Timedora
Free Practice Quiz Question List

4 Oligopoly and Strategic Competition Online Quiz Questions

Use this free practice quiz with 20 questions to review 4 Oligopoly and Strategic Competition, test your knowledge, and prepare for your next test or exam.

20 questions
01
Choose one
1 point

Which description best defines an oligopoly?

  1. A

    A market with many small firms and no barriers to entry

  2. B

    A market dominated by a small number of firms

  3. C

    A market in which one firm is legally required to set the price

  4. D

    A market where all firms produce identical quantities

02
Written response
1 point

What term describes the mutual dependence that arises when each firm's decisions are affected by what its rivals do?

03
Fill in the blank
1 point

A set of strategies in which every player is choosing a best response to the others, so no player can gain by changing strategy alone, is a .

04
Choose one
1 point

Which situation is an example of an entry barrier that can help preserve an oligopoly?

  1. A

    A large number of buyers

  2. B

    Frequent changes in consumer preferences

  3. C

    A patent that protects an established firm

  4. D

    A small difference between firms' advertising budgets

05
True or false
1 point

True or false: In the standard Cournot model, adding more identical firms moves the market outcome toward the competitive outcome.

  1. A

    True

  2. B

    False

06
Choose one
1 point

In the standard Stackelberg model, how are firms' quantity decisions timed?

  1. A

    Both firms choose prices simultaneously.

  2. B

    The leader chooses quantity first, and the follower observes and responds.

  3. C

    The follower chooses quantity first, and the leader observes and responds.

  4. D

    Both firms choose quantities simultaneously.

07
Written response
1 point

What is the term for a formal agreement among firms to coordinate output or prices to raise their joint profits?

08
Fill in the blank
1 point

In the Cournot model, a firm's best-response quantity for each possible quantity produced by its rivals is described by its .

09
Choose one
1 point

Under the kinked-demand idea, how are rivals assumed to respond to a firm's price change?

  1. A

    Rivals match price increases but ignore price cuts.

  2. B

    Rivals match both price increases and price cuts.

  3. C

    Rivals match price cuts but do not match price increases.

  4. D

    Rivals do not respond to any price change.

10
Choose all
1 point

In the Bertrand framework, select all of the following that can soften price competition and allow prices above marginal cost.

  1. A

    Product differentiation

  2. B

    Identical products, identical costs, and no capacity constraints

  3. C

    Capacity limits

  4. D

    Cost differences

11
True or false
1 point

True or false: When firms coordinate to raise joint profits, each firm has no incentive to secretly expand output or cut its price.

  1. A

    True

  2. B

    False

12
Choose all
1 point

Select all factors identified as affecting whether cooperation among repeatedly interacting firms can be sustained.

  1. A

    How often the firms interact

  2. B

    How quickly they can detect a deviation

  3. C

    Whether the firms have the same advertising slogan

  4. D

    How much the firms value future profits

13
Choose one
1 point

In the hypothetical two-firm payoff game, Firm A's profits are: if Firm A holds output down, it earns $1,000 when Firm B holds output down and $200 when Firm B expands; if Firm A expands, it earns $1,500 when Firm B holds output down and $400 when Firm B expands. Which strategy is Firm A's dominant strategy?

  1. A

    Hold output down

  2. B

    Expand output

  3. C

    Either strategy, because they give equal payoffs

  4. D

    The best strategy depends on whether Firm B holds output down

14
Open ended
1 point

Compare the Cournot, Bertrand, and Stackelberg models by stating what firms choose and when they choose it. For Bertrand, also state the key standard assumptions behind its price result.

15
Choose one
1 point

What does strategic interdependence mean in an oligopoly?

  1. A

    Each firm is too small to affect market outcomes, so it ignores rivals.

  2. B

    A firm’s decisions depend in part on what its rivals do.

  3. C

    Firms must always choose the same price.

  4. D

    Entry barriers prevent firms from making strategic choices.

16
True or false
1 point

In the kinked-demand model, rivals are assumed to match a firm’s price increases but not its price cuts.

  1. A

    True

  2. B

    False

17
Choose one
1 point

Two firms choose their outputs at the same time, each treating the other firm’s output as given. Which model best describes this competition?

  1. A

    Firms choose prices sequentially, with one firm observing the other’s price first.

  2. B

    Firms choose quantities sequentially, with the follower observing the leader’s quantity.

  3. C

    Firms choose quantities simultaneously, treating rivals’ quantities as given.

  4. D

    Firms coordinate prices through a formal agreement.

18
Written response
1 point

Under the standard two-firm Cournot assumptions, inverse demand is P=100−2QP=100-2Q and each firm’s constant marginal cost is 4040. What is each firm’s equilibrium quantity? Enter the quantity as a number.

19
Choose one
1 point

In the standard Bertrand model—with a homogeneous product, identical constant marginal costs, and no capacity constraints—what happens to equilibrium price?

  1. A

    Price is driven to marginal cost.

  2. B

    Price is always equal to the monopoly price.

  3. C

    Price is driven to zero regardless of marginal cost.

  4. D

    Price is set by the firm that chooses quantity first.

20
Written response
1 point

What game-theory term describes a strategy that gives a player the highest payoff, given the other players’ strategies? Enter the term.