Econ final

Which of the following firms is likely to have the highest market power? A) A perfectly competitive firm B) A monopolistic competitor C) A monopoly D) An oligopoly with homogeneous products

C

Which of the following is true of an extensiveform game? A) The sum of the payoffs to the players in the game is always constant. B) It involves simultaneous decision making by the players. C) It involves sequential decision making by the players. D) The players in the game earn equal payoffs in equilibrium.

C

Which of the following market structures provides socially efficient outcomes? A) Oligopoly B) Monopoly C) Perfect competition D) Monopolistic competition

C

Oligopolists merge to−−−−−−−−. A) increase market supply B) increase market demand C) increase market power D) reduce prices

C

A Nash equilibrium occurs if−−−−−−−−. A) each player chooses strategies that are mutual best responses B) each player chooses his or her dominant strategy C) each player chooses only a pure strategy D) each player chooses only a mixed strategy

A

A strategy is called a pure strategy if it involves choosing−−−−−−−−. A) one particular action for a situation B) different combinations of actions for a situation C) an action that yields a higher payoff to the opponent D) an action that yields zero payoff to the player

A

At the profit-maximizing level of production of a monopolist,−−−−−−−−.A) marginal revenue equals marginal costB) marginal revenue exceeds marginal costC) marginal revenue is less than marginal costD) both marginal revenue and marginal cost are negative

A

In a duopoly with homogeneous products, the best response of a firm is to charge a lowerprice than its rival as long as−−−−−−−−. A) the rival's price is above marginal cost B) the rival's price is below marginal cost C) the rival's price is above average cost D) the rival's price is below average cost

A

In which of the four market structures do sellers act as price takers? A) Perfect competition B) Monopolistic competition C) Monopoly D) Oligopoly

A

Social surplus is maximized in a(n)−−−−−−−−. A) perfectly competitive market B) monopolistically competitive market C) monopoly market D) oligopoly market

A

The market outcome in a duopoly with homogeneous products is similar to that in−−−−−−−− A) a perfectly competitive market B) a monopolistically competitive market C) a monopoly D) an oligopoly with differentiated products

A

The optimal strategy of a goalie in penalty kicking is similar to that in a(n)−−−−−−−−. A) zero-sum game B) symmetric game C) extensive-form game D) prisoners dilemma

A

The prisoners' dilemma is an example of a(n)−−−−−−−−game. A) simultaneous move B) extensive-form C) zero-sum D) mixed strategy

A

Third-degree price discrimination occurs when: A) different groups of consumers are charged different prices. B) consumers are charged different prices at different points of time. C) consumers are charged different prices according to their willingness to pay. D) consumers are charged different prices based on the characteristics of their purchases.

A

Which of the following market structures has the highest market concentration? A) A monopoly B) An oligopoly with differentiated products C) A perfect competition D) A monopolistic competition

A

A collusion can work if−−−−−−−−. A) a colluder can cheat without being detected B) a colluder values future monopoly profits more than current profits C) a colluder charges a price higher than his partners D) a colluder gives secret price discounts

B

A profit-maximizing monopolistic competitor continues production until−−−−−−−− A) marginal revenue exceeds marginal cost B) marginal revenue equals marginal cost C) marginal revenue exceeds average revenue D) marginal revenue equals average revenue

B

In an extensive-form game, payoff to a player is usually higher if−−−−−−−−. A) he follows a pure strategy B) he follows a mixed strategy C) he is the first mover D) he is the second mover

C

A strategy is called a mixed strategy if involves choosing−−−−−−−−. A) one particular action for a situation B) different actions randomly C) an action that yields a higher payoff to the opponent D) an action that yields zero payoff to the player

B

A−−−−−−−−is an extensive -form representation of a game. A) payoff matrix B) game tree C) Nash equilibrium D) pure strategy

B

A−−−−−−−−is the privilege granted to an individual or company by the government, whichgives them the sole right to produce and sell a good. A) brand B) patent C) copyright D) trademark

B

Collusion occurs when firms−−−−−−−. A) charge a price equal to their marginal cost of production B) conspire to set the quantity they produce or the prices they charge C) compete with each other by setting a price slightly lower than the rival's price D) compete with each other by differentiating their products

B

Game theory is the study of−−−−−−−−. A) policy analysis B) strategic interactions C) program evaluation D) irrational decision making

B

If a monopolist owns or controls a key resource necessary for production, it is a source of: A) legal market power. B) natural market power. C) regulated market power. D) restricted market power.

B

The Herfindahl-Hirschman Index is used to−−−−−−−−. A) measure the price elasticity of demand faced by a firm B) estimate the degree of competition in an industry C) measure the price elasticity of market supply in an industry D) estimate the profit earned by firms in an industry

B

The first mover in an extensive-form game should use−−−−−−−−to win the game. A) forward induction B) backward induction C) pure strategies D) mixed strategies

B

The profit earned by a monopolistic competitor after the entry of new firms is−−−−−−−−. A) higher than the profit earned by the firm before the entry of new firms B) lower than the profit earned by the firm before the entry of new firms C) equal to the profit earned by a monopolist in the long run D) higher than the profit earned by a perfect competitor in the long ru

B

The−−−−−−−−the Herfindahl-Hirschman Index, the−−−−−−−−. A) lower; more concentrated the industry B) higher; more concentrated the industry C) higher; less concentrated the industry D) lower; higher the profits earned in the industry

B

Which of the following firms is most likely to have a constant marginal cost?A) A firm that is a price takerB) A firm that has extremely high fixed costsC) A firm that has extremely high variable costsD) A firm that faces a horizontal demand curve

B

Which of the following helps in preventing firms in the U.S. from forming collusive agree-ments? A) The low demand faced by colluding firms B) The antitrust policy of the government C) The high rate of corporate income taxes D) The low profit earned by firms after colluding

B

Which of the following is a difference between an oligopoly model with homogeneousproducts and a monopoly? A) Firms in an oligopoly with homogeneous products earn positive economic profits in the longrun, while a monopoly earns zero economic profits in the long run. B) Firms in an oligopoly with homogeneous products face stiff competition from its rivals, whilethere is no competition in a monopoly. C) There are huge barriers to entry in an oligopoly with identical products, while there are nobarriers to entry in a monopoly. D) Firms in an oligopoly with identical products charge a price higher than marginal cost in thelong run, while a monopoly charges a price lower than marginal cost in the long run.

B

Which of the following is a similarity between a monopoly and an oligopoly with differen-tiated products? A) There are no barriers to entry in both markets. B) The long-run equilibrium price in both markets exceeds marginal cost. C) There is a single seller in both markets. D) Firms in both the markets earn zero profit in the long run.

B

Which of the following is true of a payoff matrix? A) It is the representation of only the best response of each player. B) It takes into account all relevant costs and benefits associated with each action of the players. C) It shows the payment made to each factor of production for the production of a good. D) It does not represent all the costs and benefits associated with the choices of the players.

B

Compared to a firm under perfect competition, a monopolist: A) charges less and produces less. B) charges less and produces more. C) charges more and produces less. D) charges more and produces more.

C

If a monopolist decides to charge a higher price for its product, it will yield: A) a lower revenue per unit sold but a higher number of units sold. B) a lower revenue per unit sold and a lower number of units sold. C) a higher revenue per unit sold but a lower number of units sold .D) a higher revenue per unit sold and a higher number of units sold.

C

Which of the following statements correctly identifies a similarity between monopoly andperfect competition?A) Entry is restricted in both market structures. B) Price equals marginal cost in both market structures. C) Production is expanded until marginal revenue equals marginal cost in both the market struc-tures. D) Firms face an upward sloping demand curve and a downward sloping marginal revenuecurve in both the market structures.

C

Which of the following statements is true? A) Network effects arise because of economies of scale. B) Economies of scale arise because of network effects. C) Economies of scale act as barriers to entry into a market. D) Network effects provide incentives to new sellers to enter the market.

C

Which of the following statements is true? A) Under monopoly, the seller sets the price of its good below marginal costs. B) Under perfect competition, sellers set the price of their goods below marginal costs. C) Under monopoly, prospective buyers may not be able to buy a good even if they have awillingness to pay above marginal costs. D) Under perfect competition, prospective buyers may not be able to buy a good even if theyhave a willingness to pay above marginal costs.

C

A player has a dominant strategy when: A) her chosen strategy gives her a lower payoff than the other player. B) her chosen strategy matches the best response of other players in the game. C) she has many best responses to any strategy of the other player in the game. D) she has only one best response to every possible strategy of the other player.

D

In a zero-sum game,−−−−−−−−. A) each player earns a zero payoff irrespective of the strategy one chooses B) each player has a dominant strategy C) each player chooses a pure strategy D) one player's loss is another player's gain

D

The pricing rule for a monopolist is: A) P=MR>MC. B) P>MR>MC. C) P=MR=MC. D) P>MR=MC.

D

There are a few ship manufacturers in Polonia and each firm faces a downward slopingdemand curve. The ship-building industry in Polonia is an example of a(n)−−−−−−−. A) perfect competition B) monopolistic competition C) monopoly D) oligopoly

D

Which of the following is a feature of an oligopoly market? A) There is a large number of sellers in this market. B) There are no barriers to entry in this market. C) Each firm in this market earns zero economic profits. D) Each firm's action affects the decisions of its rival.

D

Which of the following is an example of differentiated goods? A) Books and cosmetics B) Fuel and water C) Potatoes grown by different farmers D) Tea and energy drinks

D

−−−−−−−−is the market structure in which there are a few rival firms. A) Perfect competition B) Monopolistic competition C) Monopoly D) Oligopoly

D