Econ Quiz 64-68 (28-32)

Use the information in the table below on market shares in the search engine industry and measures of market power to determine which of the following statements are correct Search Engine Market Share Google 44% Yahoo 29% MSN 13% AOL 6% Ask 5% Other 3% I. The 4-firm concentration ratio is 92. II. The Herfindahl-Hirchman index is 3,016 III. The industry is likely to be an oligopoly. a. I only b. II only c. III only d. I and II only e. I, II, and III

e. I, II, and III

Which of the following results is possible for a monopolistic competitor in the short run? I. positive economic profit II. normal profit III. loss a. I only b. II only c. III only d. I and II only e. I, II, and III

e. I, II, and III

The long-run outcome in a monopolistically competitive industry results in a. inefficiency because firms earn positive economic profits b. efficiency due to excess capacity c. inefficiency due to product diversity d. efficiency because price exceeds marginal cost e. a trade-off between higher average total cost and more product diversity

e. a trade-off between higher average total cost and more product diversity

Which of the following industries has been prosecuted for creating an illegal cartel? a. the lysine industry b. the art auction house industry c. the U.S. electrical equipment industry d. the bulk vitamin industry e. all of the above

e. all of the above

Brand names generally serve to a. waste resources b. decrease firm profits c. confuse consumers d. decrease information e. signal quality

e. signal quality

When firms cooperate to raise their joint profits, they are necessarily a. colluding b. in a cartel c. a monopoly d. in a duopoly e. in a competitive industry

a. colluding

In the context of the Thelma and Louise story in the module, suppose that Louise discovers Thelma's action (confess or don't confess) before choosing her own action Based on the payoff matrix provided, Louise will a. confess whether or not Thelma confessed. b. not confess only if Thelma confessed. c. not confess only if Thelma didn't confess. d. not confess regardless of whether or not Thelma confessed. e. confess only if Thelma did not confess

a. confess whether or not Thelma confessed

Advertising is an attempt to affect which of the following? a. consumer tastes and preferences b. consumer income c. the price of complements d. the price of substitutes e. input prices

a. consumer tastes and preferences

Oligopolists engage in tacit collusion in order to a. raise prices. b. increase output. c. share profits. d. increase market share. e. all of the above.

a. raise prices.

Which of the following types of oligopoly behavior is/are illegal? I. tacit collusion II. cartel formation III. tit for tat a. I only b. II only c. III only d. I and II only e. I, II, and III

b. II only

Which of the following will make it easier for firms in an industry to maintain positive economic profit? a. a ban on cartels b. a small number of firms in the industry c. a lack of product differentiation d. low start-up costs for new forms e. the assumption by firms that other firms have variable output levels

b. a small number of firms in the industry

Which of the following best describes a monopolistic competitor's demand curve? a. upward sloping b. downward sloping c. U-shaped d. horizontal e. vertical

b. downward sloping

Which of the following is a characteristic of monopolistic competition? a. a standardized product b. many sellers c. barriers to entry d. positive long-run profits e. a perfectly elastic demand curve

b. many sellers

Each player has an incentive to choose an action that, when both players choose it, make them both worse off. This situation describes a. a dominant strategy b. the prisoners' dilemma c. interdependence d. Nash equilibrium e. tit for tat

b. the prisoners' dilemma

When was the first federal legislation against cartels passed? a. 1776 b. 1800 c. 1890 d. 1900 e. 1980

c. 1890

Which of the following is true on the basis of the payoff matrix provided in Question 4? a. Louise has no dominant strategy, but Thelma does. b. Thelma has no dominant strategy, but Louise does. c. Both Thelma and Louise have a dominant strategy. d. Neither Thelma nor Louise has a dominant strategy. e. Louise has a dominant strategy only if Thelma confesses.

c. Both Thelma and Louise have a dominant strategy.

A situation in which each player in a game chooses the action that maximizes his or her payoff, given the actions of the other players, ignoring the effects of his or her action on the payoffs received by others, is known as a: a. dominant strategy b. cooperative equilibrium c. Nash equilibrium d. strategic situation e. prisoners' dilemma

c. Nash equilibrium

Which of the following led to the passage of the first antitrust laws? I. growth of the railroad industry II. the emergence of the Standard Oil Company III. increased competition in agricultural industries a. I only b. II only c. III only d. I and II only e. I, II, and III

d. I and II only

In which of the following market structures will individual firms advertise? I. perfect competition II. oligopoly III. monopolistic competition a. I only b. II only c. III only d. II and III only e. I, II, and III

d. II and III only

Which of the following is trie of advertising expenditures in monopolistic competition? Monopolistic competitors a. will not advertise b. use only informational advertising c. waste resources on advertising d. attempt to create popular brand names e. earn long-run profits through advertising

d. attempt to create popular brand names

An agreement among several producers to restrict output and increase profit is necessary for a. cooperation b. collusion c. monopolization d. cartel e. competition

d. cartel

Having which of the following makes it easier for oligopolies to coordinate on raising prices? a. a large number of firms b. differentiated products c. buyers with bargaining power d. identical perceptions of fairness e. complex pricing schemes

d. identical perceptions of fairness

Oligopolists engage in which of the following types of behavior? I. quantity competition II. price competition III. cooperative behavior a. I only b. II only c. III only d. I and II only e. I, II, and III

e. I, II, and III

Which of the following is a form of product differentiation? I. style or type II. location III. quality a. I only b. II only c. III only d. I and II only e. I, II, and III

e. I, II, and III