Home / Questions / An industry is composed of 20 firms, all with equal sales. The eight-firm concentration ra
An industry is composed of 20 firms, all with equal sales. The eight-firm concentration ratio in this industry is
a.0.40.
b.0.32.
c.2.00.
d.This cannot be determined from the information given.
42.Concentration ratios are not perfect guides to industry concentration, because they
a.do not take into account foreign competition and competition from substitute goods.
b.take into account foreign competition and competition from substitute goods.
c.do not take into account advertising expenditures.
d.do not take into account tax payments.
43.If you were to rank the four market structures in terms of lowest concentration ratio to highest concentration ratio, which of the following rankings would be correct?
a.oligopoly, monopoly, perfect competition, monopolistic competition
b.monopoly, oligopoly, monopolistic competition, perfect competition
c.perfect competition, monopolistic competition, oligopoly, monopoly
d.monopolistic competition, perfect competition, oligopoly, monopoly
e.monopolistic competition, oligopoly, perfect competition, monopoly
44.The concentration ratio provides a measure of the extent to which an industry
a.produces a useful product.
b.is dominated by a small number of firms.
c.is earning economic profits.
d.is earning accounting profits.
45.In the real-world, which of these industries is most clearly an oligopoly?
a.wheat
b.electricity generation
c.cereal breakfast foods
d.restaurants
46.The key behavioral assumption of the cartel theory is that oligopolists in an industry
a.try to maximize sales instead of profits.
b.act as if they are perfect competitors.
c.act in a manner consistent with there being only one firm in the industry.
d.try to create a demand for their products by way of advertising.
e.none of the above
47.A cartel is an organization of firms
a.dominated by one firm, which is usually referred to as the price leader.
b.that attempts to increase total (or industry) demand for their product.
c.that reduces output and increases price in an effort to increase joint profits.
d.that deliberately attempts to disrupt the market for political reasons.
48.If the firms of an industry form a cartel, their goal is to
a.collectively increase output and thereby earn higher profits.
b.cut back on output and raise the price of their product to earn higher profits.
c.maintain a constant level of output, but increase price to earn higher profits.
d.maintain a constant price level, but increase output to earn higher profits.
49.The major economic objective of cartels is to
a.impose their political will on others.
b.restrict output, push up price, and increase profits.
c.reduce costs.
d.develop new ways of doing things.
e.b and d
50.Which of the following statements is false?
a.On occasion, governments have helped to create and maintain cartels.
b.Once a cartel agreement has been made, cartel members have an incentive to cheat on the agreement.
c.A single cartel member may be better off with a cartel agreement that all members abide by (including itself) than with no cartel agreement at all.
d.Cartels are easy to form and to maintain.
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