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Economics - Chapter 24 > Economics Chapter 24 > Flashcards

Economics Chapter 24 Flashcards

1
Q

The concentration ratio is the percentage of _____________ earned by the _____________ largest firms in the industry.

  • sales;four
  • sales, ten
  • profits, four
  • profits, ten
A

sales;four

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2
Q

The tobacco, healthcare wholesale, and beverage industries all have a concentration ratio of over:

  • 10
  • 50
  • 80
  • 100
A

80

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3
Q

__________________ is (are) legal in the United States.

A

Cut throat competition

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4
Q

A highly oligopolized industry would have a ___________________ Herfindahl-Hirschman Index and a ________________concentration ratio.

  • high/high
  • low;low
  • high;low
  • low;high
A

high/high

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5
Q

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
A

Oligopolies are illegal in most states

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6
Q

A Herfindahl-Hirschman Index of 10,000 would mean there is (are) how many firms in the industry?

  • 1
  • 10
  • 100
  • 1000
  • 10,000
A

1

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7
Q

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
A

oligopoly

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8
Q

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
A

Proctor and Gamble

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9
Q

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
A

None is false

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10
Q

Oligopoly is characterized by

  • identical products only
  • differentiated products only
  • high barriers to entry
  • many firms
A

high barriers to entry

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11
Q

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
A

there is a small number of large firms

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12
Q

See photo.

The highest concentration ratio:

  • is an Industry X
  • is in Industry Y
  • is in Industry Z
  • cannot be determined
A

is in Industry Y

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13
Q

See attached photo

  • The highest Herfindahl Hirschman Index
  • is in Industry X
  • is in Industry Y
  • is in Industry Z
  • cannot be determined
A

is in Industry X

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14
Q

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
A

4;80

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15
Q

Each of the following is an oligopoly except:

  • General motors
  • Hertz (car rentals)
  • Philip Morris (cigarettes)
  • Microsoft (computer operating systems)
A

Microsoft (computer operating systems)

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16
Q

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
A

Colluding

17
Q

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

a group of firms acting under collusion to control output and maximize group profits

18
Q

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
A

Price leadership

19
Q

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
A

5000

20
Q

An industry with four firms each having a 25% market share would have a Herfindahl-Hirschman Index (HHI) of

  • 25
  • 100
  • 250
  • 1000
  • 2500
A

2500

21
Q

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
A

cartel

22
Q

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
A

no more than four firms

23
Q

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
A

both the concentration ratio and the Herfindahl-Hirschman index

24
Q

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
A

become less accurate as a measure of concentration

25
Q

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
A

The higher the concentration ratio, the higher the degree of oligopolization

26
Q
A

Economics - Chapter 24 (1 decks)

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