Practice Test on Oligopoly: Solutions
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)....................
- oligopoly or monopolistically competitive market.
- oligopoly or perfectly competitive market.
- oligopoly or monopoly market.
- monopoly or monopolistically competitive market.
- 2 and 3
Question 2: An oligopoly is a market in which ? ......
- firms are price takers.
- there are only a few sellers, each offering a product similar or identical to the products offered by other firms in the market.
- the actions of one seller in the market have no impact on the other sellers' profits.
- none of the above.
Question 3: Which of the following is an example of a monopolistically competitive industry?
- Mobile apps
- Air fares.
- Each firm sells a virtually identical product.
- Restaurants in Dubai.
Question 4: Due to the nature of the patent law on pharmaceuticals, the market for such drugs.
- always remains a competitive market.
- always remains a monopolistic market.
- switches from competitive to monopolistic once the firm's patent runs out.
- switches from monopolistic to competitive once the firm's patent runs out.
Question 5: A monopolistically competitive industry is characterized by .....
- a few firms selling highly different products.
- many firms selling products that are similar but not identical.
- many firms selling identical products.
- a few firms selling products that are similar but not identical.
Question 6: A distinguishing feature of an oligopolistic industry is the tension between
- profit maximization and cost minimization.
- cooperation and self interest.
- producing a small amount of output and charging a price above marginal cost.
- short-run decisions and long-run decisions
Question 7: A special kind of competitive market that has only two firms is called imperfectly
- a two-tier competitive structure.
- an incidental monopoly.
- a doublet.
- a duopoly.
Question 8: As a group, oligopolists would always be better off if they would act collectively
- as a single perfectly competitive firm.
- in a manner that would prohibit collusive agreements.
- as a single monopolist.
- as if they were each seeking to maximize their own individual profits.
- none of the above.
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Date of last modification: 2019