LSUS MBA 701 - Final Exam Preparation Set (Week Seven)
1) What is the most important D) interdependence of profits
characteristic of oligopoly?
A) firms have market power
B) product differentiation
C) low barriers to entry
D) interdependence of profits
E)None of the choices are correct
2) In an oligopoly market: E) All of the choices are correct.
A) a firm must lower price in order to
sell more output.
B) each firm faces a demand curve
that depends on how the firm’s rivals
behave.
C) a few firms account for a large
portion of industry sales.
D) both "firm must lower price in order
to sell more output" and "each firm
faces a demand curve that depends on
how the firm’s rivals behave".
E)All of the choices are correct.
,3) Oligopolists face interdependent profits A) there are few firms in the market.
because:
A) there are few firms in the market.
B)the product is differentiated.
C) industry sales are large.
D)All of the choices are correct.
4) In game theory, a dominant strategy is: D) a strategy that leads to the best outcome no matter what a rival does.
A) a strategy used by a large firm
to compete against smaller
firms.
B)a strategy followed by the price leader.
C) a strategy involving a high risk but also
a high return.
D) a strategy that leads to the
best outcome no matter what a rival
does.
E)None of the choices are correct.
D) A strategy that leads to the best outcome for a firm no matter what strategy the
5) In game theory, what is a dominant other chooses.
strategy?
A) A strategy that leads to the best
possible outcome for both firms.
B)Any strategy that leads to a
Nash equilibrium.
C) A strategy that yields a
minimax outcome.
D)A strategy that leads to the best
outcome for a firm no matter what
strategy the other chooses.
6) Interdependence occurs when: A) firms consider the actions of other firms when making price and output decisions.
A) firms consider the actions of other
firms when making price and output
decisions.
B)all firms in an industry are affected by
the same general economic conditions,
like consumer incomes and the
unemployment rate.
C) firms cooperate to increase profit.
D)All of the choices are correct.
, 7)A form of strategic entry deterrence is: D) both "maintaining excess capacity" and "limit pricing".
A) forming a cartel.
B)maintaining excess capacity.
C) limit pricing.
D) both "maintaining excess capacity" and
"limit pricing".
A) to discourage the entry of new firms.
8) One reason a firm or firms might
charge a price lower than its profit-
maximizing price is:
A) to discourage the entry of new firms.
B)to follow a tit-for-tat strategy.
C) to erect multiproduct barriers to entry.
D) both "to discourage the entry of new
firms" and "to erect multiproduct barriers
to entry".
9) Refer to the following figure showing the B) 2
reaction functions of oligopoly firms A and
B. (See Inserted Graph)
If firm A anticipates that firm B will run 3
ads, then firm A should run__ads in
order
to maximize its own profit.
A) 1
B) 2
C) 4
D) 5
1) What is the most important D) interdependence of profits
characteristic of oligopoly?
A) firms have market power
B) product differentiation
C) low barriers to entry
D) interdependence of profits
E)None of the choices are correct
2) In an oligopoly market: E) All of the choices are correct.
A) a firm must lower price in order to
sell more output.
B) each firm faces a demand curve
that depends on how the firm’s rivals
behave.
C) a few firms account for a large
portion of industry sales.
D) both "firm must lower price in order
to sell more output" and "each firm
faces a demand curve that depends on
how the firm’s rivals behave".
E)All of the choices are correct.
,3) Oligopolists face interdependent profits A) there are few firms in the market.
because:
A) there are few firms in the market.
B)the product is differentiated.
C) industry sales are large.
D)All of the choices are correct.
4) In game theory, a dominant strategy is: D) a strategy that leads to the best outcome no matter what a rival does.
A) a strategy used by a large firm
to compete against smaller
firms.
B)a strategy followed by the price leader.
C) a strategy involving a high risk but also
a high return.
D) a strategy that leads to the
best outcome no matter what a rival
does.
E)None of the choices are correct.
D) A strategy that leads to the best outcome for a firm no matter what strategy the
5) In game theory, what is a dominant other chooses.
strategy?
A) A strategy that leads to the best
possible outcome for both firms.
B)Any strategy that leads to a
Nash equilibrium.
C) A strategy that yields a
minimax outcome.
D)A strategy that leads to the best
outcome for a firm no matter what
strategy the other chooses.
6) Interdependence occurs when: A) firms consider the actions of other firms when making price and output decisions.
A) firms consider the actions of other
firms when making price and output
decisions.
B)all firms in an industry are affected by
the same general economic conditions,
like consumer incomes and the
unemployment rate.
C) firms cooperate to increase profit.
D)All of the choices are correct.
, 7)A form of strategic entry deterrence is: D) both "maintaining excess capacity" and "limit pricing".
A) forming a cartel.
B)maintaining excess capacity.
C) limit pricing.
D) both "maintaining excess capacity" and
"limit pricing".
A) to discourage the entry of new firms.
8) One reason a firm or firms might
charge a price lower than its profit-
maximizing price is:
A) to discourage the entry of new firms.
B)to follow a tit-for-tat strategy.
C) to erect multiproduct barriers to entry.
D) both "to discourage the entry of new
firms" and "to erect multiproduct barriers
to entry".
9) Refer to the following figure showing the B) 2
reaction functions of oligopoly firms A and
B. (See Inserted Graph)
If firm A anticipates that firm B will run 3
ads, then firm A should run__ads in
order
to maximize its own profit.
A) 1
B) 2
C) 4
D) 5
