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Your Answer Micro Test 121) Which of the following does NOT help explain why oligopolies exist?A) Economies of scaleB) MergersC) Product homogeneityD) Barriers to entry2) A merger between firms that are in the same industry is called aA) conglomerate merger.B) horizontal merger.C) vertical merger.D) none of the above.3) Strategic behavior and game theory are features of which market structure?A) Perfect competitionB) MonopolyC) Monopolistic competitionD) Oligopoly4) In oligopoly, any action by one firm to change price, output, or quality causesA) a reaction by other firms.B) no reaction from the other firms.C) a profit gain for the other firms.D) loss of market share by the acting firm.5) Within a game theory model, if a change in decision-making raises corporation A’s profits by $50 and lowers corporation B’s profits by $50, the gameis aA) negative-sum game.B) zero-sum game.C) positive-sum game.D) cooperative game.6) Within a game theory model, if a change in decision-making raises corporation A’s profits by $50 and lowers corporation B’s profits by $40, the gameis aA) negative-sum game.B) zero-sum game.C) positive-sum game.D) cooperative game.7) A noncooperative game would refer to a situation in which oligopoly firmsA) are too small to be interdependent.B) do not engage in collusive behavior together.C) are made worse off by their actions.D) behave as a joint monopoly.8) In a zero-sum gameA) both players are better off at the end of the game.B) both players are worse off at the end of the game.C) one player’s losses are exactly offset by another player’s gains.D) both players collude to make both of them better off.9) A group of firms that try to work together to earn monopoly profits is called a(n)A) patent.B) public enterprise.C) cartel.D) natural monopoly.10) An example of a cooperative game would beA) oligopoly.B) monopolistic competition.C) a cartel.D) perfect competition.11) Which of the following is not true about a cartel?A) Members earn economic profits.B) Members experience large economies to scale relative to industry demand.C) Cartels will set common prices for their members.D) Members of a cartel will have production quotas.12) Which of the following is LEAST likely to be a reason for firms to form a cartel?A) to maximize profits of the cartelB) to raise competition among firms in the cartelC) to cut back output of the cartelD) to set common prices among firms in the cartel13) When a consumer’s willingness to buy a good or service is influenced by the number of people who have purchased that good or service, this is calledA) a switching cost.B) an opportunity cost.C) a network effect.D) an advertising gimmick.14) A network effect arises wheneverA) firms in an oligopolistic industry engage in limit pricing.B) firms in an oligopolistic industry engage in a zero-sum game.C) a consumer’s willingness to purchase a good or service is influenced by how many others also buy or have bought the item.D) a producer’s willingness to produce a good or service is influenced by how many other firms also produce or have produced the item.15) In an industry with network effects and differentiated products, it is possible for the industry to become an oligopoly ifA) they engage in a zero-sum game.B) they use a price-leadership model.C) they use a kinked demand curve model.D) a few firms reap most of the sales gains resulting from positive market feedback.