MCQOPTIONS
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MCQOPTIONS
This section includes 21 Mcqs, each offering curated multiple-choice questions to sharpen your Economics knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
When an oligopolist individually chooses its level of production to maximize its profits, it produces an output that is ? |
| A. | more than the level produced by a monopoly and less than the level produced by a competitive market |
| B. | less than the level produced by a monopoly and more than the level produced by a competitive market |
| C. | less than the level produce by either monopoly or a competitive market |
| D. | more than the level produced by either monopoly or a competitive market |
| Answer» B. less than the level produced by a monopoly and more than the level produced by a competitive market | |
| 2. |
When a oligopolist individually chooses its level of production to maximize its profits it charges a price that is ? |
| A. | more than the price charged by either monopoly or a competitive market |
| B. | less than the price charged by either monopoly or a competitive market |
| C. | more than the price charged by a monopoly and less then the price charged by a competitive market |
| D. | less than the price charged by a monopoly and more than the price charged by a competitive market |
| Answer» E. | |
| 3. |
The market for hand tools (such as hammers and screwdrivers) is dominated by Draper Stanley, and Craftsman This market is best described as ? |
| A. | monopolistically competitive |
| B. | a monopoly |
| C. | an oligopoly |
| D. | competitive |
| Answer» D. competitive | |
| 4. |
The Kinked Demand curve theory assumes ? |
| A. | Firms cooperate |
| B. | Firms act as part of cartel |
| C. | Firms are competitive |
| D. | Firms are not profit maximisers |
| Answer» D. Firms are not profit maximisers | |
| 5. |
Many economics argue that resale price maintenance ? |
| A. | has a legitimate purpose of stopping discount retailers from free riding on the services provided by full services retailers? |
| B. | is price fixing and, therefore is prohibited by law |
| C. | is price fixing and therefore, is prohibited by law and enhances the market power of the producer |
| D. | enhances the market power of the producer |
| Answer» B. is price fixing and, therefore is prohibited by law | |
| 6. |
Laws that make it illegal for firms to conspire to raise prices or reduce production are known as ? |
| A. | antimonopoly laws |
| B. | all of these answers |
| C. | anti-collusion laws |
| D. | pro-competition laws |
| E. | antitrust laws |
| Answer» F. | |
| 7. |
In the Kinked demand curve theory ? |
| A. | There is a kink in the marginal cost curve |
| B. | Demand is price inelastic |
| C. | Demand is price elastic |
| D. | non-price competition is likely |
| Answer» E. | |
| 8. |
In the kinked Demand Curve theory it is assumed that ? |
| A. | An increase in price by the firm is not followed by others |
| B. | An increase in price by the firm is followed by others |
| C. | A decrease in price by the firm is followed by others |
| D. | Firms collude to fix the price |
| Answer» B. An increase in price by the firm is followed by others | |
| 9. |
In Game Theory ? |
| A. | Firms are assumed to act independently |
| B. | Firms are assumed to cooperate with each other |
| C. | Firms collude as part of cartel |
| D. | Firms consider the actions of others before deciding what to do |
| Answer» E. | |
| 10. |
In cartels ? |
| A. | Each individual firm profit maximizes |
| B. | There may be an incentive to cheat |
| C. | The industry as a whole is loss making |
| D. | There is no need to police agreements |
| Answer» C. The industry as a whole is loss making | |
| 11. |
In a cartel member firms may be given a fixed amount to produce. This is called a ? |
| A. | Limit |
| B. | Factor |
| C. | Quota |
| D. | Quotient |
| Answer» D. Quotient | |
| 12. |
In a cartel ? |
| A. | Firms compete against each other |
| B. | Price wars are common |
| C. | Firms use price to win market share from competitors |
| D. | Firms collude |
| Answer» E. | |
| 13. |
If oligopolists engage in collusion and successfully from a cartel, the market outcome is ? |
| A. | the same as if it were served by competitive firms |
| B. | efficient because cooperation improves efficiency |
| C. | the same as if it were served by a monopoly |
| D. | known as a Nash equilibrium |
| Answer» D. known as a Nash equilibrium | |
| 14. |
If a few firms dominate an industry the market is known as ? |
| A. | monopolistic competition |
| B. | Competitively monopolistic |
| C. | Duopoly |
| D. | Oligopoly |
| Answer» E. | |
| 15. |
Firms in oligopoly are likely to ? |
| A. | Invest heavily in branding |
| B. | Act independently of other firms |
| C. | Try to differentiate its products |
| D. | Try to be a price maker |
| Answer» E. | |
| 16. |
Collusion is difficult for an oligopoly to maintain ? |
| A. | all of these answers |
| B. | if additional firms enter of the oligopoly |
| C. | because antitrust laws (also known as competition laws) make collusion illegal |
| D. | because, in the case of oligopoly self-interest is in conflict with cooperation |
| Answer» B. if additional firms enter of the oligopoly | |
| 17. |
As the number of sellers in an oligopoly increases ? |
| A. | output in the market tends to fall because each firm must cut back on production |
| B. | the price in the market moves further from marginal cost |
| C. | collusion is more likely to occur because a larger number of firms can place pressure on any firm that defects |
| D. | The price in the market moves closer to marginal cost |
| Answer» E. | |
| 18. |
As the number of sellers in an oligopoly grows larger, an oligopolistic market looks more like ? |
| A. | monopoly |
| B. | a competitive market |
| C. | monopolistic competition |
| D. | a collusion solution |
| Answer» C. monopolistic competition | |
| 19. |
A situation in which oligopolists interacting with one another each choose their best strategy given the strategies that all the other oligopolists have chosen is known as a ? |
| A. | Nash equilibrium |
| B. | dominant strategy |
| C. | cartel |
| D. | collusion solution |
| Answer» B. dominant strategy | |
| 20. |
A model of Game theory of oligopoly is known as the ? |
| A. | Prisoner’s Dilemma |
| B. | Monopoly Cell |
| C. | Jailhouses Sentences |
| D. | Jury Box |
| Answer» B. Monopoly Cell | |
| 21. |
A market structure in which many firms sell products that are similar but not identical is known as ? |
| A. | monopolistic competition |
| B. | monopoly |
| C. | perfect competition |
| D. | oligopoly |
| Answer» B. monopoly | |