Unit 7: Oligopoly - Practice Quiz

1 An oligopoly is a market structure characterized by:

2 A key feature of oligopoly is:

3 An oligopoly with exactly two firms is specifically called a:

4 Which of the following is a major source of oligopoly?

5 In an oligopoly selling identical products (like steel or cement), the market is termed:

6 An oligopoly in which firms sell differentiated products (like automobiles) is called a:

7 Which of the following typically acts as a barrier to entry in an oligopoly?

8 A common feature of oligopoly markets is:

9 Heavy expenditure on advertising and selling costs is most common in which market?

10 A cartel is best described as:

11 The main objective of forming a cartel is to:

12 Which of the following is a well-known real-world example of a cartel?

13 When firms in a cartel act together, they effectively behave like a:

14 A major reason cartels often break down is:

15 Price leadership in oligopoly refers to a situation where:

16 Price leadership is an example of:

17 When the largest firm in an industry sets the price and smaller firms follow, it is called:

18 Barometric price leadership occurs when the price is set by:

19 Which of the following is a form of collusion among oligopoly firms?

20 In many countries, formal cartels are generally:

21 A market has four large firms that together control about 85% of total industry sales, with the remaining share split among many tiny sellers. This market structure is best classified as:

22 The central feature that distinguishes oligopoly from other market structures is:

23 Which of the following is a genuine source of oligopoly?

24 An oligopoly in which firms produce a standardized, undifferentiated product such as steel or cement is termed a:

25 The kinked demand curve model is used mainly to explain which observed feature of oligopoly markets?

26 Which factor would most likely reduce the tendency of an industry to become an oligopoly?

27 In an oligopoly, firms often prefer non-price competition (advertising, product features) over price competition mainly because:

28 A cartel that seeks to maximize the joint profit of its members will set the industry output where:

29 Under a centralized cartel that minimizes total cost, output is allocated across member firms so that:

30 The strongest incentive for an individual member to cheat on a cartel agreement arises because:

31 In the dominant-firm price leadership model, the dominant firm sets its output by:

32 In dominant-firm price leadership, the smaller follower firms typically behave as:

33 A cartel decides to raise the market price. This action is most likely to succeed in the long run when:

34 Which of the following best describes barometric price leadership?

35 Two firms form a cartel. Firm A has and Firm B has at their current outputs. To minimize the cartel's total cost for the same total output, the cartel should:

36 OPEC is a well-known real-world example of which oligopoly arrangement?

37 A cartel faces market demand and constant marginal cost . Acting as a joint monopolist, the profit-maximizing output is:

38 Using demand , , and the cartel output , the price charged by the cartel is:

39 Which condition would most weaken the stability of a cartel?

40 A key difference between price leadership and a formal cartel is that price leadership:

41 In a Cournot duopoly with market demand and constant marginal cost for both firms, what is the equilibrium output of each firm?

42 A key structural feature that distinguishes oligopoly from monopolistic competition is:

43 In a Bertrand duopoly with identical products and constant marginal cost , the Nash equilibrium price is:

44 Which of the following is the most fundamental source of oligopoly among the options below?

45 A cartel of two firms faces demand with marginal cost . If they jointly maximize profit like a monopolist and split output equally, each firm produces:

46 Under the dominant-firm price leadership model, the dominant firm sets price by:

47 The primary incentive that makes cartel agreements inherently unstable is:

48 In the dominant-firm model, market demand is and the competitive fringe supplies . The dominant firm's residual demand is:

49 The kinked demand curve model of oligopoly explains:

50 A three-firm cartel maximizes joint profit efficiently by allocating output so that:

51 Barometric price leadership differs from dominant-firm price leadership in that the barometric leader:

52 Two firms form a cartel facing with and . To minimize total cost of the joint output, the cartel should:

53 In a Stackelberg duopoly with and , the leader's output is:

54 In the dominant-firm model with residual demand and dominant firm , the dominant firm's output is:

55 Which condition most strongly promotes successful cartel formation and stability?

56 The concentration ratio measures:

57 A cartel faces with combined constant . Compared to the competitive outcome, cartelization changes total output from the competitive level to:

58 Under repeated interaction, cartel discipline is best sustained by:

59 A Herfindahl-Hirschman Index (HHI) of in an industry most likely indicates:

60 In the dominant-firm model, as the competitive fringe grows larger over time, the dominant firm's residual demand and market power tend to: