Economics MCQs

Page No. 309

When an oligopolist individually chooses its level of production to maximize its profits, it produces an output that is ?


amore than the level produced by a monopoly and less than the level produced by a competitive market

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b less than the level produced by a monopoly and more than the level produced by a competitive market

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cless than the level produce by either monopoly or a competitive market

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d more than the level produced by either monopoly or a competitive market

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Suppose an oligopolist individually maximizes its profits. When calculating profits, if the output effect exceeds the price effect on the marginal unit of production, then the oligopolist ?


a Should produce more units

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bas maximized profits.

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cShould produce fewer units

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dshould exit the industry.

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A market structure in which many firms sell products that are similar but not identical is known as ?


amonopolistic competition

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bmonopoly

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c perfect competition

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doligopoly

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In a cartel ?


aFirms compete against each other

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bPrice wars are common

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cFirms use price to win market share from competitors

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dFirms collude

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View Answer Firms collude

In the Kinked demand curve theory ?


a There is a kink in the marginal cost curve

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bDemand is price inelastic

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c Demand is price elastic

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dnon-price competition is likely

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The Kinked Demand curve theory assumes ?


aFirms cooperate

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bFirms act as part of cartel

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cFirms are competitive

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dFirms are not profit maximisers

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View Answer Firms are competitive

In a cartel member firms may be given a fixed amount to produce. This is called a ?


aLimit

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bFactor

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c Quota

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dQuotient

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View Answer Quota

Laws that make it illegal for firms to conspire to raise prices or reduce production are known as ?


aantimonopoly laws

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ball of these answers

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c pro-competition laws

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dantitrust laws

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View Answer antitrust laws

Suppose that ABC publishing sells an economics textbook and accompanying study guide. Raheel is willing to pay Rs75 for the text and Rs15 for the study guide. Mariam is willing to spend Rs60 for the text and Rs25 for the study guide. Suppose both the book and study guide have a zero marginal cost of study production. If ABC publishing engages in tying the two products its best strategy is to charge a combined price of ?


a Rs 60

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bRs 90

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c Rs 85

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dRs 75

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View Answer Rs 85

Collusion is difficult for an oligopoly to maintain ?


a all of these answers

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b if additional firms enter of the oligopoly

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cbecause antitrust laws (also known as competition laws) make collusion illegal

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dbecause, in the case of oligopoly self-interest is in conflict with cooperation.

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