B horizontal merger c vertical merger d none of the

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B) horizontal merger. C) vertical merger. D) none of the above. Answer: C
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Q UESTION 28 Which of the following is NOT a characteristic of oligopoly firms? A) Strategic dependence B) Product differentiation C) Non-price competition, such as advertising and promotions D) Perfectly elastic demand curves Answer: D
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Q UESTION 29 The Nash equilibrium in the prisoners' dilemma is for A) neither player to confess. B) both players to confess. C) only one player to confess. Answer: B
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Q UESTION 30 Refer to the above payoff matrix for the profits (in $ millions) of two firms (A and B) making a decision to advertise or not. Which of the following is (are) a Nash Equilibrium? A) Both firm A and firm B choose not to advertise. B) Both firm A and firm B choose to advertise. C) Firm A chooses to advertise while firm B chooses not to advertise. D) Firm A chooses not to advertise while firm B chooses to advertise. Answer: C, D
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Q UESTION 31 A member in a cartel can earn more profits by A) charging a slightly lower price and raising production. B) producing less than the agreed rate. C) selling less than the agreed amount. D) none of the above. Answer: A
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Q UESTION 32 Which of the following is NOT a reason for the government to regulate a nonmonopolistic industry? A) To eliminate non-price competition in the industry B) Asymmetric information. C) Positive externalities. D) Negative externalities. Answer: A
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Q UESTION 33 Which of the following is NOT an example of a negative externality? A) Inoculation against disease B) Pollution C) Making an annoying sound in a crowded park D) Rush hour traffic Answer: A
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Q UESTION 34 Markets tend to underallocate resources to the production of a good when A) there are negative externalities. B) there are positive externalities. C) there are public goods produced. D) equilibrium occurs. Answer: B
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Q UESTION 35 If antitrust legislation is successful, then the monopolistic firm will A) decrease output and charge a lower price than before. B) increase output and charge a higher price than before. C) increase output and charge a lower price than before. D) decrease output and charge a higher price than before. Answer: C
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Q UESTION 36 The capture hypothesis suggests that A) marginal cost regulation is superior to average cost regulation. B) the well-focused interests of consumers will lead to the over-regulation of most industries. C) the firms being regulated will unduly influence the regulators. D) regulation will lead to over-entry and eventual losses for firms in the industry. Answer: C
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