Chapter 24

Question 1

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

Answer 1

sales; four

Question 2

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

Answer 2

80

Question 3

_____ is (are) legal in the United States.

Answer 3

Cut throat competition

Question 4

A highly oligopolized industry would have a ______ Herfindahl-Hirschman Index and a ______ concentration ratio.

Answer 4

high; high

Question 5

Which statement is false?

Answer 5

Oligopolies are illegal in most states.

Question 6

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

Answer 6

1

Question 7

The market structure in which the behavior of any given firm depends on the behavior of the other firms in the industry is

Answer 7

oligopoly.

Question 8

Which one of these firms would be an oligopolist?

Answer 8

Proctor & Gamble

Question 9

Which statement is false?

Answer 9

None is false.

Cigarettes, motor vehicles, and pipelines are industries with high concentration ratios.
Oligopolized industries have higher concentration ratios than monopolistic competitors.
The Electric Machinery Conspiracy case involved covert collusion.

Question 10

Oligopoly is characterized by

Answer 10

high barriers to entry.

Question 11

The closer the industry concentration ratio is to 100, the more likely it is that

Answer 11

there is a small number of large firms.

Question 12

The highest concentration ratio

Answer 12

is in Industry Y.

Question 13

The highest Herfindahl-Hirschman Index

Answer 13

is in Industry X.

Question 14

An example of an oligopoly market would be one in which ___ firm(s) sell(s) ___% of the output.

Answer 14

4; 80

Question 15

Each of the following is an oligopoly except

Answer 15

Microsoft (computer operating systems).

Question 16

Which of the following represents an illegal control of prices?

Answer 16

Colluding

Question 17

A cartel is

Answer 17

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

Question 18

Which of the following is a legal way to reduce the price problems oligopolies face?

Answer 18

Price leadership

Question 19

If the market share of the largest firm in an industry is 50%, then theoretically, the highest possible Herfindahl-Hirschman Index for this industry would be

Answer 19

5,000

Question 20

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

Answer 20

2,500

Question 21

At one end of the competitive spectrum is cutthroat competition. At the other end is (the)

Answer 21

cartel

Question 22

A concentration ratio of 100 would imply that the industry has

Answer 22

no more than four firms

Question 23

Corporate concentration can be measured by

Answer 23

both the concentration ratio and the Herfindahl-Hirschman index.

Question 24

As foreign imports become a greater percentage of sales in oligopolized industries, the concentration ratio and the Herfindahl-Hirschman index

Answer 24

less accurate as a measure of concentration

Question 25

Which statement is true?

Answer 25

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