Sat Chp 16

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Chapter 16
Oligopoly

MULTIPLE CHOICE

1.Markets with only a few sellers, each offering a product similar or identical to the others, are typically referred to as a.competitive markets.
b.monopoly markets.
c.monopolistically competitive markets.
d.oligopoly markets.
ANSWER: d.oligopoly markets.
TYPE: M DIFFICULTY: 1 SECTION: 16.1

2.An oligopoly is a market in which
a.there are only a few sellers, each offering a product similar or identical to the others. b.firms are price takers.
c.the actions of one seller in the market have no impact on the other sellers’ profits. d.All of the above are correct.
ANSWER: a.there are only a few sellers, each offering a product similar or identical to the others. TYPE: M DIFFICULTY: 2 SECTION: 16.1

3.The general term for market structures that fall somewhere in-between monopoly and perfect competition is a.incomplete markets.
b.imperfectly competitive markets.
c.oligopoly markets.
d.monopolistically competitive markets.
ANSWER: b.imperfectly competitive markets.
TYPE: M DIFFICULTY: 1 SECTION: 16.1

4.In a market that is characterized by imperfect competition, a.firms are price takers.
b.there is always a large number of firms.
c.there are at least a few firms that compete with one another. d.the actions of one firm in the market never have any impact on the other firms’ profits. ANSWER: c.there are at least a few firms that compete with one another. TYPE: M DIFFICULTY: 2 SECTION: 16.1

5.There are two types of imperfectly competitive markets:
a.monopoly and monopolistic competition.
b.monopoly and oligopoly.
c.monopolistic competition and oligopoly.
d.monopolistic competition and cartels.
ANSWER: c.monopolistic competition and oligopoly.
TYPE: M DIFFICULTY: 1 SECTION: 16.1

6.Monopolistically competitive firms are typically characterized by a.many firms selling products that are similar, but not identical. b.many firms selling identical products.
c.a few firms selling products that are similar, but not identical. d.a few firms selling highly different products.
ANSWER: a.many firms selling products that are similar, but not identical. TYPE: M DIFFICULTY: 1 SECTION: 16.1

7.A special kind of imperfectly competitive market that has only two firms is called a.a two-tier competitive structure.
b.an incidental monopoly.
c.a doublet.
d.a duopoly.
ANSWER: d.a duopoly.
TYPE: M DIFFICULTY: 1 SECTION: 16.2

8.In markets characterized by oligopoly,
a.the oligopolists are best off cooperating and behaving like a monopolist. b.collusive agreements will always prevail.
c.collective profits are always lower with cartel arrangements than they are without cartel arrangements. d.pursuit of self-interest by profit-maximizing firms always maximizes collective profits in the market. ANSWER: a.the oligopolists are best off cooperating and behaving like a monopolist. TYPE: M DIFFICULTY: 2 SECTION: 16.2

9.Firms in industries that have competitors but, at the same time, do not face so much competition that they are price takers, are operating in either a(n) a.oligopoly or perfectly competitive market.

b.oligopoly or monopoly market.
c.oligopoly or monopolistically competitive market.
d.monopoly or monopolistically competitive market.
ANSWER: c.oligopoly or monopolistically competitive market. TYPE: M DIFFICULTY: 1 SECTION: 16.1

10.One characteristic of an oligopoly market structure is:
a.firms in the industry are typically characterized by very diverse product lines. b.firms in the industry have some degree of market power. c.products typically sell at a price that reflects their marginal cost of production. d.the actions...
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