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Free Questions › CFA › Economics
Free CFA Economics Practice Questions & Answers
2,050 exam-style Economics questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.
100% free · No login to startQuestion 1321
Innovation in oligopoly:
Select an option first.
Correct answer: B — May help maintain leadership
Question 1322
An oligopoly with a credible threat of entry:
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Correct answer: B — Cannot charge high prices
Question 1323
A credible threat of entry exists when:
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Correct answer: C — Products can be easily replicated
Question 1324
When economies of scale are limited, oligopolists:
Select an option first.
Correct answer: B — Face stronger entry threats
Question 1325
Brand recognition reduces threat of entry because:
Select an option first.
Correct answer: B — It creates customer loyalty
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Question 1326
Oligopoly appearance may differ from behavior because:
Select an option first.
Correct answer: B — Threat of entry forces competitive pricing
Question 1327
A normal oligopoly typically has:
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Correct answer: B — Differentiated goods and pricing power
Question 1328
If oligopolists produce easily replicable goods:
Select an option first.
Correct answer: B — They face strong competitive pressure
Question 1329
High margins in oligopoly:
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Correct answer: A — Attract new entrants
Question 1330
In oligopoly, the optimal strategy depends on:
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Correct answer: B — Rivals’ actions
Question 1331
In oligopoly, MR and price depend on:
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Correct answer: B — Both the firm’s and rivals’ decisions
Question 1332
Oligopolists avoid price wars because:
Select an option first.
Correct answer: B — They reduce total revenue for all firms
Question 1333
Long-run equilibrium in oligopoly requires:
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Correct answer: B — Considering rivals’ reactions
Question 1334
Oligopolists may behave competitively when:
Select an option first.
Correct answer: B — Threat of entry is credible
Question 1335
Monopoly markets are considered inefficient primarily because:
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Correct answer: B — Producers restrict output to raise prices
Question 1336
Competition law exists mainly to:
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Correct answer: B — Regulate the degree of competition in industries
Question 1337
Measuring market power in the real world is difficult because:
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Correct answer: C — Market power is often unclear and context-dependent
Question 1338
The Archer Daniels Midland case involved:
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Correct answer: B — A price-fixing conspiracy involving lysine
Question 1339
The AT&T antitrust case in the 1970s resulted in:
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Correct answer: B — AT&T being broken up into smaller companies
Question 1340
The European Commission denied the GE–Honeywell merger because:
Select an option first.
Correct answer: B — It would create excessive market concentration
Question 1341
A financial analyst evaluating a merger should consider:
Select an option first.
Correct answer: B — Whether competition law may block the merger
Question 1342
The theoretical way to measure market power is to estimate:
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Correct answer: B — Demand and supply elasticity
Question 1343
If demand is very elastic, the market is likely:
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Correct answer: A — Close to perfect competition
Question 1344
The econometric challenge in estimating elasticity is:
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Correct answer: B — Endogeneity of price and quantity
Question 1345
Endogeneity arises because:
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Correct answer: C — Price and quantity are jointly determined
Question 1346
To estimate elasticity properly, economists need:
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Correct answer: B — A two-equation model for supply and demand
Question 1347
A drawback of time-series elasticity estimation is:
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Correct answer: B — Market structure may change over time
Question 1348
A drawback of cross-sectional regression is:
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Correct answer: B — It requires extensive data collection
Question 1349
Different specifications of explanatory variables in regression:
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Correct answer: B — Can dramatically change elasticity estimates
Question 1350
The concentration ratio measures:
Select an option first.
Correct answer: B — Sum of market shares of the largest N firms
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