1) Which of the following is an example of collusion?
A) Firms agreeing to sell only in specific geographical areas.
B) Firms agreeing to sell only specific products.
C) Firms agreeing to set a price.
D) Firms collaborating on research and development.
E) All of the above are examples of collusion.
1) _______
2) According to the kinked demand curve model, firms expect rivals to
follow ________ but not ________.
A) quantity increases; quantity decreases
B) price increases; quantity decreases
C) price decreases; price increases
D) quantity decreases; quantity increases
E) price increases; price decreases
2) _______
Use the figure for the question(s) below.
3) The figure above shows a oligopoly firm facing a kinked demand curve.
At prices above $100, the firm's demand curve is relatively ________,
and at prices below $100, the firm's demand curve is relatively ________.
A) elastic; unit elastic
B) elastic; elastic
C) inelastic; elastic
D) inelastic; elastic
E) elastic; inelastic
3) _______
4) If oligopoly firms engage in price wars, and undercut each other's prices
for as long as possible, which of the following statements is NOT true?
A) The firms will earn significant profits.
B) Price will be equal to marginal cost on the last unit.
C) Oligopoly prices will be equal to perfectly competitive prices.
D) Consumers will benefit from the price war.
E) The industry will may be socially efficient.
4) _______
Use the figure for the question(s) below.
5) The figure above shows a duopoly operating as a centralized cartel. The
cartel will maximize profit at price ________ and quantity ________.
A) ;
5)
______
6) A centralized cartel will ________, while a market-sharing cartel will
________.
A) compete by undercutting prices; set geographical boundaries for
the market
B) set geographical boundaries for the market; combine marginal
costs and act as a monopolist
C) combine marginal costs and act as a monopolist; compete by
undercutting prices
D) combine marginal costs and act as a monopolist; set geographical
boundaries for the market
E) compete by undercutting prices; combine marginal costs and act as
a monopolist
6)
______
7) Market concentration refers to the
A) market power of firms.
B) extent of government regulation.
C) number of firms in the market.
D) size and distribution of market shares and number of firms relative
to the market.
E) type of market structure.
7)
______
B)
;
C)
;
D)
;
E)
;
8) An advantage of the Hirfindahl-Hirschman Index (HHI) is it
A) is easier to calculate than the CR4.
B) requires little data to calculate.
C) is easier to obtain the data for the HHI than for the CR4.
D) can give a better picture of how the market shares of the top four
firms are distributed.
E) All of the above are advantages of the HHI.
8)
______
9) Which of the following market structures are likely to have long-run
profits that are greater than zero?
9)
______
I.
II.
III.
IV.
A)
B)
C)
D)
E)
Monopoly
Oligopoly
Monopolistic competition
Perfect competition
III and IV
IV only
I and II
I, II, and III
I only
10) Which of the following market structures are likely to set prices that are
greater than marginal cost?
I.
II.
III.
IV.
A)
B)
C)
D)
E)
10) ______
monopoly
oligopoly
monopolistic competition
perfect competition
I only
III and IV
IV only
I and II
I, II, and III
11) If markets are contestable
A) the government is likely to step in and regulate the market.
B) there will be many firms in the market.
C) the market will be perfectly competitive.
D) prices are likely to be low, even in concentrated industries.
E) there are significant barriers to entry.
Answer Sheet to Homework # 6 – Part II – Oligopolies
11) ______