies of competing firms.

In a duopoly situation, the logic of self-interest results in a total output level that

exceeds the monopoly level of output, but falls short of the competitive level of output.

equals the output level that would prevail in a competitive market.

equals the output level that would prevail in a monopoly.

falls short of the monopoly level of output.

As a group, oligopolists earn the highest profit when they

produce a total quantity of output that falls short of the Nash-equilibrium total quantity.

produce a total quantity of output that exceeds the Nash-equilibrium total quantity.

charge a price that falls short of the Nash-equilibrium price.

In order to be successful, a cartel must

agree on the total level of production and on the amount produced by each member.

find a way to encourage members to produce more than they would otherwise produce.

agree on the total level of production for the cartel, but they need not agree on the amount produced by each member.

agree on the prices charged by each member, but they need not agree on amounts produced.

In a particular town, Comvision and Veriview are the only two providers of cable TV service. Comvision and Veriview constitute a

duopoly, whether they collude or not.

cartel, whether they collude or not.

Nash industry, whether they collude or not.

monopolistically competitive market if they charge the same price.

Which of these situations produces the largest profits for oligopolists?

The firms reach the monopoly outcome.

The firms reach a Nash equilibrium.

The firms reach the competitive outcome.

The firms produce a quantity of output that lies between the competitive outcome and the monopoly outcome.

When firms have agreements among themselves on the quantity to produce and the price at which to sell output, we refer to their form of organization as a

monopolistically competitive oligopoly.

perfectly competitive oligopoly.

The equilibrium quantity in markets characterized by oligopoly is

higher than in monopoly markets and lower than in perfectly competitive markets.

higher than in monopoly markets and higher than in perfectly competitive markets.

lower than in monopoly markets and higher than in perfectly competitive markets.

lower than in monopoly markets and lower than in perfectly competitive markets.

The equilibrium price in a market characterized by oligopoly is

lower than in monopoly markets and higher than in perfectly competitive markets.

higher than in monopoly markets and higher than in perfectly competitive markets.

higher than in monopoly markets and lower than in perfectly competitive markets.

lower than in monopoly markets and lower than in perfectly competitive markets.

When oligopolistic firms interacting with one another each choose their best strategy given the strategies chosen by other firms in the market, we have

a group of oligopolists behaving as a monopoly.

the perfectly competitive outcome.

As the number of firms in an oligopoly market

increases, the market approaches the competitive market outcome.

decreases, the price charged by firms likely decreases.

decreases, the market approaches the competitive market outcome.

increases, the market approaches the monopoly outcome.

Assume oligopoly firms are profit maximizers, they do not form a cartel, and they take other firms' production levels as given. Then in equilibrium the output effect

must balance with the price effect.

must dominate the price effect.

must be smaller than the price effect.

can be larger or smaller than the price effect.

For cartels, as the number of firms (members of the cartel) increases,

the easier it becomes to observe members violating their agreement.

the monopoly outcome becomes more likely.

the magnitude of the price effect decreases.

the more concerned each seller is about its own impact on the market price.

Suppose a market is initially perfectly competitive with many firms selling an identical product. Over time, however, suppose the merging of firms results in the market being served by only three or four firms selling this same product. As a result, we would expect

a decrease in market output and an increase in the price of the product.

an increase in market output and an increase in the price of the product.

an increase in market output and an decrease in the price of the product.

a decrease in market output and a decrease in the price of the product.

Cartels are difficult to maintain because

there is always tension between cooperation and self-interest in a cartel.

antitrust laws are difficult to enforce.

cartel agreements are conducive to monopoly outcomes.

firms pay little attention to the decisions made by other firms.

There are two types of markets in which firms face some competition yet are still able to have some control over the prices of their products. Those two types of market are

monopolistic competition and oligopoly.

perfect competition and monopolistic competition.

duopoly and imperfect competition.

A group of firms that act in unison to maximize collective profits is called a

monopolistically competitive industry.

If duopolists individually pursue their own self-interest when deciding how much to produce, the amount they will produce collectively will

be greater than the monopoly quantity.

be less than the monopoly quantity.

be equal to the monopoly quantity.

If duopolists individually pursue their own self-interest when deciding how much to produce, the profit-maximizing price they will charge for their product will be

equal to the perfectly competitive market price.

greater than the monopoly price.

possibly less than or greater than the monopoly price.

To increase their individual profits, members of a cartel have an incentive to

increase production above the level agreed upon.

charge a higher price than the other members of the cartel.

ignore the choices made by the other firms and act as a monopolist.

charge the same price a monopolist would charge.

If an oligopolist is part of a cartel that is collectively producing the monopoly level of output, then that oligopolist has the incentive to lower production with the aim of

increasing profits for the group of firms as a whole.

increasing profits for itself, regardless of the impact on profits for the group of firms as a whole.

chap 17: Oligopoly

Authored by Diệu Thảo Nguyễn

English

University

Used 2+ times

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following statements about oligopolies is not correct?

An oligopolistic market has only a few sellers.

The actions of any one seller can have a large impact on the profits of all other sellers.

Oligopolistic firms are interdependent in a way that competitive firms are not.

Unlike monopolies and monopolistically competitive markets, oligopolies prices do not exceed their marginal revenues.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In the language of game theory, a situation in which each person must consider how others might respond to his or her own actions is called a

quantifiable situation.

cooperative situation.

strategic situation.

tactical situation.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In general, game theory is the study of

how people behave in strategic situations.

how people behave when the possible actions of other people are irrelevant.

oligopolistic markets.

all types of markets, including competitive markets, monopolistic markets, and oligopolistic markets.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following statements is correct?

Strategic situations are more likely to arise when the number of decision-makers is very large rather than very small.

Strategic situations are more likely to arise in monopolistically competitive markets than in oligopolistic markets.

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.

Game theory is not necessary for understanding competitive or monopoly markets.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In which of the following markets are strategic interactions among firms most likely to occur?

markets to which patent and copyright laws apply

the market for piano lessons

the market for tennis balls

the market for corn

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Game theory is important for understanding which of the following market types?

perfectly competitive and oligopolistic markets

perfectly competitive markets but not oligopolistic markets

oligoplistic but not perfectly competitive markets

neither oligopolistic nor perfectly competitive markets.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

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

openly.

strategically.

dominantly.

cooperatively.

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chap 17: Oligopoly

Which of the following statements about oligopolies is not correct?

In the language of game theory, a situation in which each person must consider how others might respond to his or her own actions is called a

In general, game theory is the study of

Which of the following statements is correct?

In which of the following markets are strategic interactions among firms most likely to occur?

Game theory is important for understanding which of the following market types?

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

We must be knowledgeable of how people behave in strategic situations if we are to understand

In an oligopoly, each firm knows that its profits

A distinguishing feature of an oligopolistic industry is the tension between

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