1. In the kinked demand curve model, if one firm increases its price, other firms will ...
a. reduce their price.
b. compete on a non-price basis.
c. raise their price.
d. maintain their price constant.
e. wage a price war.
2. Which of the following is true?
a. In Bertrand oligopoly each firm believes that their rivals will hold their output constant if it changes its output.
b. In Cournot oligopoly firms produce an identical product at a constant marginal cost and engage in price competition.
c. In Oligopoly a change in marginal cost never has an effect on output or price.
d. None of the above.
3. Engen and Shell are two local petrol stations. Although they have different constant marginal costs, they both survive continued competition." Tom and Jack do not constitute a ...
a. Monopolistically Competitive industry.
b. Cournot oligopoly.
c. Stackelberg oligopoly.
d. Bertrand oligopoly.
4. When a firm charges each customer the maximum price that the customer is willing to pay, the firm ...
a.engages in a discrete pricing strategy.
b. charges the average reservation price.
c. engages in second-degree price discrimination.
d. engages in first-degree price discrimination.
e. engages in a price war.
5. The kinked demand curve model of oligopoly assumes that the elasticity of demand ...
a. in response to a price increase is less elastic than the elasticity of demand in response to a price decrease.
b. in response to a price increase is more elastic than the elasticity of demand in response to a price decrease.
c. is constant regardless of whether price increases or decreases.
d. is perfectly elastic if price increases and perfectly inelastic if price decreases.
6. All of the following are ways monopolistically competitive firms differentiate their products
EXCEPT ...
a. Selling with slightly different physical characteristics.
b. Selling products at different locations.
c. Offering different levels of service that come with a product.
d. Creating a special aura or image for the product with advertising.
e. None of the above are exceptions they are all ways of differentiating products.
7. Which of the following is true?
a. In a Bertrand oligopoly, each firm believes that their rivals will hold their output constant if it changes its output.
b. In a Cournot oligopoly, firms produce an identical product at a constant marginal cost and engage in price competition.
c. In an oligopoly, a change in marginal cost never has an effect on output or price.
d. None of the above is true.
8. A Market structure in which there is one large firm that has a major shaqre of the market and many smaller firms supplying the rest of the remainder of the market is called the ...
a. Stackelberg model.
b. kinked demand curve model.
c. dominant firm model.
d. Cournot model.
e. Bertrand model.
9. The oligopoly model that predicts that oligopoly prices will tend to be very rigid is the_ model.
a. Cournot
b. Stackelberg
c. dominant firm
d. kinked demand
e. Nash
10. Sue and Jane each own a local petrol station. They have identical constant marginal costs, but earn zero economic profits. Sue and Jane constitute ...
a. a Sweezy oligopoly.
b. a Cournot oligopoly.
c. a Bertrand oligopoly.
d. None of the above.