1			Which of the following types of oligopoly competition would you expect to result in the highest market output, other things equal?
			A)	Stackelberg.
			B)	Betrand.
			C)	Cournot.
			D)	Collusion.

Use the following information to answer questions 2 and 3:
Two symmetric firms in a Bertrand duopoly face the inverse market demand P = 80 - 5Q, and the marginal costs of the two firms are $10. Also, fixed costs are zero for both firms.

2			What will the market price be?
			A)	$10.
			B)	$15.
			C)	$5.
			D)	$8.
3			How much output will each firm produce?
			A)	15.
			B)	14.
			C)	7.
			D)	30.
4			Which of the following is not a feature of Sweezy oligopoly?
			A)	There are a few firms in the market serving many consumers.
			B)	The firms produce homogeneous products.
			C)	Each firm believes that rivals will cut their prices in response to a price reduction, but will not raise their prices in response to a price increase.
			D)	Significant barriers to entry exist.
5			Which of the following is not one of the characteristics of a contestable market?
			A)	All firms have access to the same productive technology.
			B)	Consumers react quickly to a price change.
			C)	Existing firms can not respond quickly to entry by lowering their price.
			D)	There are significant sunk costs.

Use the following information to answer questions 6 and 7:
Two identical firms compete as a Cournot duopoly. The inverse market demand they face is P = 80 - 4Q. The cost function for each firm is C(Q) = 8Q.

6			The total industry output will be
			A)	6.
			B)	12.
			C)	32.
			D)	48.
7			Each firm will earn equilibrium profits of
			A)	$48.
			B)	$240.
			C)	$192.
			D)	$144.
8			Suppose that two firms competing in Cournot fashion agree to produce the collusive output. Given that the two firms both agree to the collusive output, one of the firms can increase their profits by cheating and
			A)	producing less output.
			B)	producing more output.
			C)	raising prices.
			D)	None of the above.

Use the following information to answer questions 9 and 10:
Two firms compete as a Stackelberg duopoly. The inverse market demand function they face is P = 62 – 4.5Q. The cost function for each firm is C(Q) = 8Q.

9			The outputs of the two firms are
			A)	QL = 8; QF = 4.
			B)	QL = 9; QF = 6.
			C)	QL = 6; QF = 3.
			D)	QL = 4; QF = 2.
10			The market price charged will be
			A)	$21.5.
			B)	$8.
			C)	$35.
			D)	$48.5.
11			Which of the following is incorrect?
			A)	In Cournot oligopoly each firm believes that their rivals will hold their output constant if it changes its output.
			B)	In Betrand oligopoly firms produce an identical product at a constant marginal cost and engage in price competition.
			C)	In Sweezy oligopoly each firm believes rivals will cut their prices in response to a price reduction, but will not raise prices in response to price increases.
			D)	In oligopoly a change in marginal cost never has an effect on output or price.
12			If a new entrant wants to leave a contestable market,
			A)	all, or nearly all, the invested capital values can be recovered.
			B)	another firm will always want to enter to take its place.
			C)	it will have to accept large losses in its capital investment, so it is unlikely to exit.
			D)	its leaving will be contested by government regulators that seek to limit exit.
13			A basic characteristic of the firms in an oligopoly market is that they are
			A)	large relative to the total market and independent in firm behavior.
			B)	small relative to the total market and independent in firm behavior.
			C)	large relative to the total market and interdependent in firm behavior.
			D)	small relative to the total market and interdependent in firm behavior.
14			Which of the following are not price setting oligopoly models?
			A)	Stackelberg and Cournot.
			B)	Cournot and Bertrand.
			C)	Bertrand and Sweezy.
			D)	Stackelberg and Sweezy.
15			A market is initially serviced by a Bertrand duopoly, where each firm has a constant marginal cost of $10. If a new firm enters the market, what conclusion can we draw about the price charged in the market, should the three firms co-exist after the entry?
			A)	The market price after the entry will be above $10.
			B)	The market price after the entry will be below $10.
			C)	The market price after the entry will be equal to $10.
			D)	Unable to tell given the information provided.