1)The market structure characterized by a few interdependent firms in which there are barriers to entry is called:

(5 Points)

monopolistic competition

perfect competition

oligopoly

monopoly

game theory

2.Which of the following scenarios best describes an oligopolistic industry?

(5 Points)

a single cable company serves customers in a small town

thousands of soybean farmers sell their output in a global commodities market

Coca-Cola and Pepsi sell most of the soft drinks consumed around the world

a college has one bookstore selling textbooks to students

hundreds of firms produce similar, but differentiated, types of shoes

3.Oligopoly is a market structure that is characterized by a _____ number of____ firms that produce____products.

(5 Points)

large; relatively small independent; identical

small; independent; identical or differentiated

large; relatively small, independent; differentiated

small; independent; differentiated

small; interdependent; identical or differentiated

4.An industry with two firms producing is generally called:

(5 Points)

a monopoly

monopolistic competition

a duopoly

perfect competition

monopsony

5.An extreme case of oligopoly in which firms collude to raise joint profits is known as a:

(5 Points)

duopoly

cartel

dominant producer

price war

price leadership

6.When firms openly agree on price, output, and other decisions aimed at achieving monopoly profits, those firms are practicing:

(5 Points)

overt collusion

tacit collusion

price leadership

price-taking behavior

price discrimination

7.Which of the following will make it easier for firms in an industry to maintain positive economic profits?

(5 Points)

a ban on cartels

a small number of firms in the industry

a lack of product differentiation

low start up costs for new firms

the assumption by firms that other firms have variable output levels

8.Like a monopolist, cartel members will find that an increase in price will:

(5 Points)

increase total revenue if the demand is inelastic

increase total revenue if the price effect is smaller than the quantity effect

always lead to increased total revenue

always lead to decreased total revenue

decrease total revenue if the price effect is larger than the quantity effect

\f2: Demand for Wooden Stakes '10. The table shows the demand for wooden stakes in the town of Sunnyvale. Suppose the marginal cost of producing stakes is zero. The only two rms producing wooden stakes, Spikes Inc. and Buffy Co., agree to form a cartel. What price will the cartel charge and how many stakes will the cartel sell? * (5 Points)