Multiple Choice Questions

Advertising is an important aspect of monopolistic competition and oligopoly because
  • brand distinction encourages consumer loyalty, which increases profits
  • The largest four firms in the industry account for 60 percent of sales.
  • providing information about new products, increasing sales and output, and lowering average total cost.
  • The largest four firms in the industry account for 90 percent of sales.
What is the meaning of a four-firm concentration ratio of 60 percent?
  • They do not account for interindustry competition
  • Automobiles, personal computers, and gasoline
  • The largest four firms in the industry account for 90 percent of sales.
  • The largest four firms in the industry account for 60 percent of sales.
Consider an oligopoly industry whose firms have identical demand and cost conditions. If the firms decide to collude, then they will want to collectively produce the amount of output that would be produced by:
  • a pure monopolist
  • credible threats
  • economies of scale
  • True
Collusive agreements can be established and maintained by:
  • credible threats
  • . a few large productions
  • economies of scale
  • a pure monopolist
Price leadership is legal in the United States, whereas price-fixing is not. This is because price leadership is
  • not an agreement, whereas price-fixing is
  • Automobiles, personal computers, and gasoline
  • They do not account for interindustry competition
  • price competition can lower revenue for all firms
Advertising promotes efficiency and benefits consumers by
  • The largest four firms in the industry account for 90 percent of sales.
  • brand distinction encourages consumer loyalty, which increases profits
  • providing information about new products, increasing sales and output, and lowering average total cost.
  • Collusive pricing is economically desirable from the oligopoly's viewpoint because it results in monopoly profits.
Some analysts consider oligopolies to be potentially less efficient than monopoly firms because at least monopoly firms tend to be regulated. Arguments in favor of a more benign view of oligopolies include: a. oligopolies can be kept in line by foreign competition b. oligopolies are self-regulatingc. oligopolies may engage in limit pricing to keep out potential entrantsd. oligopolistic industries may promote technological progress
  • Automobiles, personal computers, and gasoline
  • a. oligopolies can be kept in line by foreign competition c. oligopolies may engage in limit pricing to keep out potential entrantsd. oligopolistic industries may promote technological progress
  • Collusive pricing is economically desirable from the oligopoly's viewpoint because it results in monopoly profits.
  • providing information about new products, increasing sales and output, and lowering average total cost.
What is the meaning of a four-firm concentration ratio of 90 percent?
  • The largest four firms in the industry account for 60 percent of sales.
  • Automobiles, personal computers, and gasoline
  • They do not account for interindustry competition
  • The largest four firms in the industry account for 90 percent of sales.
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Multiple Choice Questions
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