FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 17: Oligopoly

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 141

Multiple Choice

Review LaterAdd Note

Review Later

The theory of oligopoly provides a reason why

A) perfect competition is not a useful object of study.
B) price is less than marginal cost for many firms.
C) all countries can benefit from free trade among nations.
D) firms do not want to capture larger shares of their markets.

E) A) and D)
F) A) and C)

Correct Answer

verified

Show Answer

Question 142

Multiple Choice

Review LaterAdd Note

Review Later

From society's standpoint, cooperation among oligopolists is

A) desirable, because it leads to less conflict among firms and a wider variety of products for consumers.
B) desirable, because it leads to an outcome closer to the competitive outcome than what would be observed in the absence of cooperation.
C) undesirable, because it leads to output levels that are too low and prices that are too high.
D) undesirable, because it leads to output levels that are too high and prices that are too high.

E) B) and C)
F) A) and D)

Correct Answer

verified

Show Answer

Question 143

Multiple Choice

Review LaterAdd Note

Table 17-4 The table shows the town of Mauston's demand schedule for gasoline. For simplicity, assume the town's gasoline seller(s) incur no costs in selling gasoline. -Refer to Table 17-4. If the market for gasoline in Mauston is perfectly competitive, then the equilibrium price of gasoline is

When firms are faced with making strategic choices to maximize profit, economists typically use

Explain the practice of resale price maintenance and discuss why it is controversial.

Table 17-20 Nadia and Maddie are two college roommates who both prefer a clean common space in their dorm room, but neither enjoys cleaning. The roommates must each make a decision to either clean or not clean the dorm room's common space. The payoff table for this situation is provided below, where the higher a player's payoff number, the better off that player is. The payoffs in each cell are shown as (payoff for Nadia, payoff for Maddie) . -Refer to Table 17-20. What is Maddie's dominant strategy?

Table 17-16 This table shows a game played between two players, A and B. The payoffs are given in the table as (Payoff to A, Payoff to B) . -Refer to Table 17-16. Which of the following outcomes represents a Nash equilibrium in the game?

In a prisoners' dilemma game,

Table 17-2 Imagine a small town in which only two residents, Abby and Brad, own wells that produce safe drinking water. Each week Abby and Brad work together to decide how many gallons of water to pump. They bring water to town and sell it at whatever price the market will bear. To keep things simple, suppose that Abby and Brad can pump as much water as they want without cost so that the marginal cost is zero. The weekly town demand schedule and total revenue schedule for water is shown in the table below: -Refer to Table 17-2. If this market for water were perfectly competitive instead of monopolistic, how many gallons of water would be produced and sold?

If duopoly firms that are not colluding were able to successfully collude, then

Table 17-28 Suppose that two firms determine that each could lower its costs and increase its profits if both reduced their advertising budgets. But in order for the plan to work, each firm must agree to refrain from advertising. Each firm believes that advertising works by increasing the demand for the firm's product, but each firm also believes that if neither firm advertises, the cost savings will outweigh the lost sales. The table below lists each firm's individual profits: Firm A Breaks agreement Maintains agreement and advertises and does not advertise -Refer to Table 17-28. What is the outcome of this game?

An equilibrium in which each firm in an oligopoly maximizes profit, given the actions of its rivals, is called

Assuming that oligopolists do not have the opportunity to collude, once they have reached the Nash equilibrium, it

Some business practices that appear to reduce competition, such as resale price maintenance, may have legitimate economic purposes.

The Sherman Antitrust Act

Tying can be thought of as a form of price discrimination.

Suppose that Thierry and Abdul are duopolists. Thierry is producing 700 units of output, and Abdul is producing 500 units of output. When Abdul produces 500 units, Thierry maximizes profit by producing 700 units. When Thierry produces 700 units of output, Abdul maximizes profit by producing 500 units. Thierry and Abdul are

Scenario 17-5 Assume that a local restaurant sells two items, salads and steaks. The restaurant's only two customers on a particular day are Mr. Carnivore and Ms. Leafygreens. Mr. Carnivore is willing to pay $20 for a steak and $7 for a salad. Ms. Leafygreens is willing to pay only $8 for a steak, but is willing to pay $12 for a salad. Assume that the restaurant can provide each of these items at zero marginal cost. -Refer to Scenario 17-5. If the restaurant is unable to use tying, what is the profit-maximizing price to charge for a salad?

Predatory pricing occurs when

As the number of firms in an oligopoly becomes very large, the price effect disappears.