MCQOPTIONS
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MCQOPTIONS
This section includes 24 Mcqs, each offering curated multiple-choice questions to sharpen your Economics Mcqs knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Suppose an oligopolist individually maximizes its profits. When calculating profits, if the output effect exceeds the price effect on the marginal unit of production, then the oligopolist ? |
| A. | Should produce more units |
| B. | has maximized profits |
| C. | is in a Nash equilibrium |
| D. | Should produce fewer units |
| E. | should exit the industry |
| Answer» B. has maximized profits | |
| 2. |
In Game Theory ? |
| A. | Firms are assumed to act independently |
| B. | Firms are assumed to cooperate with each other |
| C. | Firms collude as part of cartel |
| D. | Firms consider the actions of others before deciding what to do |
| Answer» E. | |
| 3. |
When an oligopolist individually chooses its level of production to maximize its profits, it produces an output that is ? |
| A. | more than the level produced by a monopoly and less than the level produced by a competitive market |
| B. | less than the level produced by a monopoly and more than the level produced by a competitive market |
| C. | less than the level produce by either monopoly or a competitive market |
| D. | more than the level produced by either monopoly or a competitive market |
| Answer» B. less than the level produced by a monopoly and more than the level produced by a competitive market | |
| 4. |
Suppose that ABC publishing sells an economics textbook and accompanying study guide. Raheel is willing to pay Rs75 for the text and Rs15 for the study guide. Mariam is willing to spend Rs60 for the text and Rs25 for the study guide. Suppose both the book and study guide have a zero-marginal cost of study production. If ABC publishing charges separate price for both products its best strategy is to charge price that when combined, total ? |
| A. | Rs 85 |
| B. | Rs 75 |
| C. | Rs 80 |
| D. | Rs 60 |
| Answer» C. Rs 80 | |
| 5. |
A model of Game theory of oligopoly is known as the ? |
| A. | Prisoner’s Dilemma |
| B. | Monopoly Cell |
| C. | Jailhouses Sentences |
| D. | Jury Box |
| Answer» B. Monopoly Cell | |
| 6. |
Many economics argue that resale price maintenance ? |
| A. | has a legitimate purpose of stopping discount retailers from free riding on the services provided by full services retailers? |
| B. | is price fixing and, therefore is prohibited by law |
| C. | is price fixing and therefore, is prohibited by law and enhances the market power of the producer |
| D. | enhances the market power of the producer |
| Answer» B. is price fixing and, therefore is prohibited by law | |
| 7. |
As the number of sellers in an oligopoly increases ? |
| A. | output in the market tends to fall because each firm must cut back on production |
| B. | the price in the market moves further from marginal cost |
| C. | collusion is more likely to occur because a larger number of firms can place pressure on any firm that defects |
| D. | The price in the market moves closer to marginal cost |
| Answer» E. | |
| 8. |
As the number of sellers in an oligopoly grows larger, an oligopolistic market looks more like ? |
| A. | monopoly |
| B. | a competitive market |
| C. | monopolistic competition |
| D. | a collusion solution |
| Answer» C. monopolistic competition | |
| 9. |
Laws that make it illegal for firms to conspire to raise prices or reduce production are known as ? |
| A. | antimonopoly laws |
| B. | all of these answers |
| C. | anti-collusion laws |
| D. | pro-competition laws |
| E. | antitrust laws |
| Answer» F. | |
| 10. |
In a cartel member firms may be given a fixed amount to produce. This is called a ? |
| A. | Limit |
| B. | Factor |
| C. | Quota |
| D. | Quotient |
| Answer» D. Quotient | |
| 11. |
Suppose that ABC publishing sells an economics textbook and accompanying study guide. Raheel is willing to pay Rs75 for the text and Rs15 for the study guide. Mariam is willing to spend Rs60 for the text and Rs25 for the study guide. Suppose both the book and study guide have a zero marginal cost of study production. If ABC publishing engages in tying the two products its best strategy is to charge a combined price of ? |
| A. | Rs 60 |
| B. | Rs 90 |
| C. | Rs 85 |
| D. | Rs 75 |
| Answer» D. Rs 75 | |
| 12. |
A situation in which oligopolists interacting with one another each choose their best strategy given the strategies that all the other oligopolists have chosen is known as a ? |
| A. | Nash equilibrium |
| B. | dominant strategy |
| C. | cartel |
| D. | collusion solution |
| Answer» B. dominant strategy | |
| 13. |
When a oligopolist individually chooses its level of production to maximize its profits it charges a price that is ? |
| A. | more than the price charged by either monopoly or a competitive market |
| B. | less than the price charged by either monopoly or a competitive market |
| C. | more than the price charged by a monopoly and less then the price charged by a competitive market |
| D. | less than the price charged by a monopoly and more than the price charged by a competitive market |
| Answer» E. | |
| 14. |
Collusion is difficult for an oligopoly to maintain ? |
| A. | all of these answers |
| B. | if additional firms enter of the oligopoly |
| C. | because antitrust laws (also known as competition laws) make collusion illegal |
| D. | because, in the case of oligopoly self-interest is in conflict with cooperation |
| Answer» B. if additional firms enter of the oligopoly | |
| 15. |
If oligopolists engage in collusion and successfully from a cartel, the market outcome is ? |
| A. | the same as if it were served by competitive firms |
| B. | efficient because cooperation improves efficiency |
| C. | the same as if it were served by a monopoly |
| D. | known as a Nash equilibrium |
| Answer» D. known as a Nash equilibrium | |
| 16. |
The market for hand tools (such as hammers and screwdrivers) is dominated by Draper Stanley, and Craftsman This market is best described as ? |
| A. | monopolistically competitive |
| B. | a monopoly |
| C. | an oligopoly |
| D. | competitive |
| Answer» D. competitive | |
| 17. |
Firms in oligopoly are likely to ? |
| A. | Invest heavily in branding |
| B. | Act independently of other firms |
| C. | Try to differentiate its products |
| D. | Try to be a price maker |
| Answer» E. | |
| 18. |
In cartels ? |
| A. | Each individual firm profit maximizes |
| B. | There may be an incentive to cheat |
| C. | The industry as a whole is loss making |
| D. | There is no need to police agreements |
| Answer» C. The industry as a whole is loss making | |
| 19. |
In a cartel ? |
| A. | Firms compete against each other |
| B. | Price wars are common |
| C. | Firms use price to win market share from competitors |
| D. | Firms collude |
| Answer» E. | |
| 20. |
In the Kinked demand curve theory ? |
| A. | There is a kink in the marginal cost curve |
| B. | Demand is price inelastic |
| C. | Demand is price elastic |
| D. | non-price competition is likely |
| Answer» E. | |
| 21. |
In the kinked Demand Curve theory it is assumed that ? |
| A. | An increase in price by the firm is not followed by others |
| B. | An increase in price by the firm is followed by others |
| C. | A decrease in price by the firm is followed by others |
| D. | Firms collude to fix the price |
| Answer» B. An increase in price by the firm is followed by others | |
| 22. |
If a few firms dominate an industry the market is known as ? |
| A. | monopolistic competition |
| B. | Competitively monopolistic |
| C. | Duopoly |
| D. | Oligopoly |
| Answer» E. | |
| 23. |
A market structure in which many firms sell products that are similar but not identical is known as ? |
| A. | monopolistic competition |
| B. | monopoly |
| C. | perfect competition |
| D. | oligopoly |
| Answer» B. monopoly | |
| 24. |
The Kinked Demand curve theory assumes ? |
| A. | Firms cooperate |
| B. | Firms act as part of cartel |
| C. | Firms are competitive |
| D. | Firms are not profit maximisers |
| Answer» D. Firms are not profit maximisers | |