46. Over the past several decades, U.S. firms have faced more competition from o

Question

46. Over the past several decades, U.S. firms have faced more competition from overseas firms. Does this have any impact on the market power of U.S. oligopoly firms?
A) No, because the United States government has effectively blocked all imports that might compete with domestic firms in oligopoly industries.
B) Yes, competition from overseas firms can substantially limit domestic firms' market power.
C) There is no way to know.
D) No, because domestic firms in oligopoly markets are always so dominant that overseas producers have little or no impact on those markets.

47. Which of the following does NOT help explain why oligopolies exist?
A) Barriers to entry
B) Economies of scale
C) Product homogeneity
D) Mergers

48. The joining of firms that are producing or selling a similar product is known as
A) a vertical merger.
B) economies to scale.
C) a conglomerate merger.
D) a horizontal merger.

49. The dominant strategy allows a firm to
A) obtain the highest benefit, regardless of its rivals' actions.
B) transform a negative-sum game into a positive-sum game.
C) escape from a Prisoners' Dilemma situation.
D) transform a zero-sum game into a positive-sum game.

50. Suppose an industry has total sales of $25 million per year. The two largest firms have sales of $6 million each, the third largest firm has sales of $2 million, and the fourth largest firm has sales of $1 million. The four-firm concentration ratio for this industry is
A) 25 percent.
B) 50 percent.
C) 60 percent.
D) 36 percent.

Explanation / Answer

B) Yes, competition from overseas firms can substantially limit domestic firms' market power.
It depends on the type of industry we are speaking about, but impact has surely been there.

B) Economies of scale

D) a horizontal merger.

A) obtain the highest benefit, regardless of its rivals' actions.


C) 60 percent.

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