Economics Quiz 5 Multiple Choice Questions

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Question 1(1 point)

Some olgopolies are characterized by cartels in which
Question 1 options:

members
enter into collusive agreements.

members
try to recruit new members.

members
trust each other completely.

members
join together to act as a cometitive firm.

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Question 2(1 point)

Modeling a cartel as a prisoners’ dilemma game shows that
__________ may be rational even if __________.
Question 2 options:

non-cooperation;cooperation
benefits everyone

cooperation;cooperation
benefits everyone

cooperation;cooperation
damages everyone

non-cooperation;cooperation
damages everyone

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Question 3(1 point)

A Nash equilibrium is an outcome in game theory in which
Question 3 options:

price
and output are the same as the competitive equilibrium.

members
of a cartel always cooperate with each other.

the
cartel produces the socially desirable outcome.

each
member of a cartel does the best that he/she can, given what the others are
doing.

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Question 4(1 point)

Bob and Al are captured near the scene of a burglary and are
given the “third degree” separately by the police. Each has to choose
whether or not to confess and implicate the other. If neither man confesses,
then both will serve one year on a charge of carrying a concealed weapon. If
each confesses and implicates the other, both will go to prison for 10 years.
However, if one burglar confesses and implicates the other, and the other
burglar does not confess, the one who has collaborated with the police will go
free, while the other burglar will go to prison for 20 years on the maximum
charge. The strategies in this case are: confess or don’t confess. The payoffs
are the sentences served. The most likely outcome for this game is
Question 4 options:

both
Bob and Al confess and each serves 10 years.

neither
Bob and Al confess and each serves 1 year.

Al
confesses but Bob does not.

Bob
confesses but Al does not.

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Question 5(1 point)

All four market forms discussed in the lessons maximize profit
where
Question 5 options:

P
= MC.

AR
= AC.

MR
= MC.

MC
= AR.

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Question 6(1 point)

Which of the following characteristics does not influence market
structure?
Question 6 options:

the
type of product the firm sells

the
firm’s ability to influence price

whether
the firm owns or rents its inputs

the
number of firms in the industry

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Question 7(1 point)

The analysis of oligopolistic behavior is difficult because
Question 7 options:

there
are few real-world examples of oligopolies for economists to study.

oligopolists
make decisions independently of each other.

firms
in oligopolistic industries react to each others’ behavior in many ways.

economists
have paid little attention to the topic in recent years and so have not yet
applied to it the techniques of modern economic theory.

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Question 8(1 point)

The game theory approach to the analysis of oligopoly assumes
that oligopolists
Question 8 options:

ignore
their interdependence.

behave
with little forethought.

do
not take their businesses seriously.

act
strategically.

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Question 9(1 point)

An example of collusion is
Question 9 options:

a
cartel.

a
pure monopoly.

a
monopolistic competitor.

a
perfectly contestable market.

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Question 10(1 point)

Oligopolists
Question 10 options:

are
price takers.

rarely
advertise.

must
take rivals’ reactions into account.

offer
homogeneous products.

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