Oligopoly and Strategic Behavior MCQs
Oligopoly and Strategic Behavior MCQs
Our team has conducted extensive research to compile a set of Oligopoly and Strategic Behavior MCQs. We encourage you to test your Oligopoly and Strategic Behavior knowledge by answering these 30 multiple-choice questions provided below.
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1: A positive network externality in which a consumer’s demand for a product increases because other consumers own it is called _____.
A. Game theory
B. Bandwagon effect
C. Cooperative game
D. Collusion
2: A collection of firms that agree on sales, pricing, and other decisions is called _____.
A. Mafia
B. Cartel
C. Company
D. Industry
3: Collusion is to ______ competition.
A. Restrict
B. Resist
C. Allow
D. Constrict
4: Cooperative game is one in which firms cooperate to increase their _____ payoff.
A. Mutual
B. Individual
C. Dual
D. None of above
5: A dominant strategy is one which is ______ regardless of the opponent's actions.
A. Optimal
B. Minimal
C. Maximal
D. Neutral
6: The study of strategic interactions among economic agents is called _____.
A. Game sequence
B. Game theory
C. Game analytics
D. Game systematics
7: When a firm shapes its policy with an eye to the policies of competing firms is called mutual interdependence.
A. True
B. False
8: An increase in a consumer’s demand for a good because _____ consumers are purchasing the same good negative network externality.
A. More
B. Fewer
C. Excessive
D. All of above
9: Network externalities is when more people own some goods ,the more _____ that good is.
A. Valuable
B. Worthless
C. Expensive
D. Cheap
10: Non-cooperative games are like where one pursues _____.
A. Self interest
B. Selfless
C. Social interest
D. None of above
11: Payoff matrix is a summary of the _______outcomes of various strategies.
A. Possible
B. Personal
C. Individual
D. Organizational
12: ______ network externality is an increase in a consumer’s quantity demanded for a good
A. Positive
B. Cooperative
C. Collective
D. Social
13: Predatory pricing is Setting a price deliberately ____ to drive out competitors
A. Low
B. High
C. Average
D. Maximum
14: A competitor in an oligopoly is called
A. Product Follower
B. Price Follower
C. Price leader
D. Product Leader
15: A large firm in an oligopoly is Known as
A. Price leader
B. Product Leader
C. Market Leader
D. Team Leader
16: Price leadership is when a dominant firm that produces a large portion _______ its Profit
A. Minimize
B. Maximize
C. Legalize
D. Standardize
17: A game in which pursuing dominant strategies results in non-cooperation is called
A. Prisoners’ dilemma
B. Persons’ dilemma
C. Dominants’ dilemma
D. None of these
18: The ________ costs involved in changing from one product to another brand
A. Derived
B. Switching
C. Product
D. Interest
19: The tit-for -tat strategy is used in repeated games and leads to _____cooperation.
A. Greater
B. Lesser
C. Maximum
D. Minimum
20: Which of the following best describes an oligopolistic industry?
A. It has a small number of large sellers.
B. It has a large number of small sellers.
C. It has a small number of small sellers.
D. It has a large number of large sellers.
21: Oligopoly markets tend to have substantial ______.
A. Monopolies in place
B. Economies of scale
C. Numbers of firms competing against each other
D. Opportunities for new firms to enter the market
22: For many products, a firm in an oligopoly must produce a ______ fraction of the market output in order to obtain a reasonably ______ cost of production.
A. Large; low
B. Large; high
C. Small; high
D. Small; low
23: Four-firm concentration ratios of ______ are common in oligopolies.
A. Less than 10%
B. 10–40%
C. 50%
D. 70–100%
24: Which two factors are reduced when sellers collude with each other?
A. Oligopoly; the potential for economic profits
B. Uncertainty; the potential for economic profits
C. Uncertainty; the level of competition
D. Oligopoly; the level of competition
25: A collection of firms that agree on sales, pricing, and other decisions is called a ______.
A. Monopoly
B. Marginalist group
C. Cartel
D. Joint industry
26: A collusive oligopoly achieves joint profit maximization by producing at a point where marginal revenue is ______ the marginal cost for the industry.
A. Much greater than
B. Equal to
C. Slightly less than
D. Much less than
27: Which of the following has been true of the banking industry in the United States?
A. The dominant firm has changed over time as various firms announced changes to the prime interest rate.
B. The price followers gradually merged into a single firm to challenge the dominant firm within the banking industry.
C. The dominant firm usually went along with the decisions that price followers made about the prime interest rate.
D. The price followers often coordinated together to forge a formal agreement about the prime interest rate.
28: How is a price leader most likely to communicate pricing decisions to competitors?
A. Through a cartel agreement
B. Through an announcement to the press
C. During a formal meeting with its rivals
D. In a written notice to its rivals
29: What is the proper equation for the Herfindahl-Hirshman Index (HHI) for an industry containing four firms with market shares of 40 percent, 25 percent, 20 percent, and 15 percent, respectively.
A. HHI = 404+254+204+154
B. HHI = 403+253+203+153
C. HHI = 402+252+202+152
D. HHI = 40+25+20+15
30: A conglomerate can result from the merger of two firms ______.
A. At different stages of production
B. Selling similar products
C. In the same industry
D. In different industries
31: The prisoners’ dilemma is a game in which pursuing dominant strategies results in ______ and makes everyone ______.
A. Non-cooperation; worse off
B. Cooperation; worse off
C. Non-cooperation; better off
D. Cooperation; better off
32: A conglomerate can result from the merger of two firms ______.
A. At different stages of production
B. Selling similar products
C. In the same industry
D. In different industries
33: In the oligopolists’ dilemma, when each firm is doing as well as it can (given the actions of its competitor), the firms are said to have reached a ______ equilibrium.
A. Nobel
B. Nash
C. Matrix
D. Defection
34: Which of the following best characterizes the arms race that occurred between the United States and the former Soviet Union during the Cold War?
A. It mutually benefited both economies.
B. It was a cooperative game.
C. It was a one-shot game.
D. It involved mutual lack of trust.
35: Which of the following accurately describes the societal effects of oligopoly?
A. It can help create perfectly competitive markets.
B. It meets the condition for productive efficiency.
C. It can encourage technological developments.
D. It demonstrates allocative efficiency.
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Oligopoly and Strategic Behavior MCQs
