Chapter 10 Multiple Choice Quiz

. The market for automobiles is an example of

A. monopolistic competition.

B. duopoly.

C. differentiated oligopoly.

D. pure oligopoly.

. If an industry is comprised of four firms and their market shares are 40%, 30%, 20%, and 10%, then the Herfindahl index for the industry is

A. 100

B. 200

C. 3,000

D. 10,000

. The Herfindahl index will be largest for an industry that is

A. a monopoly.

B. perfectly competitive.

C. a duopoly.

D. monopolistically competitive.

. The Herfindahl index will be smallest for an industry that is

A. a monopoly.

B. perfectly competitive.

C. a duopoly.

D. a differentiated oligopoly.

. According to the Cournot model, a firm will

A. assume that rival firms will keep their production constant.

B. produce the quantity where marginal revenue equals marginal cost.

C. respond to changes in production by rival firms by adjusting its production.

D. All of the above are correct.

. According to the Bertrand model, a firm will assume that rival firms will

A. keep their rates of production constant.

B. keep their prices constant.

C. match price cuts but not price increases.

D. match price increases but not price cuts.

. According to the kinked demand curve model, a firm will assume that rival firms will

A. keep their rates of production constant.

B. keep their prices constant.

C. match price cuts but not price increases.

D. match price increases but not price cuts.

. The refrigerator industry is an example of

A. monopolistic competition.

B. monopoly.

C. oligopoly.

D. perfect competition.

. The petroleum industry is an example of

A. monopolistic competition.

B. pure oligopoly.

C. duopoly.

D. differentiated oligopoly.

. The kinked demand curve model assumes that

A. firms match price increases, but not price cuts.

B. demand is more elastic for price cuts than for price increases.

C. changes in marginal cost can never lead to changes in market price.

D. None of the above is correct.

. Which of the following is not a form of nonprice competition?

A. Advertising

B. Quality of service

C. Product quality

D. All of the above are forms of nonprice competition.

. A cartel that gives each member the exclusive right to operate in a particular geographic area is a

A. market-sharing cartel.

B. centralized cartel.

C. price leadership cartel.

D. None of the above is correct.

. A cartel that operates like a multiplant monopolist is a

A. market-sharing cartel.

B. centralized cartel.

C. price leadership cartel.

D. None of the above is correct.

. Under the dominant-firm price leadership model,

A. all firms but the dominant firm are price takers.

B. the dominant firm acts as the residual monopolistic supplier.

C. the demand curve faced by the dominant firm is flatter than the market demand curve.

D. All of the above are correct.

. Oligopolistic firms can earn positive economic profits

A. in the short run, but not in the long run.

B. in the short run and in the long run.

C. in the long run, but not in the short run.

D. in neither the short run nor the long run.

. Which of the following forms of market organization assumes that entry and exit of firms is costless?

A. Differentiated oligopoly

B. Duopoly

C. Monopolistic competition

D. Pure oligopoly

. The harmful effects of oligopoly include all of the following except

A. Economies of scale result in a small number of large firms that spend more of research and development.

B. Price is greater than long-run marginal and average cost.

C. Production does not generally take place at the lowest point on the long-run average cost curve.

D. All of the above are harmful effects of oligopoly.

. The sales maximization model assumes that imperfectly competitive firms will produce a level of output where

A. marginal revenue is equal to zero.

B. marginal revenue is equal to marginal cost.

C. marginal revenue is equal to zero if profit is satisfactory.

D. they will break even.

. One reason that most economists do not support government industrial and trade policies is that the outcomes of these policies cannot

A. have a positive effect on a country's industries.

B. be accurately predicted.

C. help a country to overcome a comparative disadvantage.

D. prevent a country from losing a comparative advantage.

. The growth of global oligopolists has been encouraged by

A. the development of new transportation and telecommunications technologies.

B. the globalization of tastes.

C. reductions in barriers to international trade and investment.

D. All of the above.

. In which of the sectors listed below has the growth in concentration has been most pronounced during the past decade?

A. Agriculture.

B. Mining.

C. Banking.

D. Home construction.

. Firms in which of the following industries have used mergers and acquisitions to grow and globalize?

A. Telecommunications

B. Entertainment and communications media

C. Consumer products

D. All of the above.

. Compared to relationship enterprises, virtual corporations are more likely to be

A. lasting and stable.

B. short term and temporary.

C. global in scope.

D. oligopolistic.

. When several independent firms form a temporary network to take advantage of a short-term business opportunity, the result is called a

A. collaborative firm.

B. relationship enterprise.

C. virtual corporation.

D. cartelized partnership.

. The ideal firm architecture includes all of the following except:

A. A focus on core competencies

B. The integration of physical and virtual systems

C. A hierarchical, top down management structure

D. Smaller, more flexible production facilities

. Porter's strategic framework identifies forces that influence an industry's

A. intensity of competition and profitability.

B. rate of growth.

C. popularity among consumers.

D. potential as an exporter within the global economy.

. Which of the following is not a force identified by Porter's strategic framework?

A. Threat of entry

B. Intensity of rivalry

C. Government tax policy

D. Bargaining power of buyers

. The knowledge economy is characterized by a reliance on

A. innovation and creativity.

B. a customer-centric approach.

C. efficiency in production.

D. All of these answers are correct.

. An emphasis on design innovation is typical of

A. the knowledge economy.

B. the virtual corporation.

C. relationship enterprises.

D. the creative firm.

. CENCOR is an acronym for a design strategy that consists of the following parts:

A. Collaborate, evaluate, celebrate, occlude, and rationalize

B. Calibrate, explore, create, organize, and realize

C. Create, evoke, circumvent, officiate, and redeem

D. Calculate, erect, consign, offer, and return

Quiz Content