Solved by verified expert :21)
The threat of punishment in a repeated game tends to
A)
reduce the incentive to break a pricing agreement.
B)
anger the other firms, resulting in a price war.
C)
maintain prices at the duopoly price level.
D)
deter entry.
22)
Explicit price fixing
A)
is illegal in the U.S. and in the European Union.
B)
is illegal only in the United States.
C)
is illegal only if the firms engage in punishment strategies.
D)
has not occurred in recent years.
23)
When firms discuss pricing strategies with each other
A)
it is a violation of antitrust laws.
B)
it is not a violation of antitrust laws because laws cannot restrict free
speech.
C)
it is a violation of antitrust laws only if the discussion includes punishment
strategies.
D)
it is a violation of antitrust laws only if some firms in the industry are
excluded from the
24)
Suppose there are two firms maintaining a cartel agreement. If one firm
suddenly drops its price, the other firm could interpret this as signaling
A)
a change in market conditions.
B)
limit pricing.
C)
cartel pricing.
D)
cooperative pricing.
25)
Oligopolists that follow the price leadership model
A)
are engaging in implicit, but not explicit, price fixing.
B)
are violating antitrust laws.
C)
have chosen to follow the grim-trigger strategy.
D)
will be unable to overcome the duopolists’ dilemma because firms will have an
incentive to underprice the firm that is the price leader.
26)
Relative to explicit price fixing, with implicit price fixing
A)
firms will find it more difficult to figure out why the price leader has set
the price that it has.
B)
the reasons for the price leader’s pricing strategy will be more clear and less
ambiguous.
C)
firms face a higher risk of prosecution for antitrust violations.
D)
consumers will pay higher prices.
27)
Suppose there are two firms maintaining a cartel agreement. If one firm
suddenly drops its price, the other firm could interpret this as signaling
A)
under-pricing.
B)
limit pricing.
C)
cartel pricing.
D)
cooperative pricing.
28)
If a firm perceived that the other firm in an implicit pricing agreement
dropped its price in response to a change in market conditions, then its most
likely response would be to
A)
match the other firm’s price.
B)
engage in a price war.
C)
raise price to punish the other firm.
D)
keep its price the same.
29)
If a firm perceived that the other firm in an implicit pricing agreement
dropped its price in an attempt to gain market share then its most likely
response would be to
A)
merge with the other firm.
B)
engage in a price war.
C)
raise price to punish the other firm.
D)
keep its price the same.
Recall the Application about low-price guarantees
and the prices of tires to answer the following question(s).
30)
Recall the Application. A study of the retail tire market suggests that prices
are ________ in markets where firms offer low-price guarantees.
A)
generally higher
B)
generally lower
C)
always lower
D)
generally unchanged
