Question 1

The market structure that is characterized by only a small number of producers is:

Accepted Answer

An oligopoly market structure is characterized by a small number of producers who have significant control over the market. In an oligopoly, each producer can influence prices and decisions made by other producers. This type of market structure is common in industries such as telecommunications, automobile, and airline industries.

Question 2

Which scenarios BEST describes an oligopolistic industry?

Accepted Answer

An oligopolistic industry is characterized by a few large firms dominating the market, which is exactly the case with Coca-Cola and Pepsi selling most of the soft drinks consumed around the world. The other scenarios do not fit the definition of an oligopoly. A single cable company serving customers in a small town is a monopoly, thousands of soybean farmers selling their output in a global commodities market is a perfectly competitive market, and a college having one bookstore selling textbooks to students is a monopolistic competition.

Question 3

In oligopoly,a firm must realize that:

Accepted Answer

In oligopoly, there are usually a few dominant firms in the industry, and their behavior greatly impacts the market. In order to be successful, a firm must understand and adapt to the actions of these dominant firms. Choosing A or B is incorrect because a firm's behavior will definitely have an effect on others in the industry, and ignoring the behavior of other firms could lead to negative consequences. Choice D is incorrect because there are still laws against collusion, even in oligopoly markets.

Question 4

The market structure characterized by a few interdependent firms and barriers to entry is called:

Accepted Answer

An oligopoly is a market structure characterized by a few interdependent firms and barriers to entry, as there are only a few firms in the industry, each firm's actions can have a significant impact on the other firm's profits. This gives the firms in the industry substantial market power, which they can use to limit competition and increase their profits.

Question 5

To be called an oligopoly,an industry must have:

Accepted Answer

An oligopoly is a market structure where a small number of large firms dominate the industry. The key characteristic of an oligopoly is that the firms are interdependent upon one another, meaning that a decision made by one firm can have a significant impact on the other firms in the industry. Therefore, choice C is the best answer as it states that an oligopoly contains a small number of interdependent firms. The other choices are incorrect as A) independence in decision making is not a characteristic of an oligopoly, B) a horizontal demand curve is more characteristic of a perfectly competitive market, and D) oligopolies typically have high barriers to entry and exit, making it difficult for new firms to enter the market.

Question 6

Oligopoly is a market structure that is characterized by a _____ number of _____ firms that produce _____ products.

Accepted Answer

In an oligopoly market structure, there are a small number of interdependent firms that can produce either identical or differentiated products. Choice A is incorrect because all firms in an oligopoly are not necessarily independent. Choice B is incorrect because firms in an oligopoly market are not necessarily independent, and the products can be either identical or differentiated. Choice C is incorrect because a large number of firms would make it a monopolistic competition, not an oligopoly.

Question 7

In an oligopoly:

Accepted Answer

In an oligopoly, firms recognize their interdependence, meaning they take into account the actions and reactions of their rivals in making business decisions. This is due to the small number of firms within the industry and the influence they have on each other. Options A and B are incorrect because an oligopoly consists of only a few sellers, and there may be significant barriers to entry preventing new firms from joining the market. Option D is incorrect because in an oligopoly, total surplus is not necessarily maximized as firms may prioritize increasing their own profits over maximizing overall social welfare.

Question 8

An industry that is dominated by a few firms,each of which recognizes that its own choices can affect the choices of its rivals and vice versa,is:

Accepted Answer

An industry that is dominated by a few firms and where the firms' choices are interdependent is called an oligopoly. In such a market structure, each firm's decisions can impact its competitors' decisions and the market outcome. This interdependence can lead to strategic behavior such as price collusion and advertising wars, making it different from monopolistic competition and perfect competition. A monopoly, on the other hand, is a market structure where there is only one dominant firm.

Question 9

Which Herfindahl-Hirschman index is MOST likely to indicate a perfectly competitive market?

Accepted Answer

A Herfindahl-Hirschman index of 100 indicates that there are many small firms in the market and no one firm has a significant market share, which is characteristic of perfect competition.

Question 10

The sum of the squared market shares of each firm in an industry is the:

Accepted Answer

The calculation of the sum of the squared market shares of each firm in an industry is known as the Herfindahl-Hirschman index (HHI). It is a commonly used measure of market concentration in antitrust analysis. The higher the index, the greater the concentration of market power in the hands of a few large firms.

Question 11

A firm that is in an oligopoly knows that its _____ affect its _____ and that the _____ of its rivals will affect it.

Accepted Answer

In an oligopoly market, firms are interdependent and their actions can affect the behavior of their rivals. Therefore, a firm in an oligopoly market needs to consider how its actions (such as pricing decisions or marketing strategies) will affect its competitors and how its competitors will react. Hence, Option A is the correct answer. Option B and D are incorrect as they only focus on price changes and their impact on revenue, without considering the reactions of rivals. Option C is also incorrect as it suggests that firms in an oligopoly are not aware of the actions of their rivals, which is not true.

Question 12

The Herfindahl-Hirschman index is a measure of concentration found by:

Accepted Answer

The Herfindahl-Hirschman index involves squaring the percentage market share of each firm in the industry and then adding up those squared market shares. This index provides a measure of how concentrated an industry is, with higher values indicating greater concentration.

Question 13

The MOST important source of oligopoly in an industry is:

Accepted Answer

Economies of scale allow larger firms to operate more efficiently and at lower costs than smaller firms, which creates barriers to entry for potential competitors. This leads to a concentration of market power among a few large firms, resulting in an oligopoly. Government regulations, technological inferiority, and ownership of plentiful resources may also contribute to oligopoly, but economies of scale are generally considered the most important factor.

Question 14

The largest Herfindahl-Hirschman index possible is _____,and the industry is a(n)_____.

Accepted Answer

The largest Herfindahl-Hirschman Index (HHI) possible is 10,000, indicating a monopoly. This occurs when a single firm controls the entire market, resulting in an HHI of 10,000, which is calculated as the sum of the squares of the market shares of all firms in the industry (in this case, 100^2).

Question 15

An industry characterized by a few interdependent firms and by barriers to entry is called:

Accepted Answer

An oligopoly is a market structure in which a few firms dominate the market and have significant market power, often resulting in high barriers to entry for potential new competitors. Interdependence between firms in an oligopoly is also high, as they must consider the actions and reactions of their competitors when making strategic decisions.

Question 16

An industry is dominated by a few firms.Each of these firms acknowledges that its own choices affect the choices of its rivals.Each firm also recognizes that its rivals' choices affect the decisions it makes.This industry is an example of:

Accepted Answer

An oligopoly is characterized by a few dominant firms in the industry, where each firm's decisions influence its rivals and vice versa. This is different from a monopoly where there is only one dominant firm and monopolistic competition where there are many small firms with differentiated products. Perfect competition is characterized by many small firms that cannot influence prices.

Question 17

Oligopoly is a market structure that is characterized by a _____ number of _____ firms producing _____ products.

Accepted Answer

Oligopoly involves a small number of firms producing either identical or differentiated products. The firms in an oligopoly are interdependent, meaning their decisions affect each other's profits and market share. Option A accurately describes these characteristics.

Question 18

Oligopoly is a market structure characterized by:

Accepted Answer

In oligopoly, firms are interdependent as each firm's decision affects the profit of the other firms. The other choices are not characteristics of oligopoly.

Question 19

The Herfindahl-Hirschman index equals _____ when _____ have/has _____% of the market.

Accepted Answer

The formula for the Herfindahl-Hirschman index is the sum of squared market shares of all firms in the market. For option C, with two firms each having 50% of the market, the index is (0.50)^2 + (0.50)^2 = 0.25 + 0.25 = 0.50, which gives a HHI of 5,000. Therefore, option C is the correct answer. Option A would have a HHI of 10,000 and option B would have a HHI of 3,333. Option D, with one firm having 100% of the market, would have a HHI of 100,000.

Question 20

To calculate the Herfindahl-Hirschman index (HHI),one must _____ market share(s)of _____ in the industry.

Accepted Answer

The Herfindahl-Hirschman index (HHI) is calculated by summing the squares of the market shares of all the firms in the industry. This method accounts for both the size of firms and the distribution of market shares among them, providing a measure of market concentration.

Quiz 14: Oligopoly

The market structure that is characterized by only a small number of producers is:

Which scenarios BEST describes an oligopolistic industry?

In oligopoly,a firm must realize that:

The market structure characterized by a few interdependent firms and barriers to entry is called:

To be called an oligopoly,an industry must have:

Oligopoly is a market structure that is characterized by a ___ number of _ firms that produce ___ products.

In an oligopoly:

An industry that is dominated by a few firms,each of which recognizes that its own choices can affect the choices of its rivals and vice versa,is:

Which Herfindahl-Hirschman index is MOST likely to indicate a perfectly competitive market?

The sum of the squared market shares of each firm in an industry is the:

A firm that is in an oligopoly knows that its ___ affect its _ and that the ___ of its rivals will affect it.

The Herfindahl-Hirschman index is a measure of concentration found by:

The MOST important source of oligopoly in an industry is:

The largest Herfindahl-Hirschman index possible is _,and the industry is a(n) _.

An industry characterized by a few interdependent firms and by barriers to entry is called:

An industry is dominated by a few firms.Each of these firms acknowledges that its own choices affect the choices of its rivals.Each firm also recognizes that its rivals' choices affect the decisions it makes.This industry is an example of:

Oligopoly is a market structure that is characterized by a ___ number of _ firms producing ___ products.

Oligopoly is a market structure characterized by:

The Herfindahl-Hirschman index equals ___ when _ have/has ___% of the market.

To calculate the Herfindahl-Hirschman index (HHI) ,one must _ market share(s) of _ in the industry.

Quiz 14: Oligopoly

The market structure that is characterized by only a small number of producers is:

Which scenarios BEST describes an oligopolistic industry?

In oligopoly,a firm must realize that:

The market structure characterized by a few interdependent firms and barriers to entry is called:

To be called an oligopoly,an industry must have:

Oligopoly is a market structure that is characterized by a _____ number of _____ firms that produce _____ products.

In an oligopoly:

An industry that is dominated by a few firms,each of which recognizes that its own choices can affect the choices of its rivals and vice versa,is:

Which Herfindahl-Hirschman index is MOST likely to indicate a perfectly competitive market?

The sum of the squared market shares of each firm in an industry is the:

A firm that is in an oligopoly knows that its _____ affect its _____ and that the _____ of its rivals will affect it.

The Herfindahl-Hirschman index is a measure of concentration found by:

The MOST important source of oligopoly in an industry is:

The largest Herfindahl-Hirschman index possible is _____,and the industry is a(n) _____.

An industry characterized by a few interdependent firms and by barriers to entry is called:

An industry is dominated by a few firms.Each of these firms acknowledges that its own choices affect the choices of its rivals.Each firm also recognizes that its rivals' choices affect the decisions it makes.This industry is an example of:

Oligopoly is a market structure that is characterized by a _____ number of _____ firms producing _____ products.

Oligopoly is a market structure characterized by:

The Herfindahl-Hirschman index equals _____ when _____ have/has _____% of the market.

To calculate the Herfindahl-Hirschman index (HHI) ,one must _____ market share(s) of _____ in the industry.

Oligopoly is a market structure that is characterized by a ___ number of _ firms that produce ___ products.

A firm that is in an oligopoly knows that its ___ affect its _ and that the ___ of its rivals will affect it.

The largest Herfindahl-Hirschman index possible is _,and the industry is a(n) _.

Oligopoly is a market structure that is characterized by a ___ number of _ firms producing ___ products.

The Herfindahl-Hirschman index equals ___ when _ have/has ___% of the market.

To calculate the Herfindahl-Hirschman index (HHI) ,one must _ market share(s) of _ in the industry.