William Rainey Harper College
ECO 211

Review

Ch. 11 Oligopoly

 

1.

In an oligopolistic market:

A.

one firm is always dominant.

B.

products may be standardized or differentiated.

C.

the four largest firms account for 20 percent or less of total sales.

D.

the industry is monopolistically competitive.



2.

Clear-cut mutual interdependence with respect to the price-output policies exists in:

A.

pure monopoly

B.

oligopoly

C.

monopolistic competition

D.

pure competition



3.

Assume six firms comprising an industry have market shares of 30, 30, 10, 10, 10, and 10 percent. The Herfindahl Index for this industry:

A.

is 2,525.

B.

is 1,600.

C.

is 2,200.

D.

is 80.

E.

cannot be determined from the information given.



4.

R-1 F26063

The above diagram portrays:

A.

pure competition.

B.

monopolistic competition.

C.

noncollusive oligopoly.

D.

pure monopoly.

E.

collusive oligopoly.



5.

R-1 F26063

Refer to the above diagram. Equilibrium output is:

A.

j.

B.

h.

C.

g.

D.

f .



6.

R-1 F26063

Refer to the above diagram. Equilibrium price is:

A.

e.

B.

d.

C.

c.

D.

b.

E.

a.



7.

R-1 F26063

Refer to the above diagram. This firm's demand and marginal revenue curves are based on the assumption that:

A.

the firm has no immediate rivals.

B.

rivals will match both a price increase and a price decrease.

C.

rivals will match a price increase, but ignore a price decrease.

D.

rivals will ignore a price increase, but match a price decrease.



8.

R-1 F26063

Refer to the above diagram. In equilibrium the firm:

A.

is realizing an economic profit of ad per unit.

B.

should close down in the short run.

C.

is realizing a loss.

D.

is realizing an economic profit of bd per unit.



9.

In the United States cartels are:

A.

quite common in industries which produce nondurable goods.

B.

in violation of the antitrust laws.

C.

concentrated in monopolistically competitive industries.

D.

encouraged by government policy so that firms can realize economies of scale.



10.

If the several oligopolistic firms which comprise an industry behave collusively, the resulting price and output will most likely resemble those of:

A.

bilateral monopoly.

B.

pure monopoly.

C.

monopolistic competition.

D.

pure competition.



11.

Advertising can enhance economic efficiency when it:

A.

increases brand loyalty.

B.

expands sales such that firms achieve substantial economies of scale.

C.

keeps new firms from entering profitable industries.

D.

is undertaken by pure competitors.



12.

The conclusion that oligopoly is inefficient relative to the competitive ideal must be qualified because:

A.

industry price leaders often select a price equal to marginal cost.

B.

over time oligopolistic industries may promote more rapid product development and greater improvement of production techniques than if they were purely competitive.

C.

increased output due to persuasive advertising may perfectly offset the restriction of output caused by monopoly power.

D.

many oligopolists sell their products in monopolistically competitive or even purely competitive industries.




This is the end of the test. When you have completed all the questions and reviewed your answers, press the button below to grade the test.