Question 1

Which is the most accurate statement?

Accepted Answer

Option D is the most accurate statement. Oligopoly can take various forms, ranging from a cartel that regulates prices and output among firms to cutthroat competition that leads to price wars among firms. Option A is incorrect because product differentiation is not the most important aspect of oligopoly, although it can be one element of the industry. Option B is incorrect because there is no limit on the number of firms in an oligopolistic industry, although typically there are only a few. Option C is incorrect because there are many examples of oligopolies in the U.S., such as the airline, automobile, and telecommunications industries.

Question 2

Use the following Table to answer the question :

-Which statement is true?

Accepted Answer

The Herfindahl-Hirschman Index (HHI) is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. For Industry X: $HHI = 0.40^2 + 0.20^2 + 0.10^2 + 0.10^2 + 0.10^2 + 0.10^2 = 0.16 + 0.04 + 0.01 + 0.01 + 0.01 + 0.01 = 0.24$ or 2400 when expressed as per the usual convention (multiplying by 10,000).

Question 3

A concentration ratio of 100 would imply that the industry has __________.

Accepted Answer

The answer of A concentration ratio of 100 would imply...

Question 4

Use the following Table to answer the question :

-An industry with four firms each having a 25% market share would have a Herfindahl-Hirschman Index (HHI) of

Accepted Answer

The answer of Use the following Table to answer the...

Question 5

Theoretically, what is the highest possible Herfindahl Index?

Accepted Answer

The Herfindahl Index ranges from 0 to 10,000, where 10,000 indicates a monopoly (100^2) or the highest level of market concentration.

Question 6

Statement I. Collusion is most likely to succeed when there are many firms in the industry. Statement II. Firms in an industry that divide a market by territory make price and output decisions similar to the way a monopolist would operate.

Accepted Answer

Statement II is true because when firms divide a market by territory, they have some degree of market power in their respective territories, similar to a monopolist. However, statement I is false because collusion is more difficult and less likely to succeed when there are many firms in an industry, as each firm has a smaller market share and thus less incentive to cooperate with others.

Question 7

Use the following Table to answer the question :

-Using concentration ratios, which is the more concentrated industry?

Accepted Answer

Industry Y has a concentration ratio of 95, which is higher than the concentration ratio of Industry X at 80. Therefore, Industry Y is more concentrated than Industry X.

Question 8

Which is the most accurate statement?

Accepted Answer

The answer of Which is the most accurate statement?
...

Question 9

As foreign imports become a greater percentage of sales in oligopolized industries, the concentration ratio

Accepted Answer

The concentration ratio is based on market share of domestic firms, so as foreign imports increase, they are not included in the calculation and the concentration ratio becomes less accurate as a measure of concentration.

Question 10

Use the following Table to answer the question :

-According to the Herfindahl-Hirschman Index, which is the more concentrated industry?

Accepted Answer

The Herfindahl-Hirschman Index measures the concentration of an industry by summing the squared market shares of all firms in the industry. A higher index score indicates a more concentrated industry. Industry Y has a higher index score of 2,738 compared to Industry X's score of 2,400, indicating that Industry Y is more concentrated.

Question 11

The most important fact about an oligopolized industry is that

Accepted Answer

An oligopolized industry is characterized by a few firms dominating the market. Even though there may be several firms, the market is still dominated by only a few. The size of the firms and the type of product they produce is not the defining characteristic of an oligopoly.

Question 12

Statement I. Most cars sold in the United States were made in Japan or assembled in the United States by Japanese-owned companies. Statement II. Imports of fuel-efficient cars made in Japan reduced the concentration ratio in the United States that was dominated by G.M., Ford, and Chrysler.

Accepted Answer

The answer of Statement I. Most cars sold in the...

Question 13

Which statement is true?

Accepted Answer

Concentration ratio measures the market share of the largest firms in the market. In an oligopoly, a few large firms dominate the market, and therefore, a higher concentration ratio indicates a higher degree of oligopolization. So, statement A is true.

Question 14

If the market share of the largest firm in an industry is 50%, then theoretically, the highest possible Herfindahl-Hirschman Index for this industry would be

Accepted Answer

The answer of If the market share of the largest...

Question 15

Which statement is the most accurate?

Accepted Answer

While not all large firms in the U.S. are oligopolists, many industries are dominated by a small number of very large firms. This concentration of power in a few firms is one of the defining characteristics of oligopoly. Options B, C, and D are not accurate statements about oligopoly.

Question 16

Use the following Table to answer the question :

-Which statement is true?

Accepted Answer

The answer of Use the following Table to answer the...

Question 17

The largest firm in Industry J has a 90% market share, while the remaining ten firms each has a one percent share. The largest firm in industry K has a 80% market share, while the other two firms each has a 10% share. Which statement is true?

Accepted Answer

The concentration ratio for Industry J is 90%, which is higher than the concentration ratio for Industry K, which is 80%. Therefore, Industry J has a higher concentration ratio than Industry K.

Question 18

Statement I. The automobile industry is an oligopoly. Statement II. The cigarette industry is an oligopoly.

Accepted Answer

Both statements are true. An oligopoly is a market structure where a few large firms dominate the market, and the automobile and cigarette industries fit this description. In the automobile industry, a few large firms like Ford, General Motors, and Toyota control the market, while in the cigarette industry, companies like Philip Morris, British American Tobacco, and Japan Tobacco dominate the market.

Question 19

Corporate concentration can be measured by

Accepted Answer

Corporate concentration can be measured by both the concentration ratio and the Herfindahl-Hirschman index. The concentration ratio measures the total market share of the largest firms in an industry, while the Herfindahl-Hirschman index takes into account the market share of all firms in an industry. Both measures are commonly used to assess the level of competition in an industry and the potential for market power by dominant firms.

Question 20

At one end of the competitive spectrum is cutthroat competition. At the other end is (the)

Accepted Answer

A cartel is a group of independent market participants who collude with each other in order to improve their profits and dominate the market, representing the opposite end of the spectrum from cutthroat competition, where there is no cooperation among competitors.

Quiz 12: Oligopoly

Which is the most accurate statement?

Use the following Table to answer the question : -Which statement is true?

A concentration ratio of 100 would imply that the industry has __________.

Use the following Table to answer the question : -An industry with four firms each having a 25% market share would have a Herfindahl-Hirschman Index (HHI) of

Theoretically, what is the highest possible Herfindahl Index?

Statement I. Collusion is most likely to succeed when there are many firms in the industry. Statement II. Firms in an industry that divide a market by territory make price and output decisions similar to the way a monopolist would operate.

Use the following Table to answer the question : -Using concentration ratios, which is the more concentrated industry?

Which is the most accurate statement?

As foreign imports become a greater percentage of sales in oligopolized industries, the concentration ratio

Use the following Table to answer the question : -According to the Herfindahl-Hirschman Index, which is the more concentrated industry?

The most important fact about an oligopolized industry is that

Statement I. Most cars sold in the United States were made in Japan or assembled in the United States by Japanese-owned companies. Statement II. Imports of fuel-efficient cars made in Japan reduced the concentration ratio in the United States that was dominated by G.M., Ford, and Chrysler.

Which statement is true?

If the market share of the largest firm in an industry is 50%, then theoretically, the highest possible Herfindahl-Hirschman Index for this industry would be

Which statement is the most accurate?

Use the following Table to answer the question : -Which statement is true?

The largest firm in Industry J has a 90% market share, while the remaining ten firms each has a one percent share. The largest firm in industry K has a 80% market share, while the other two firms each has a 10% share. Which statement is true?

Statement I. The automobile industry is an oligopoly. Statement II. The cigarette industry is an oligopoly.

Corporate concentration can be measured by

At one end of the competitive spectrum is cutthroat competition. At the other end is (the)