The key characteristic of oligopoly markets is interdependence among firms. This means that:
a. the demand curve faced by each firm is perfectly elastic.
b. each firm produces a product identical to its rivals.
c. each firm must consider how its decisions will affect its competitors.
d. firms will be able to earn above-normal profits in the long run.
QUESTION 2In which of these situations is vertical integration most likely?
a. A cargo distribution company's vertical integration into storage.
b. An airline's vertical integration into aircraft design and manufacture.
c. A coal miner's vertical integration into thermal power generation.
d. An airline's vertical integration into food production.
QUESTION 3Trade is promoted by
A) having a self-interested population.
B) proper incentives.
C) the presence of property rights.
D) all of these choices.
QUESTION 4Which of the following is not a common characteristic of oligopolistic firms?
a. high barriers to entry
b. mutual interdependence
c. a large number of sellers
d. nonprice competition
QUESTION 5Assume that James owns a wheat farm that produces an annual crop of 500 bushels. His only choice is to store it in a nearby grain elevator owned by Martin, whose facility will be empty unless James is using it. Martin contracts with James to provide storage at 5 per bushel every month. In this example James and Martin are in:
a. probabilistic positions.
b. asymptotic positions.
c. hypothetical positions.
d. symmetric positions.
QUESTION 6Property rights
A) only need to be found in wealthy segments of the population.
B) need to be universal.
C) do not promote incentives.
D) do not promote efficiency
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