Practice Test on Oligopoly

Question 1: Firms in industries that have competitors but do not face so much competition that they are price takers are operating in either a(n)....................
  1. oligopoly or monopolistically competitive market.
  2. oligopoly or perfectly competitive market.
  3. oligopoly or monopoly market.
  4. monopoly or monopolistically competitive market.
  5. 2 and 3

Question 2: An oligopoly is a market in which ? ......
  1. firms are price takers.
  2. there are only a few sellers, each offering a product similar or identical to the products offered by other firms in the market.
  3. the actions of one seller in the market have no impact on the other sellers' profits.
  4. none of the above.

Question 3: Which of the following is an example of a monopolistically competitive industry?
  1. Mobile apps
  2. Air fares.
  3. Each firm sells a virtually identical product.
  4. Restaurants in Dubai.

Question 4: Due to the nature of the patent law on pharmaceuticals, the market for such drugs.
  1. always remains a competitive market.
  2. always remains a monopolistic market.
  3. switches from competitive to monopolistic once the firm's patent runs out.
  4. switches from monopolistic to competitive once the firm's patent runs out.

Question 5: A monopolistically competitive industry is characterized by .....
  1. a few firms selling highly different products.
  2. many firms selling products that are similar but not identical.
  3. many firms selling identical products.
  4. a few firms selling products that are similar but not identical.

Question 6: A distinguishing feature of an oligopolistic industry is the tension between
  1. profit maximization and cost minimization.
  2. cooperation and self interest.
  3. producing a small amount of output and charging a price above marginal cost.
  4. short-run decisions and long-run decisions

Question 7: A special kind of competitive market that has only two firms is called imperfectly
  1. a two-tier competitive structure.
  2. an incidental monopoly.
  3. a doublet.
  4. a duopoly.

Question 8: As a group, oligopolists would always be better off if they would act collectively
  1. as a single perfectly competitive firm.
  2. in a manner that would prohibit collusive agreements.
  3. as a single monopolist.
  4. as if they were each seeking to maximize their own individual profits.
  5. none of the above.

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Date of last modification: 2019