Economics Chapter 24 Flashcards
The concentration ratio is the percentage of _____________ earned by the _____________ largest firms in the industry.
- sales;four
- sales, ten
- profits, four
- profits, ten
sales;four
The tobacco, healthcare wholesale, and beverage industries all have a concentration ratio of over:
- 10
- 50
- 80
- 100
80
__________________ is (are) legal in the United States.
Cut throat competition
A highly oligopolized industry would have a ___________________ Herfindahl-Hirschman Index and a ________________concentration ratio.
- high/high
- low;low
- high;low
- low;high
high/high
Which statement is false?
- Oligopolies are illegal in most states
- Most oligopolies engage in outright collusion
- Ford Motor Company is an oligopoly
- None of these statementts is false
Oligopolies are illegal in most states
A Herfindahl-Hirschman Index of 10,000 would mean there is (are) how many firms in the industry?
- 1
- 10
- 100
- 1000
- 10,000
1
The market structure in which the behavior of any given firm depends on the the behavoir of other firms in the industry is:
- monopoly
- perfect competition
- oligopoly
- monopolistic competition
oligopoly
Which one of these firms would be an oligopolist?
- Proctor and Gamble
- A family farm
- A McDonald’s restaraurant in Manhatttan
- The only dentist in Hendry County, Florida
Proctor and Gamble
Which statement is false?
- Cigarettes, motor vehicles, and pipelines are industries with high concentration ratios
- Oligopolized industries have higher concentration ratios than monopolistic competitiors
- The Electric Machinery Conspiracy case involved covert collusion
- None is false
None is false
Oligopoly is characterized by
- identical products only
- differentiated products only
- high barriers to entry
- many firms
high barriers to entry
The closer the industry conentration ratio is to 100, the more likely it is that
- there are a reasonably large number of medium-sized firms
- this is an industry approaching perfect competiion
- there is a small number of large firms
- price competition is being practiced
there is a small number of large firms
See photo.
The highest concentration ratio:
- is an Industry X
- is in Industry Y
- is in Industry Z
- cannot be determined
is in Industry Y
See attached photo
- The highest Herfindahl Hirschman Index
- is in Industry X
- is in Industry Y
- is in Industry Z
- cannot be determined
is in Industry X
An example of an oligopoly market would be one in which ___________firm (s) sell (s) _______% of the output.
- 1;95
- 3;10
- 4;80
- 250;35
- 1000;99
4;80
Each of the following is an oligopoly except:
- General motors
- Hertz (car rentals)
- Philip Morris (cigarettes)
- Microsoft (computer operating systems)
Microsoft (computer operating systems)
Which of the following represents an illegal control of prices?
- Colluding
- Following the leader without explicit agreements to do so
- Following the price determined by an analysis of supply and demand
- Accepting a government mandated price without contesting it
- Selling the product below the cost of manufacturing it
Colluding
A cartel is:
- generally legal in the US
- a group of firms acting under collusion to control output and maximize group profits
- similar to a monopolistically competitive industry
- a group of firms acting like a perfectly competitive industry
a group of firms acting under collusion to control output and maximize group profits
Which of the following is a legal way to reduce the price problems oligopolies face?
- Collusion
- Formation of cartels
- Price leadership
- Merging to become monopolists
- There are no price problems in oligopolies
Price leadership
If the market share of the largest industry in an industry is 50%, then theorectically, the highest possible Herfindahl-Hirschman Index for this industry would be
- 2500
- 5000
- 10,000
- 25,000
- 50,000
5000
An industry with four firms each having a 25% market share would have a Herfindahl-Hirschman Index (HHI) of
- 25
- 100
- 250
- 1000
- 2500
2500
At one end of the competitive spectrum is cutthroat competition. At the other end is the
- cartel
- open collusion
- covert collusion
- price leadership
- weak compeitition
cartel
A concentration ratio of 100 would imply that the industry has ________________________________
- one firm
- no more than four firms
- at least four firms
- more than four firms
- 100 firms
no more than four firms
Corporate concentration can be measured by
- only the concentration ratio
- only the Herfindahl Hirschman index
- both the concentration ratio and the Herfindahl Hirschman index
- neither the concentration ratio nor the Herfindahl index
both the concentration ratio and the Herfindahl-Hirschman index
As foreign imports become a greater percentage of sales in oligopolized industries, concentration ratio and the Herfindahl - Hirschman index
- become more accurate as a measure of concentration
- become less accurate as a measure of concentration
- continue at the same level of accuracy
become less accurate as a measure of concentration
Which statement is true?
- The higher the concentration ratio, the higher the degree of oligopolization
- The lower the concentration ratio, the higher the degree of oligopolization
- The concentration ratio remains constant as the degree of oligopolization rises
- There is no relationship between the concentration ratio and the degree of oligopolization
The higher the concentration ratio, the higher the degree of oligopolization
