Flashcards

Table of Contents
Lecture 1............................................................................................................................2
Lecture 2............................................................................................................................5
Lecture 3............................................................................................................................8
Lecture 4..........................................................................................................................10
Lecture 5..........................................................................................................................12
Lecture 6..........................................................................................................................15
Lecture 7..........................................................................................................................17
Lecture 8..........................................................................................................................19
Lecture 9..........................................................................................................................22
Lecture 10........................................................................................................................24
Lecture 11........................................................................................................................27
Lecture 12........................................................................................................................30
Lecture 1
Flashcard Set 1: Definition
 Q1: What is Industrial Organization?
 a) The study of weather patterns
 b) The analysis of consumer behavior
 c) The strategic behavior of firms and market structure
 d) The history of industrial revolutions

Flashcard Set 2: Real-World Considerations

 Q2: What does Industrial Organization add to the neoclassical model?
 a) Fictional elements for entertainment
 b) Real-world frictions like limited information, transaction costs, government
actions, and market barriers
 c) Economic forecasts
 d) Ancient economic philosophies
Flashcard Set 3: Label and Perspective
 Q3: What is another name for Industrial Organization?
 a) Microeconomics of Perfect Competition
 b) Macro-Management
 c) Economics of Perfect Harmony
 d) Economics of Imperfect Competition
Flashcard Set 4: Role in Policy
 Q4: Why is Industrial Organization important from a policy perspective?
 a) To predict stock market trends
 b) To promote efficient resource allocation for the benefit of undertakings
and consumers
 c) To analyze historical economic events
 d) To determine the cost of living
Flashcard Set 5: Theoretical Foundation
 Q5: What is the theoretical foundation of Industrial Organization?
 a) Ancient philosophy
 b) Behavioral economics
 c) Strategic management
 d) Neoclassical theory
Flashcard Set 6: Course Objective
 Q6: What is the objective of an Industrial Organization course?
 a) Predicting future market trends
 b) Understanding the relation between market structure, firm behavior, and
government policy under perfect competition
 c) Analyzing historical economic events
 d) Studying macroeconomic theory
Flashcard Set 7: Structure-Conduct-Performance (SCP) Paradigm
 Q7: What does the SCP paradigm analyze?
 a) Environmental changes
 b) The structure of consumer preferences
  c) The conduct and performance of firms and industries based on market
structure
 d) Historical economic trends
Flashcard Set 8: SCP Paradigm Observations
 Q8: According to the SCP paradigm, what influences the performance of a firm?
 a) Political ideology
 b) The structure of a market
 c) Market demand for consumer goods
 d) Technological advancements
Flashcard Set 9: Government Policy in SCP Paradigm
 Q9: How does government policy relate to the SCP paradigm?
 a) It has no impact on market dynamics
 b) It shapes market structure, conduct, and performance variables
 c) It determines consumer preferences
 d) It predicts future economic trends
Flashcard Set 10: Transition to New Industrial Organization
 Q10: How has Industrial Organization evolved from the SCP paradigm?
 a) By focusing on historical economic events
 b) By emphasizing market structure over conduct and performance
 c) By focusing more on conduct and performance aspects, considering firms
as active decision-makers
 d) By ignoring government policy
Flashcard Set 11: Neoclassical Theory and Market Structures
 Q11: What does neoclassical theory analyze regarding market structures?
 a) Ancient economic philosophies
 b) Different market structures, including perfect competition and monopoly
 c) Future economic trends
 d) Consumer preferences
Flashcard Set 12: Perfect Competition Characteristics
 Q12: What are the characteristics of perfect competition?
 a) Large number of buyers and sellers, free entry and exit, homogeneous
products, perfect information, and independent firm behavior
 b) Few buyers and sellers, high entry barriers, and differentiated products
 c) A single buyer and seller, perfect information, and independent firm
behavior
 d) Limited buyers and sellers, no entry barriers, and homogeneous products
Flashcard Set 13: Monopoly Characteristics
 Q13: What are the characteristics of a monopoly?
 a) Large number of buyers and sellers, free entry and exit, homogeneous
products, perfect information, and independent firm behavior
 b) Few buyers and sellers, high entry barriers, and differentiated products
 c) A single buyer and seller, perfect information, and independent firm
behavior
 d) Limited buyers and sellers, no entry barriers, and homogeneous products
Flashcard Set 14: Welfare Comparison
 Q14: How does welfare compare between perfect competition and monopoly?
 a) Perfect competition results in lower total welfare compared to a monopoly
  b) Both perfect competition and monopoly result in the same level of welfare
 c) Perfect competition results in higher total welfare compared to a monopoly
 d) Welfare is not influenced by market structure
Flashcard Set 15: Competition Act Purpose
 Q15: What is the purpose of the Danish Competition Act?
 a) To promote efficient resource allocation for the benefit of undertakings and
consumers
 b) To predict stock market trends
 c) To analyze historical economic events
 d) To determine the cost of living
Flashcard Set 16: Anti-Competitive Agreements
 Q16: What does the Danish Competition Act prohibit concerning agreements?
 a) Agreements that promote fair competition
 b) Agreements with the direct or indirect object or effect of restricting
competition
 c) Agreements that encourage market growth
 d) Agreements that enhance consumer choices
Flashcard Set 17: Abuse of Dominant Position
 Q17: What does the Danish Competition Act consider an abuse of a dominant
position?
 a) Providing benefits to consumers
 b) Imposing fair prices and trading conditions
 c) Applying dissimilar conditions and imposing supplementary obligations
 d) Promoting healthy competition
Flashcard Set 18: Merger Control
 Q18: How does the Danish Competition Act handle mergers?
 a) It has no regulations regarding mergers
 b) The Competition and Consumer Authority decides whether to approve or
prohibit mergers based on their impact on effective competition
 c) Mergers are automatically approved without review
 d) Mergers are prohibited without any assessment
Flashcard Set 19: Long-Run Average Cost
 Q19: What does the Long-Run Average Cost (LRAC) represent?
 a) The highest cost of producing one unit of output by varying all inputs in the
long run
 b) The average cost of producing one unit of output in the short run
 c) The lowest cost of producing one unit of output by varying all inputs in the
long run
 d) The total cost of producing all units of output in the short run
Flashcard Set 20: Economies of Scale in Practice
 Q20: What are some examples of economies of scale in practice?
 a) Cost increases with larger scale operations
 b) Cost savings from small-scale operations
 c) Cost savings from large-scale operations, learning economies, and various
internal and external factors
 d) Cost savings from ignoring technological advancements
Answers
A1: c) The strategic behavior of firms and market structure
A2: b) Real-world frictions like limited information, transaction costs, government actions,
and market barriers
A3: d) Economics of Imperfect Competition
A4: b) To promote efficient resource allocation for the benefit of undertakings and
consumers
A5: d) Neoclassical theory
A6: b) Understanding the relation between market structure, firm behavior, and government
policy under imperfect competition
A7: c) The conduct and performance of firms and industries based on market structure
A8: b) The structure of a market
A9: b) It shapes market structure, conduct, and performance variables
A10: c) By focusing more on conduct and performance aspects, considering firms as active
decision-makers
A11: b) Different market structures, including perfect competition and monopoly
A12: a) Large number of buyers and sellers, free entry and exit, homogeneous products,
perfect information, and independent firm behavior
A13: c) A single buyer and seller, perfect information, and independent firm behavior
A14: c) Perfect competition results in higher total welfare compared to a monopoly
A15: a) To promote efficient resource allocation for the benefit of undertakings and
consumers
A16: b) Agreements with the direct or indirect object or effect of restricting competition
A17: c) Applying dissimilar conditions and imposing supplementary obligations
A18: b) The Competition and Consumer Authority decides whether to approve or prohibit
mergers based on their impact on effective competition
A19: c) The lowest cost of producing one unit of output by varying all inputs in the long run
A20: c) Cost savings from large-scale operations, learning economies, and various internal
and external factors

Lecture 2
Flash Card 1 Question: What does the consultancy firm 'London Economics' estimate
regarding consumers buying products or services from cartel firms?
1. Consumers pay less
2. Consumers pay up to 50% too much
3. Consumers pay exactly the right amount
4. Consumers pay 25% more
Flash Card 2 Question: According to the text, what impact do cartels have on the speed of
innovation in the industry?
1. Increased innovation
2. No impact on innovation
3. Decreased innovation
4. Innovation remains constant
Flash Card 3 Question: What is Schumpeter's dynamic view of competition?
1. Innovation leads to abnormal profits
2. Innovation has no impact on competition
 3. Imitation follows innovation
4. Innovation results in market power decline
Flash Card 4 Question: What does Baumol's sales revenue maximization model focus on?
1. Maximizing profit
2. Maximizing sales revenue with no profit constraint
3. Maximizing sales revenue subject to a minimum profit constraint
4. Minimizing sales revenue
Flash Card 5 Question: According to Marris's theory of growth maximization, why do
managers strive for growth?
1. Growth leads to declining profitability
2. Growth enhances managerial perks
3. Growth is constrained by managerial preferences
4. Growth is limited by financial constraints
Flash Card 6 Question: According to Williamson's theory of managerial utility maximization,
what factors contribute to managerial utility?
1. Staff, perks, and discretionary profit
2. Profit maximization only
3. Sales revenue maximization
4. External market conditions
Flash Card 7 Question: What is the Bertrand model in oligopoly theory?
1. Price competition with no capacity constraint
2. Collusion with perfect information
3. Interdependence without competition
4. Independent action with collusion
Flash Card 8 Question: What is the Barometric Price Leadership model in oligopoly?
1. Dominant firm sets prices, and others follow
2. Competitive firms set prices based on market demand
3. Small firms collude on prices
4. Price leadership with perfect competition
Flash Card 9 Question: How does the text define collusion in economic terms?
1. Voluntary agreements between independent companies
2. Government-imposed market restrictions
3. Cooperative game theory
4. Competition between firms
Flash Card 10 Question: What are the motives for collusion/cartel formation mentioned in
the text?
1. Profit maximization, risk management, exchange of information, and unsatisfactory
performance
2. Price wars, advertising, and product differentiation
3. Innovation, technology advancement, and market expansion
4. Employee satisfaction, cost-cutting, and environmental sustainability
Flash Card 11 Question: How does the text describe the duration of cartels?
1. Endless
2. Finite with a final number of periods
3. Variable
4. Unpredictable
Flash Card 12 Question: What is the Prisoner's Dilemma, and why is it relevant to cartels?
 1. A psychological experiment
2. A game theory scenario where individual interests conflict with collective interests
3. A legal term
4. A type of cartel formation
Flash Card 13 Question: What is the Free Rider Problem in cartels?
1. A problem with bicycles
2. Members who benefit from the cartel without participating
3. A type of market transparency issue
4. A challenge in monitoring cartel members
Flash Card 14 Question: How does increased market transparency affect cartel stability?
1. Makes deviations from cartels more attractive
2. Reduces the expected gain from deviation
3. Increases uncertainty
4. Improves cartel stability
Flash Card 15 Question: What factors contribute to the stability of cartels according to the
text?
1. Buyer concentration
2. Number of firms
3. Non-price competition
4. All of the above
Flash Card 16 Question: What was the effect of increased market transparency in the Danish
Ready-mixed Concrete case?
1. Decreased prices
2. Increased price competition
3. Significant price increases
4. Improved cartel stability

Answers
Flash Card 1: 2. Consumers pay up to 50% too much
Flash Card 2: 3. Decreased innovation
Flash Card 3: 1. Innovation leads to abnormal profits
Flash Card 4: 3. Maximizing sales revenue subject to a minimum profit constraint
Flash Card 5: 2. Growth enhances managerial perks
Flash Card 6: 1. Staff, perks, and discretionary profit
Flash Card 7: 1. Price competition with no capacity constraint
Flash Card 8: 1. Dominant firm sets prices, and others follow
Flash Card 9: 1. Voluntary agreements between independent companies
Flash Card 10: 1. Profit maximization, risk management, exchange of information, and
unsatisfactory performance
Flash Card 11: 3. Variable
Flash Card 12: 2. A game theory scenario where individual interests conflict with collective
interests
Flash Card 13: 2. Members who benefit from the cartel without participating
Flash Card 14: 4. Improves cartel stability
Flash Card 15: 4. All of the above
Flash Card 16: 3. Significant price increases
Lecture 3
Flashcard 1:
Question: According to the consultancy firm 'London Economics,' how much more do
consumers pay for products or services from firms that are part of a cartel?
A) Approximately 50 percent more
B) The same as non-cartel firms
C) About 20 percent more
D) About 10 percent less

Flashcard 2:
Question: What is the primary socio-economic effect of cartels on consumers?
A) Higher innovation and variety
B) Reduced choices and limited availability
C) Lower prices and higher competition
D) Increased consumer surplus

Flashcard 3:
Question: In the context of cartel stability, what is the role of the Free Rider Problem?
A) It has no impact on the stability of cartels
B) It creates incentives for firms to deviate from cartel agreements
C) It ensures all firms in the industry become cartel participants
D) It encourages firms to join cartels for stability

Flashcard 4:
Question: What is one motive for collusion mentioned in the text?
A) Encouraging independent actions to overcome risks
B) Lowering prices through intense competition
C) Risk management and security enhancement
D) Maximizing consumer surplus

Flashcard 5:
Question: How does increased market transparency impact cartel stability?
A) It increases the expected gain from deviation, making cartels more stable
B) It reduces the ability to detect deviations, destabilizing cartels
C) It has no impact on cartel stability
D) It makes deviations from cartels more attractive

Flashcard 6:
Question: According to the text, what contributes to cartel stability?
A) Ineffective monitoring and detection of cheating
B) Large number of firms and low seller concentration
C) Conflicting goals of firms
D) Effective sanctions for non-compliance behavior

Flashcard 7:
Question: What are the structural characteristics that enhance collusive behavior?
A) Lack of transparency in the market
B) High fluctuations in demand
C) Different goals of firms
D) Small number of firms or high concentration

Flashcard 8:
Question: What are the welfare implications of cartel activity mentioned in the text?
A) No impact on welfare in society
B) Reduced consumer surplus, higher prices, and decreased innovation
C) Increased consumer surplus and industry stability
D) Efficient resource allocation and increased competition

Flashcard 9:
Question: According to the text, how does the Free Rider Problem impact cartel stability?
A) It has no impact on the stability of cartels
B) It ensures all firms in the industry become cartel participants
C) It encourages more firms to join the cartel, making it stable
D) It creates incentives for firms to deviate from cartel agreements

Flashcard 10:
Question: What is one factor contributing to the formation and stability of cartels according
to the text?
A) Small number of firms or high concentration and effective sanctions
B) Lack of information exchange and low buyer concentration
C) High entry barriers and intense competition
D) Conflicting goals of firms and ineffective monitoring

Answers
1. A) Approximately 50 percent more
2. B) Reduced choices and limited availability
3. B) It creates incentives for firms to deviate from cartel agreements
4. C) Risk management and security enhancement
5. D) It makes deviations from cartels more attractive
6. D) Effective sanctions for non-compliance behavior
7. D) Small number of firms or high concentration
8. B) Reduced consumer surplus, higher prices, and decreased innovation
9. C) It encourages more firms to join the cartel, making it stable
10. A) Small number of firms or high concentration and effective sanctions

Lecture 4
Flash Card 1:
Question: What is the primary goal of the Danish Competition Act?
a) Maximize market power
b) Minimize competition
c) Ensure market transparency
d) Prohibit anti-competitive agreements
Flash Card 2:
Question: Which sections of the Danish Competition Act correspond to the TFEU articles 101
and 102?
a) Sections 6 and 11
b) Sections 7 and 8
c) Sections 18 and 23a
d) Sections 1 and 2

Flash Card 3:
Question: Under what conditions are exemptions provided for anti-competitive agreements
in terms of size (irrelevance)?
a) Aggregate annual turnover of less than DKK 1 billion and an aggregate share of less than
10%
b) Aggregate annual turnover of less than DKK 150 million
c) Aggregate annual turnover of more than DKK 1 billion
d) No exemptions based on size

Flash Card 4:
Question: Which defense does not hold for cartels that fix the price or restrict the quantity
sold?
a) Size/irrelevance defense in §7 (1)
b) Efficiency defense in §8 (1)
c) Leniency defense in §23a
d) All defenses apply equally

Flash Card 5:
Question: What penalties may executive managers face for involvement in cartels according
to the Danish Competition Act?
a) Imprisonment for up to 6 years
b) Verbal warnings
c) Suspension from business activities
d) Community service

Flash Card 6:
Question: What is the effect of fines on cartel formation according to the theory?
a) Increases the likelihood of cartel formation
b) Has no impact on cartel formation
c) Decreases the likelihood of cartel formation
d) Encourages stable cartels

Flash Card 7:
Question: Under what circumstances can leniency rules be applied for cartel members?
a) When they voluntarily inform competition authorities of the existence and content of the
cartel
b) When they deny involvement in the cartel
c) When they challenge the fines in court
d) When they cooperate with other cartels

Flash Card 8:
Question: How does increased Producer Transparency (PT) affect cartel agreements?
a) Facilitates cartel formation
b) Makes it easier to detect violations of cartel rules
c) Has no impact on cartel stability
d) Increases the duration of cartels

Flash Card 9:
Question: What does Consumer Transparency (CT) imply for cartel formation?
a) Increases incentives for companies to break cartel agreements
b) Strengthens cartel stability
c) Reduces the likelihood of cartel formation
d) Has no impact on cartel dynamics

Flash Card 10:

Question: What is the dilemma for competition regulation regarding transparency?
a) Increasing consumer transparency without increasing producer transparency
b) Increasing producer transparency without increasing consumer transparency
c) Decreasing both consumer and producer transparency
d) Eliminating transparency altogether

Answers:
1. d) Prohibit anti-competitive agreements
2. a) Sections 6 and 11
3. a) Aggregate annual turnover of less than DKK 1 billion and an aggregate share of less
than 10%
4. a) Size/irrelevance defense in §7 (1)
5. a) Imprisonment for up to 6 years
6. c) Decreases the likelihood of cartel formation
7. a) When they voluntarily inform competition authorities of the existence and content
of the cartel
8. b) Makes it easier to detect violations of cartel rules
9. a) Increases incentives for companies to break cartel agreements
10. a) Increasing consumer transparency without increasing producer transparency

Lecture 5
Flashcard 1:
Question: What are the three fundamental elements that shape firms' competitive
environment?
A) Industry growth, product innovation, and market share
B) Number and size distribution of firms, market entry and exit barriers, degree of product
differentiation
C) Regulatory compliance, technological advancement, and customer satisfaction
D) Geographic dimension, spatial cross-price elasticities, and industry classification

Flashcard 2:
Question: How is seller concentration typically measured?
A) Through product differentiation and market entry barriers
B) Only through aggregate concentration
C) Both aggregate concentration and industry or market concentration
D) By analyzing the number and size distribution of firms

Flashcard 3:
Question: According to Hannah and Kay (1977), what criteria should a concentration
measure satisfy?
A) Criteria for technological advancement and market share stability
B) Criteria for entry barriers and product innovation
C) Concentration curve ranking, sales transfer, entry, and merger criteria
D) Criteria for regulatory compliance and industry growth

Flashcard 4:
Question: What is a drawback of the Concentration Ratio?
A) It is difficult to interpret
B) It only considers information from the concentration curve
C) Different values of n can yield significantly different concentration measures
D) It ignores the industry's regulatory environment

Flashcard 5:
Question: What does the Hirschman-Herfindahl index give more weight to?
A) Industry growth
B) Larger firms
C) Market entry barriers
D) Technological advancement

Flashcard 6:
Question: How is the Number Equivalent calculated?
A) By multiplying the concentration ratio by the industry's total size
B) By dividing the Hirschman-Herfindahl index by the concentration ratio
C) By solving for the hypothetical number of equal-sized firms based on the Hirschman-
Herfindahl index
D) By adding the market shares of all firms in the industry

Flashcard 7:
Question: According to the example given, which industry is the most concentrated based
on the HH index?
A) Industry 1
B) Industry 4
C) Industry 5
D) Industry 2
Flashcard 8:
Question: What is the cellophane fallacy argument related to?
A) The dispute over cellophane production in Du Pont
B) The Supreme Court's decision on industry classification
C) The profitability of raising prices in a monopoly
D) The geographic dimension of market definition

Flashcard 9:
Question: Why is the SSNIP Test conducted?
A) To measure industry growth
B) To define the relevant market for a product
C) To assess competition in international markets
D) To determine the number of equal-sized firms

Flashcard 10:
Question: What is a problem with concentration measures related to market definition?
A) The existence of multiproduct companies
B) The constant concentration index over time
C) Difficulty in assessing competition in domestic markets
D) Comparisons across markets being problematic

Flashcard 11:
Question: In industry classification, what do statistical offices use to group firms?
A) Market share
B) Product similarity and production processes
C) Geographic dimension
D) Industry growth

Flashcard 12:
Question: What does the SSNIP Test aim to determine?
A) The number of equal-sized firms
B) Whether a hypothetical monopolist can profitably raise prices
C) Industry classification criteria
D) The spatial cross-price elasticities

Flashcard 13:
Question: What did the Supreme Court's decision in the cellophane fallacy argument
support?
A) Du Pont's monopoly on cellophane production
B) The profitability of raising prices in a narrow market
C) The use of concentration measures in market definition
D) Du Pont's claim that cellophane was only a modest part of the market

Flashcard 14:
Question: What is a challenge in the interpretation of concentration measures?
A) The identity problem
B) The constant concentration index over time
C) The efficiency hypothesis
D) The neglect of spatial cross-price elasticities

Flashcard 15:
Question: According to the text, what is a potential issue with ownership structures in
concentration measures?
A) Horizontal structures being ignored
B) The constant concentration index
C) The existence of multiproduct companies
D) Vertical ownership structures underestimating market power

Answers
1. B
2. C
3. C
4. C
5. B
6. C
7. B
8. A
9. B
10. A
11. B
12. B
13. B
14. A
15. D

Lecture 6
Flash Card 1: Why do we need concentration measures?
A. Concentration measures reveal the level of market demand.
B. Concentration measures provide information about market structure, such as S-C-P.
C. Concentration measures determine the level of government regulation in an industry.
D. Concentration measures assess the number of firms entering a market.

Flash Card 2: Do the concentration measures point to very little or a lot of competition in a
particular market?
A. Concentration measures indicate low competition.
B. Concentration measures do not provide information about competition.
C. Concentration measures suggest high competition.
D. Concentration measures are irrelevant for assessing competition.

Flash Card 3: What indicators are used by the Danish Competition Authority (DCA)?
A. Profitability and market share.
B. Price levels and wage premium.
C. Productivity dispersion and return on investment.
D. Consumer satisfaction and subjective evaluation.

Flash Card 4: What does the Entry ratio measure?

A. The number of firms entering a market.
B. The share of new entrants as a percentage of the number of firms in the industry.
C. The entry barriers faced by new firms.
D. The level of government regulation in an industry.

Flash Card 5: How is the Concentration ratio (CR4) calculated?

A. It is the share of the largest four firms in total industry sales.
B. It is the sum of the market shares of the four largest firms.
C. It is the average market share of all firms in the industry.
D. It is the ratio of industry sales to total market sales.

Flash Card 6: What does CR4 > 80% imply about an industry?
A. The industry has high competition.
B. The industry is assigned 2 points.
C. The industry has low concentration.
D. The industry is facing significant competition problems.

Flash Card 7: What does the Entry ratio indicate for manufacturing industries?
A. Entry ratio below 3% indicates high competition.
B. Entry ratio below 3% is assigned 2 points.
C. Entry ratio below 3% suggests low entry barriers.
D. Entry ratio above 3% is desirable for manufacturing industries
.
Flash Card 8: What is Market share mobility?
A. The absolute changes in firms' market share between two periods.
B. The market share of a firm compared to the overall industry.
C. The percentage change in the industry's market share.
D. The average market share of all firms in an industry.

Flash Card 9: When is an industry assigned 2 points for Productivity dispersion?

A. When productivity dispersion is below average.
B. When productivity dispersion is more than 25% higher than average.
C. When productivity dispersion is equal to the average.
D. When productivity dispersion is below 25%.

Flash Card 10: What does a Wage premium in excess of 15% imply about an industry?
A. The industry has low competition.
B. The industry is assigned 1 point.
C. The industry has high entry barriers.
D. The industry is facing significant competition problems.

Flash Card 11: When is an industry assigned 2 points for Return on investment?
A. When return on investment is below 50%.
B. When return on investment is equal to the average.
C. When return on investment is more than 50% higher than the average.
D. When return on investment is negative.

Flash Card 12: What does a Price index more than 3% above the average imply about an
industry?
A. The industry has low competition.
B. The industry is assigned 3 points.
C. The industry has low market share mobility.
D. The industry has a low Entry ratio.

Flash Card 13: Why is Public regulation of the industry considered a determinant of
concentration?
A. Public regulation increases competition.
B. Regulated industries are assigned 2 points.
C. Public regulation weakens competition.
D. Public regulation is unrelated to concentration.

Flash Card 14: How is the Lerner index defined?

A. The difference between price and marginal cost.
B. The sum of price and marginal cost.
C. The ratio of price to marginal cost.
D. The absolute value of price elasticity of demand.

Flash Card 15: What does a large value of Lerner index indicate about a market?
A. High concentration and low competition.
B. Low concentration and high competition.
C. Perfect competition.
D. No relationship with market structure.

Answers
1. B
2. C
3. C
4. B
5. A
6. D
7. B
8. A
9. B
10. B
11. C
12. B
13. C
14. A
 15. A

Lecture 7
Flashcard 1: What is the purpose of studying entry barriers from a social perspective?
a) To maximize profits for incumbent firms
b) To achieve a monopoly in the market
c) To optimize resource allocation in society
d) To eliminate competition

Flashcard 2: According to Bain (1956), how does he define entry barriers?

a) Conditions that allow firms to earn abnormal profits without attracting new competitors
b) Conditions that encourage new firms to enter the market
c) Conditions that reduce profits for incumbent firms
d) Conditions that promote fair competition

Flashcard 3: What is the primary focus of today's lecture on entry barriers?

a) Internal part of SWOT analysis
b) Opportunities and Threats through ENTRY of competitors
c) Product differentiation strategies
d) Porter's Five Forces model

Flashcard 4: What are the classic entry barriers mentioned in the lecture?
a) Switching costs, network externalities, brand proliferation
b) Economies of scale, absolute cost advantages, product differentiation
c) Patents, legal environment, geography
d) Entry of new firms, exit of firms, GDP growth

Flashcard 5: In the context of entry barriers, what does "Economies of Scale" refer to?
a) The cost advantage experienced by incumbent firms due to their size
b) The advantage of being the first mover in the market
c) The ease of switching between different suppliers
d) The legal protection of a firm's products

Flashcard 6: According to Bain (1956), what is one of the classic entry barriers?
a) Limit pricing
b) Economies of scale
c) Predatory pricing
d) Switching costs

Flashcard 7: What does the term "Limit Pricing" mean?

a) Setting prices just high enough to attract potential competitors
b) Setting prices low enough to deter potential competitors
c) Setting prices based on competitors' prices
d) Setting prices at the average cost

Flashcard 8: Which pricing strategy is a form of low-price strategy used to intimidate

potential competitors away?
a) Predatory pricing
b) Limit pricing
c) Competitive pricing
d) Monopoly pricing

Flashcard 9: What does "Predatory Pricing" involve?

a) Setting prices above the average variable costs
b) Setting prices lower than average variable costs to squeeze competitors out of the market
c) Setting prices based on competitors' prices
d) Setting prices at the average cost

Flashcard 10: How is market dominance defined in practice according to the Danish
Competition Report?
a) Companies with a market share of 100%
b) Companies with a market share above 40%
c) Companies with a market share of 25-40%
d) All of the above

Flashcard 11: What are some examples of strategic entry barriers mentioned in the lecture?
a) Economies of scale, absolute cost advantages, product differentiation
b) Switching costs, network externalities, brand proliferation
c) Limit pricing, predatory pricing
d) Legal restrictions, geographical barriers, sunk cost investments

Flashcard 12: What is the primary focus of studying entry barriers from a firm's perspective?
a) To maximize profits for incumbent firms
b) To achieve a monopoly in the market
c) To prevent new entrants from entering the market
d) To promote fair competition

Flashcard 13: What does the term "Switching Costs" refer to?
a) The cost of changing suppliers or brands
b) The cost of production for new entrants
c) The cost of legal restrictions
d) The cost of advertising

Flashcard 14: How can product differentiation act as an entry barrier?

a) By reducing costs for new entrants
b) By increasing competition in the market
c) By creating loyalty to existing products and imposing high sunk costs for new businesses
d) By eliminating economies of scale

Flashcard 15: According to the lecture, why is studying entry barriers important for firms?
a) To eliminate competition
b) To maximize short-term profits
c) To understand how to keep potential competitors out of the market
d) To achieve a monopoly in the market
Answers
1. c
2. a
3. b
4. b
5. a
6. b
7. b
8. b
9. b
10. d
11. c
12. c
13. a
14. c
15. c

Lecture 8
Flashcard 1: Strategic Entry Barriers
Question: What is the key idea behind signalling commitment as a strategic entry barrier,
according to Dixit (1982)?
A) By forming alliances with potential entrants
B) By lowering prices to attract customers
C) By engaging in predatory pricing strategies
D) By making substantial sunk investments

Flashcard 2: Sequential Entry Game

Question: In Dixit's sequential entry game, what does the incumbent do in the "commit"
strategy?
A) Incumbent invests in overcapacity, and the cost of this investment is sunk.
B) Incumbent does not invest in overcapacity, hence no sunk investment.
C) Incumbent focuses on lowering prices aggressively.
D) Incumbent forms alliances with potential entrants.

Flashcard 3: Best Strategy for Entrant in Scenario 1

Question: According to the sequential entry game analysis, what is the best strategy for the
entrant under scenario 1?
A) Enter
B) Share
C) Stay out
D) Fight

Flashcard 4: Contestable Markets Constraint

Question: In contestable markets, what is the primary constraint on the market power of
incumbents?
A) Economies of scale
B) Potential entry
C) Product differentiation
D) Legal environment

Flashcard 5: Determinants of Entry - Orr's Model

Question: According to Orr's (1974) model on determinants of entry, what is the relationship
between the number of entrants (E) and the industry's past growth (Q)?
A) Positive
B) Negative
C) No significant relationship
D) Inverse quadratic relationship

Flashcard 6: Tobin's Q Measurement

Question: What does Tobin's Q measure in the context of measuring firm performance?
A) Profitability
B) Market value relative to book value
C) Price cost margin
D) Accounting rate of profit

Flashcard 7: Efficiency Hypothesis Correlation

Question: In the context of the efficiency hypothesis, what does a positive correlation
between firm size and profitability imply?
A) Evidence for market power
B) Evidence for collusion
C) Evidence for efficiency
D) Evidence for predatory pricing

Flashcard 8: Critique of SCP Paradigm

Question: What is the main critique of the SCP paradigm, according to the Chicago School in
the 1970s?
A) Lack of data availability
B) Lack of theoretical foundation
C) Lack of empirical evidence
D) Lack of consideration for efficiency hypothesis

Flashcard 9: Demsetz Critique Emphasis

Question: What did the Demsetz critique (1973/74) emphasize regarding the correlation
between concentration and profitability?
A) Positive correlation indicates collusion
B) Positive correlation indicates efficiency
C) Negative correlation indicates collusion
D) Negative correlation indicates efficiency

Flashcard 10: Poul Geroski's Survey

Question: According to Poul Geroski's survey, what tends to happen when new brands enter
the market?
A) Increased collusion
B) Reduced competition
C) Stimulated innovation
D) Higher market concentration

Flashcard 11: Focus of "New IO Literature"

Question: What is the primary focus of the "New IO literature" that emerged after the
critique of the SCP paradigm?
A) Industry-level analysis
B) Firm-level analysis
C) Market power analysis
D) Collusion analysis

Flashcard 12: Market Power Constraint in Contestable Markets

Question: In contestable markets, what is the primary constraint on the market power of
incumbents?
A) Economies of scale
B) Entry barriers
C) Legal environment
D) Product differentiation

Flashcard 13: Critique of Contestable Markets Theory

Question: What is one of the criticisms of the contestable markets theory?
A) Lack of empirical evidence
B) Overemphasis on collusion
C) Ignoring sunk costs
D) Ignoring economies of scale

Flashcard 14: Hit and Run Entry Assumptions

Question: What are the assumptions for hit-and-run entry in contestable markets?
A) Potential entrant can identify customers at lower prices, and entrant has time to sell
before incumbent reacts.
B) Incumbent has a first-mover advantage.
C) Entrant covers fixed and variable costs at quoted price.
D) Incumbent uses predatory pricing.

Flashcard 15: Stylized Facts on Entry

Question: According to Poul Geroski's survey, which statement about entry is consistent with
the stylized facts?
A) Entry rates are low, favoring incumbents.
B) Small/Young entrants are more likely to survive than Large/mature entrants.
C) Entry by new firms is less frequent than entry by existing firms via diversification.
D) Entry rates are high, stimulating innovation.

Answers:
 1. D) By making substantial sunk investments
2. A) Incumbent invests in overcapacity, and the cost of this investment is sunk.
3. C) Stay out
4. B) Potential entry
5. C) No significant relationship
6. B) Market value relative to book value
7. C) Evidence for efficiency
8. C) Lack of empirical evidence
9. B) Positive correlation indicates efficiency
10. C) Stimulated innovation
11. B) Firm-level analysis
12. B) Entry barriers
13. A) Lack of empirical evidence
14. A) Potential entrant can identify customers at lower prices, and entrant has time to
sell before incumbent reacts.
15. D) Entry rates are high, stimulating innovation.

Lecture 9
1. Hubris Hypothesis suggests that managers tend to over-estimate the value of the
target firm during mergers. What does this lead to?
 A) Over-estimation of the value of the target firm
 B) Under-estimation of the value of the target firm
 C) Accurate estimation of the value of the target firm
 D) No impact on the estimation of the value of the target firm
2. Why might firms engage in mergers as a response to macroeconomic conditions?
 A) Vertical integration
 B) Risk diversification
 C) Cost savings
 D) Market power
3. In the context of merger control, what might competition authorities require as a
remedy for anti-competitive effects?
 A) Price regulation
 B) Tax incentives
 C) Divestiture of certain assets
 D) Employee bonuses
4. What is the purpose of using event studies in the context of mergers?
 A) Analyzing market share changes
 B) Comparing stock prices before and after merger announcements
 C) Evaluating managerial discretion
 D) Assessing macroeconomic conditions
5. Under what conditions might a merger be approved without any remedies?
 A) If it results in job losses
 B) If it leads to vertical integration
 C) If it does not significantly impede effective competition
 D) If it benefits only the shareholders
 6. What is the primary synergy related to coordination of joint operations in a
merger?
 A) Economies of scale
 B) Economies of scope
 C) Improved interoperability of products
 D) Managerial discretion
7. Which hypothesis refers to the disciplining factor posed by the threat of acquisition
in the financial markets?
 A) Cost savings hypothesis
 B) Rationalization hypothesis
 C) Market power hypothesis
 D) The market for corporate control
8. What synergy is related to the coordination and elimination of disputes between
rivals in a merger?
 A) Economies of scale
 B) Rationalization (Economies of Scope)
 C) Improved interoperability of products
 D) Managerial discretion
9. In the context of mergers, what is the term for achieving cost savings and efficiency
by combining complementary resources and capabilities?
 A) Market power
 B) Rationalization (Economies of Scope)
 C) Vertical integration
 D) Hubris hypothesis
10. What profit-maximizing motive for mergers involves gaining the ability to charge
higher prices or sell a greater quantity of output without losing customers?
 A) Market power
 B) Rationalization (Economies of Scope)
 C) Hubris hypothesis
 D) Managerial discretion

Answers
1. a
2. b
3. a
4. d
5. c
6. d
7. a
8. a
9. b
10. b

Lecture 10
Flash Card 1: Strategic Alliances
 What does Gomes-Casseres (2011) define as an alliance?
  A. A legal contract between firms
 B. A marketing strategy for firms
 C. An organizational structure to govern an incomplete contract between
separate firms
 D. A financial agreement between firms
Flash Card 2: Strategic Alliances in Container Line Shipping
 What was the fate of the P3 alliance in Container Line Shipping?
 A. Approved by Chinese competition authorities
 B. Rejected by Chinese competition authorities
 C. Formed successfully with global approval
 D. Not mentioned in the text
Flash Card 3: Alliances and Synergies
 What are the three synergies of alliances mentioned by LWG?
 A. Modular synergies, contractual synergies, reciprocal synergies
 B. Sequential synergies, technological synergies, strategic synergies
 C. Modular synergies, sequential synergies, reciprocal synergies
 D. Operational synergies, financial synergies, cultural synergies
Flash Card 4: Vertical Integration - Definitions
 What does vertical integration involve according to the lecture?
 A. Owning only the production of inputs
 B. Owning only the production units that sell the company's output
 C. Owning the production of inputs or production units that use, distribute,
and sell the company's output
 D. Owning the distribution network of the company
Flash Card 5: Vertical Integration: Motives
 What is one of the motives for vertical integration mentioned in the lecture?
 A. Maximizing market share
 B. Reducing transaction costs through mergers
 C. Increasing complexity for competitors
 D. Focusing solely on profit maximization
Flash Card 6: What is Double Marginalization?
 What occurs in double marginalization?
 A. Monopolists reduce prices for efficiency
 B. Monopolists set competitive prices
 C. Monopolists set prices leading to inefficiencies
 D. Monopolists avoid mark-ups
Flash Card 7: Forward Integration: Input Substitution
 How does forward integration relate to input substitution?
 A. It does not relate to input substitution
 B. It encourages outsourcing of inputs
 C. It allows obtaining inputs at marginal cost, potentially leading to cost
savings
 D. It leads to higher input costs
Flash Card 8: Motives: Market Power with Forward Integration
 How does forward integration contribute to market power?
 A. By reducing market share
 B. By facilitating price discrimination
  C. By decreasing overall production
 D. By avoiding competition
Flash Card 9: Vertical Integration: Cost-Saving Motives
 According to the lecture, what does the transaction cost theory suggest about
vertical integration?
 A. It increases transaction costs
 B. It has no impact on transaction costs
 C. It saves costs by avoiding costly negotiations and monitoring the market
 D. It is irrelevant to transaction costs
Flash Card 10: Uncertainty as Motive for Vertical Integration
 Why might a firm choose vertical integration in the face of uncertainty?
 A. To increase uncertainty
 B. To diversify its portfolio
 C. To reduce uncertainty regarding input quality, business cycle conditions,
and customers' efficiency
 D. To ignore uncertainty
Flash Card 11: Cost-Saving Motives for Vertical Integration - Assured Supply
 How does vertical integration contribute to assured supply?
 A. By increasing input shortages
 B. By decreasing supply chain control
 C. By outsourcing production
 D. By purchasing suppliers to ensure a secure and continuous supply of inputs
Flash Card 12: Cost-Saving Motives for Vertical Integration - Asset Specificity
 What is asset specificity, and how does it relate to vertical integration?
 A. Asset specificity is irrelevant to vertical integration
 B. Asset specificity is about general investments
 C. Asset specificity occurs when firms are interdependent due to investments
in specific assets, and vertical integration can optimize output and increase
profits
 D. Asset specificity is a term for financial investments
Flash Card 13: Vertical Disintegration
 What does vertical disintegration involve?
 A. Assessing a company's ability to manage finances
 B. Assessing a company's marketing strategies
 C. Assessing a company's ability to manage its supply chain effectively
 D. Ignoring a company's supply chain management
Flash Card 14: Mergers and Acquisitions: Summary
 How do vertical mergers impact the market, according to the lecture?
 A. They significantly impact the market
 B. They affect the market less compared to horizontal and conglomerate
mergers
 C. They have no impact on the market
 D. They lead to market chaos
Flash Card 15: Transaction Cost Theory
 What does the transaction cost theory suggest about market transactions?
 A. They are always the better option
 B. They are irrelevant to the theory
  C. They may incur costs associated with monitoring, negotiation, and
implementing contractual obligations
 D. They are risk-free

Answers
Flash Card 1: Strategic Alliances
 Correct Answer: C. An organizational structure to govern an incomplete contract
between separate firms, in which each firm has limited control.
Flash Card 2: Strategic Alliances in Container Line Shipping
 Correct Answer: B. Rejected by Chinese competition authorities.
Flash Card 3: Alliances and Synergies
 Correct Answer: C. Modular synergies, sequential synergies, reciprocal synergies.
Flash Card 4: Vertical Integration - Definitions
 Correct Answer: C. Owning the production of inputs or production units that use,
distribute, and sell the company's output.
Flash Card 5: Vertical Integration: Motives
 Correct Answer: B. Reducing transaction costs through mergers.
Flash Card 6: What is Double Marginalization?
 Correct Answer: C. Monopolists set prices leading to inefficiencies.
Flash Card 7: Forward Integration: Input Substitution
 Correct Answer: C. It allows obtaining inputs at marginal cost, potentially leading to
cost savings.
Flash Card 8: Motives: Market Power with Forward Integration
 Correct Answer: B. By facilitating price discrimination.
Flash Card 9: Vertical Integration: Cost-Saving Motives
 Correct Answer: C. It saves costs by avoiding costly negotiations and monitoring the
market.
Flash Card 10: Uncertainty as Motive for Vertical Integration
 Correct Answer: C. To reduce uncertainty regarding input quality, business cycle
conditions, and customers' efficiency.
Flash Card 11: Cost-Saving Motives for Vertical Integration - Assured Supply
 Correct Answer: D. By purchasing suppliers to ensure a secure and continuous supply
of inputs.
Flash Card 12: Cost-Saving Motives for Vertical Integration - Asset Specificity
 Correct Answer: C. Asset specificity occurs when firms are interdependent due to
investments in specific assets, and vertical integration can optimize output and
increase profits.
Flash Card 13: Vertical Disintegration
 Correct Answer: C. Assessing a company's ability to manage its supply chain
effectively.
Flash Card 14: Mergers and Acquisitions: Summary
 Correct Answer: B. They affect the market less compared to horizontal and
conglomerate mergers.
Flash Card 15: Transaction Cost Theory
 Correct Answer: C. They may incur costs associated with monitoring, negotiation,
and implementing contractual obligations.
Lecture 11
Flash Card 1
Question: What alternative might firms consider if vertical mergers are not feasible?
 A. Horizontal mergers
 B. Formation of links along the value chain
 C. Conglomerate mergers
 D. Market segmentation
Flash Card 2
Question: What is the primary motive for implementing resale price maintenance (RPM)?
 A. Consumer welfare improvement
 B. Market segmentation
 C. Cost savings through service hypothesis
 D. Elimination of competition
Flash Card 3
Question: In the context of RPM, what problem does the service hypothesis address?
 A. Retailer collusion
 B. Producer collusion
 C. Free-rider problem
 D. Refusal to supply
Flash Card 4
Question: According to the service hypothesis, what factor justifies a fixed (higher) price for
retailers under RPM?
 A. Increase in consumer surplus
 B. Elimination of competition
 C. Additional services provided by retailers
 D. Price evasion
Flash Card 5
Question: What is a possible motive for bundling in practice?
 A. Market segmentation
 B. Profit maximization
 C. Entry barriers
 D. Refusal to supply
Flash Card 6
Question: Which market behavior is considered a violation of Competition Act, §11 and § 6?
 A. Bundling
 B. Refusal to supply
 C. Cost savings
 D. Market segmentation
Flash Card 7
Question: What does DCA § 8 require for an agreement to be exempt from the prohibition
set out in §6(1)?
 A. Increase in market power
 B. Consumer welfare improvement
 C. Efficiency improvement and fair consumer benefits
 D. Market segmentation
Flash Card 8
Question: Under what conditions does bundling become exempt from certain vertical
agreements according to the Block Exemption rule?
 A. Market share exceeding 30%
 B. Dominant market position
 C. Non-dominant market share
 D. Elimination of competition
Flash Card 9
Question: What is a motive for bundling, as mentioned in the text?
 A. Cost advantages
 B. Foreclosure
 C. Market power
 D. Dynamic analysis
Flash Card 10
Question: What is the motive behind foreclosure, where an upstream firm refuses to
provide essential items to downstream firms?
 A. Market segmentation
 B. Increase in market power
 C. Elimination of competition
 D. Cost advantages
Flash Card 11
Question: According to the Chicago school, how does foreclosure or vertical integration
affect the downstream market?
 A. No effect
 B. Increases overall monopoly rent
 C. Decreases overall monopoly rent
 D. Causes market segmentation
Flash Card 12
Question: Which article of the Treaty on European Union prohibits the abuse of a dominant
position in the internal market?
 A. Article 101 TEU
 B. Article 102 TEU
 C. Article 6 TEU
 D. Article 11 TEU
Flash Card 13
Question: What is the primary focus of the EU Commission's revised guidelines for assessing
abuse of a dominant position?
 A. Market segmentation
 B. Form rather than effect
 C. Foreclosure
 D. Entry barriers
Flash Card 14
Question: What does the Competition Act prohibit concerning vertical agreements?
 A. All vertical agreements
 B. Agreements with efficiency defense
 C. Agreements restricting competition
 D. Horizontal agreements only
Flash Card 15
Question: What is the role of the service hypothesis in RPM, as discussed in the text?
 A. Justifies higher prices for producers
 B. Addresses free-rider problem
 C. Facilitates collusion among retailers
 D. Promotes cost savings through service provision

Answers
Flash Card 1
Answer: B. Formation of links along the value chain
Flash Card 2
Answer: C. Cost savings through service hypothesis
Flash Card 3
Answer: C. Free-rider problem
Flash Card 4
Answer: C. Additional services provided by retailers
Flash Card 5
Answer: C. Entry barriers
Flash Card 6
Answer: B. Refusal to supply
Flash Card 7
Answer: C. Efficiency improvement and fair consumer benefits
Flash Card 8
Answer: C. Non-dominant market share
Flash Card 9
Answer: C. Market power
Flash Card 10
Answer: B. Increase in market power
Flash Card 11
Answer: A. No effect
Flash Card 12
Answer: B. Article 102 TEU
Flash Card 13
Answer: B. Form rather than effect
Flash Card 14
Answer: C. Agreements restricting competition
Flash Card 15
Answer: B. Addresses free-rider problem

Lecture 12
1. What are network effects?
 A. The cost of using a good or service
 B. The value of a good or service to an individual depends on the number of
other people who use it
 C. The total number of users in a network
 D. The speed at which information travels through a network
2. Which of the following is NOT a classic example of network effects mentioned in
the text?
 A. Telephony
 B. Social media (Facebook, Instagram)
 C. E-commerce platforms (Zalando, Airbnb)
 D. Television broadcasting
3. In the example of Facebook, what happens to the value as the number of users
increases?
 A. Value remains constant
 B. Value decreases
 C. Value is not mentioned
 D. Value increases
4. What are the two types of network effects mentioned?
 A. Positive and negative network effects
 B. Direct and indirect network effects
 C. Internal and external network effects
 D. Short-term and long-term network effects
5. How is the demand for a network good modeled in the text?
 A. Linear demand function
 B. Quadratic demand function
 C. Exponential demand function
 D. Constant demand function
6. In the demand function, what does "𝑛" represent?
 A. Marginal cost
 B. Number of users
 C. Stand-alone benefit
 D. Network benefit
7. According to the text, what role do expectations play in the demand for a network
good?
 A. Expectations have no impact
 B. Expectations are mentioned but not explained
 C. Expectations are self-fulfilling
 D. Expectations are only relevant in a monopoly
8. What characterizes the stability of the outcome in a network?
 A. Large number of users
 B. Small network size
 C. Myopic behavior of users
 D. High prices
9. In the context of network benefits, what does "weak network effects" refer to?
 A. Network effects that are not mentioned in the text
 B. Network effects that dominate stand-alone benefits
 C. Network effects that lead to unstable equilibrium
 D. Network effects that have a minimal impact on demand
10. How do network effects act as a barrier to entry?
 A. By reducing prices
 B. By creating natural monopolies
 C. By encouraging competition
  D. By promoting transparency
11. What is mentioned as a potential issue with digital platforms related to
competition?
 A. Reduced transaction costs
 B. Enhanced consumer choice
 C. Inhibition of competition
 D. Increased market entry
12. What is the Digital Markets Act mentioned in the text?
 A. A law regulating digital advertising
 B. A regulatory framework for digital platforms in the EU
 C. A digital marketing strategy
 D. A case study on internet monopolies
13. What is the QWERTY example used to illustrate?
 A. The evolution of the internet
 B. The establishment of keyboard standards
 C. The history of typewriters
 D. The impact of technology on writing speed
14. What is the primary advantage of digital platforms mentioned in the text?
 A. Increased transaction costs
 B. Limited access to new markets
 C. Reduced competition between companies
 D. Better opportunities for companies and consumers to connect
15. What competition concern is associated with digital platforms, as mentioned in the
text?
 A. Reduced transaction costs
 B. Abuse of dominant position
 C. Increased market entry
 D. Enhanced consumer choice

Answers
1. What are network effects?
 B. The value of a good or service to an individual depends on the number of
other people who use it
2. Which of the following is NOT a classic example of network effects mentioned in
the text?
 D. Television broadcasting
3. In the example of Facebook, what happens to the value as the number of users
increases?
 D. Value increases
4. What are the two types of network effects mentioned?
 B. Direct and indirect network effects
5. How is the demand for a network good modeled in the text?
 B. Quadratic demand function
6. In the demand function, what does "𝑛" represent?
 B. Number of users
7. According to the text, what role do expectations play in the demand for a network
good?
  C. Expectations are self-fulfilling
8. What characterizes the stability of the outcome in a network?
 C. Myopic behavior of users
9. In the context of network benefits, what does "weak network effects" refer to?
 B. Network effects that dominate stand-alone benefits
10. How do network effects act as a barrier to entry?
 B. By creating natural monopolies
11. What is mentioned as a potential issue with digital platforms related to
competition?
 C. Inhibition of competition
12. What is the Digital Markets Act mentioned in the text?
 B. A regulatory framework for digital platforms in the EU
13. What is the QWERTY example used to illustrate?
 B. The establishment of keyboard standards
14. What is the primary advantage of digital platforms mentioned in the text?
 D. Better opportunities for companies and consumers to connect
15. What competition concern is associated with digital platforms, as mentioned in the
text?
 B. Abuse of dominant position