Econ Exam 3 Chapter 12 MC

An industry with a Herfindahl-Hirschman Index of 10,000 could have no more than A. 1 firm B. 2 firms C. 100 firms D. 10,000 firms

A

Game theory is A. the study of how people behave in strategic situations B. the collusion of a few powerful firms to create monopoly power C. the act of price-fixing to share markets D. the division of a market into non-competitive areas, creating regional monopolies

A

Setting the prime rate of interest is an example of A. price leadership B. cutthroat competition C. covert collusion D. strong competition

A

The concentration ratio is the percentage of _____ earned by the _____ largest firms in the industry. A. sales; four B. sales; ten C. profits; four D. profits; ten

A

The demand curve facing an oligopoly will be less elastic A. the larger its share of the market and the more differentiated the product B. the smaller its share of the market and the more differentiated the product C. the larger its share of the market and the less differentiated the product D. the smaller its share of the market and the less differentiated the product

A

This firm's most efficient output level is A. OJ B. OK C. OL D. OM

A

This oligopolist is a A. cutthroat competitor that is making a profit B. cutthroat competitor that is taking a loss C. member of a cartel that is making a profit D. member of a cartel that is taking a loss

A

Which of the following is a shortcoming of concentration ratios? A. The measurement generally does not include foreign imports B. The measurement is based on all firms of the industry, no matter how small C. The measurement is only based on the top ten firms in an industry D. The measurement includes foreign imports

A

Which of the following statements is false? A. Oligopolies are illegal in most states B. Most oligopolies engage in outright collusion C. Ford Motor Company is an oligopoly D. None of these is false

A

Which of the following statements is true? A. Industry X has a higher Herfindahl-Hirschman Index than Industry Y B. Industry Y has a higher Herfindahl-Hirschman Index than Industry Z C. Industry Z has a higher Herfindahl-Hirschman Index than Industry X D. Industries X, Y, and Z have the same Herfindahl-Hirschman Index

A

Even with the big three textbook publishers (McGraw-Hill, Pearson, and Cengage) having a large market share, the textbook industry is still considered _____ because of the high level of competition that exists. A. a cartel B. a model of cutthroat competition C. an example of open collusion D. a price leadership model

B

In April 2010 the market share of the top six U.S. makers of cars and light trucks were General Motors (18.7 percent), Ford (17.0 percent), Toyota (16.0 percent), Honda (11.6 percent), Chrysler (9.7 percent), and Nissan (6.5 percent), and other companies made up the remaining 21.5 percent. What was the concentration ratio for the motor vehicle industry in April 2010? A. 35.7 B. 63.3 C. 78.5 D. 100

B

Read the two statements below and then choose the answer choice that correctly describes them. Statement I: Oligopolists must sell identical products.Statement II: Oligopolists are often very large firms. A. Statement I is true and statement II is false B. Statement II is true and statement I is false C. Both statements are true D. Both statements are false

B

The greater the barriers to entry into an industry are A. the more elastic will be the demand curves for existing firms B. the more likely that existing firms will enjoy large profits in the long run C. the lower will be short-run profits D. the lower will be the average cost curves of existing firms

B

This profit-maximizing firm's output is A. OJ B. OK C. OL D. OM

B

_____ is legal and not frowned upon in the U.S. A. Covert collusion B. Cutthroat competition C. Forming a cartel D. None of these is true.

B

An example of an oligopoly market would be one in which _____ of the output. A. 1 firm sells 95 percent B. 3 firms sell 10 percent C. 4 firms sell 80 percent D. 250 firms sell 35 percent

C

Collusion is most likely to succeed when there are A. few firms and low barriers to entry B. many firms and low barriers to entry C. few firms and high barriers to entry D. many firms and high barriers to entry

C

Oligopolists have more control over prices than monopolistic competitors because A. they can legally collude whereas monopolistic competitors may not B. their prices are always set by the government C. with fewer competitors, they can monitor and determine their own prices much easier D. since an oligopolist is the only competitor in the market, setting prices is no problem

C

Suppose the market shares of Cola-Cola, Pepsi, Anheuser-Busch, Coors, and Miller were 40 percent, 25 percent, 15 percent, 15 percent, and 5 percent, respectively. In this case, the Concentration Ratio in the beverage industry would be A. 20 percent B. 80 percent C. 95 percent D. 100 percent

C

The closer the industry concentration ratio is to 100, the more likely it is that A. there are a reasonably large number of medium-sized firms B. this is an industry approaching perfect competition C. there is a small number of large firms D. price competition is being practiced

C

The graph shown here is that of A. either a colluding oligopolist or an oligopolist engaged in cutthroat competition B. neither a cutthroat oligopolist nor a colluding oligopolist C. a cutthroat oligopolist D. a colluding oligopolist

C

The price charged by this profit-maximizing firm is about _____ and its output is about _____. A. $45; 9 B. $55; 11 C. $65; 9 D. $65; 11

C

Which of the following is true about the analysis of oligopolistic firms but untrue about the analysis of a monopoly firm? A. Price is higher than the minimum of ATC B. Output is too low to minimize ATC C. The action of rival firms must continually be taken into account D. Price is higher and output is lower than for a perfect competitor

C

Which of the following statements about cartels is FALSE? A. Cartels are illegal in the U.S B. If a cartel is to be successful, it must secure the full support of all its members C. Cartels are reluctant to raise or lower their prices D. A cartel is a group of firms colluding to control output and maximize group profits

C

Which of the following statements is true? A. Most oligopolies in the U.S. take the form of a cartel B. Covert collusion has probably never taken place among American oligopolists C. The cartel and the cutthroat competitor are on opposite ends of the competitive spectrum D. None of these is true

C

Which statement about oligopolies is true? A. Most oligopolies in the U.S. engage in outright collusion B. Most oligopolies operate at the minimum point of their ATC curves C. Most of our GDP is produced by oligopolies D. Collusion is illegal in the U.S. and does not exist

C

Fast food chains often behave like A. cartels. B. covert colluders. C. open colluders. D. cutthroat competitors.

D

Of the forms of competition listed below, the one that represents the LEAST competition is A. price leadership B. covert collusion C. open collusion D. a cartel

D

Oligopolistic firms A. pay close attention to the actions of their rival firms B. are so few in number that at least one firm has some control over price C. charge a price that is higher than its ATC D. All of these are true

D

This profit-maximizing firm charges a price of A. OV B. OW C. OX D. OZ

D

Which of the following statements is false? A. Growing automobile imports have made that industry's concentration ratio less relevant B. The Japanese automobiles have reduced the concentration ratio in that industry C. Most cars made in the U.S. are made by General Motors, Ford, and Chrysler D. None of these is false.

D

Which of the following statements is false? A. Tobacco, wireless phone carriers, and railroads are industries with high concentration ratios B. Oligopoly industries have higher concentration ratios than monopolistic competition B. Highly concentrated industries have high HHIs and high concentration ratios D. None of these is false

D