Chapter 25 - Oligopoly

1		A good or service produced by an oligopolist
			A)	must be differentiated.
			B)	must be identical.
			C)	may be identical or differentiated.
2		Statement I. An oligopolized industry may not have more than four firms. Statement II. Most oligopolized industries have concentration ratios of 100.
			A)	Statement I is true and statement II is false.
			B)	Statement II is true and statement I is false.
			C)	Both statements are true.
			D)	Both statements are false.
3		Which is the most accurate statement?
			A)	The automobile industry is an oligopoly.
			B)	In an oligopolized industry, all firms make substantial profits.
			C)	Oligopolized industries consist only of large firms.
			D)	Oligopolies often charge lower prices than would perfect competitors.
4		Statement I. The more firms in an industry, the higher its concentration ratio. Statement II. Most firms in the U.S. are oligopolies.
			A)	Statement I is true and statement II is false.
			B)	Statement II is true and statement I is false.
			C)	Both statements are true.
			D)	Both statements are false.
5		Which statement is the most accurate?
			A)	Virtually all sectors of the American economy are highly competitive.
			B)	Most American industries have a concentration ratio within the range of 90 and 100.
			C)	There is no consensus as to the degree of competitiveness of much of the American economy.
6		Statement I. The TV networks could not be considered oligopolies. Statement II. A firm with a kinked demand curve is highly competitive.
			A)	Statement I is true and statement II is false.
			B)	Statement II is true and statement I is false.
			C)	Both statements are true.
			D)	Both statements are false.
7		A firm that had a monopoly would have a Herfindahl-Hirschman index of
			A)	100.
			B)	1,000.
			C)	10,000.
			D)	100,000.
			E)	1,000,000.
8		A very oligopolistic industry would have a relatively _____ concentration ratio and a relatively ____ Herfindahl-Hirschman index.
			A)	high, high
			B)	low, low
			C)	high, low
			D)	low, high
9		The least competitive of the following is
			A)	open collusion.
			B)	covert collusion.
			C)	a cartel.
			D)	price leadership.
10		OPEC is an example of
			A)	open collusion.
			B)	covert collusion.
			C)	a cartel.
			D)	price leadership.
11		Each of the following companies was found guilty of price-fixing except
			A)	Archer Daniels Midland.
			B)	Roche Holding A.G.
			C)	the Ford Motor Company.
			D)	BASF A.G.
12		Cutthroat competition is most closely associated with
			A)	covert competition.
			B)	the kinked demand curve.
			C)	constant price changes.
			D)	OPEC.
13		When a firm with a kinked demand curve raises its price, its competitors
			A)	will raise theirs.
			B)	lower theirs.
			C)	keep theirs unchanged.
14		An oligopolist will charge a _______ price than a perfect competitor and will operate _______ efficiently than a perfect competitor.
			A)	higher, less
			B)	higher, more
			C)	lower, less
			D)	lower, more
15		When an oligopolist operates with a kinked demand curve, she will operate at an output
			A)	less than at the kink.
			B)	at the kink.
			C)	more than at the kink.