ch09 - File Ch09 CHAPTER 9 Oligopoly Each question contains...

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File: Ch09; CHAPTER 9: Oligopoly Each question contains a code showing the section of the chapter text from which it was taken. The codes for this chapter are: Code Section 1 Oligopoly 2 Quantity Competition 3 Price Competition 4 Other Dimensions of Competition 5 Appendix: Bundling and Tying MULTIPLE CHOICE 1. The term “loose oligopoly” refers to an industry with a) A four-firm industry concentration ratio of 90%. b) A four-firm industry concentration ratio between 40% and 60%. c) Significant price competition. d) A four-firm industry concentration ratio between 60% and 80%. e) A large number of differentiated sellers. ANSWER: b SECTION: 1 2. A competitive market has a four-firm concentration ratio that is a) Greater than 90%. b) Greater than 40% but less than 60%. c) Greater than 60% but less than 90%. d) Less than 40%. e) Less than 50%. ANSWER: d SECTION: 1 3. A monopoly industry is characterized by a a) Single-firm concentration ratio greater than 90% b) Single firm concentration ratio greater than 70%. c) Four-firm concentration of 90% and a HHI of 1,000. d) Small number of large firms dominating the industry. e) Large number of small firms dominating the industry. ANSWER: a SECTION: 1 9-1
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4. Statistical evidence shows that there exists a) An inverse relationship between the degree of concentration and price. b) A positive relationship between the degree of concentration and price. c) An inverse relationship between seller concentration and efficiency. d) No significant correlation between seller concentration and price. e) An inverse relationship between price and cost. ANSWER: b SECTION: 1 5. Oligopoly differs from other forms of market structure (monopoly and perfect competition) because a) Firms frequently engage in collusion. b) Firms are protected by high barriers to entry. c) Firms’ decisions have direct effects on their rivals’ profits. d) Firms' price decisions are extremely limited. e) All of the answers above are correct. ANSWER: c SECTION: 1 6. A key characteristic of oligopoly is a) That each firm must consider its rivals' actions and reactions. b) Standardized products. c) Explicit or tacit collusion to raise industry profits. d) Unused capacity. e) Few or no entry barriers. ANSWER: a SECTION: 1 7. In the 1990s, the U. S. cigarette industry was dominated by four major firms that charged similar prices for the cigarettes they sold under a variety of brand names. When one firm raised its prices, the others generally followed. The cigarette industry was best characterized as a) Oligopolistic. b) Monopolistic competition. c) A monopoly. d) Perfectly competitive. e) A cartel. ANSWER: a SECTION: 1 8. In the U.S. cigarette industry during the 1990s, either R.J. Reynolds or Phillip Morris (Marlboro) would raise prices once or twice a year by about 50 cents per carton. Other firms in the industry typically raised their prices by the same amount. This is an example of a) Predatory pricing. b)
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This note was uploaded on 03/11/2012 for the course ECON 333 taught by Professor Barkley during the Fall '08 term at CSU Fullerton.

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ch09 - File Ch09 CHAPTER 9 Oligopoly Each question contains...

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