Exam 14: Oligopoly

Use the following to answer question: Figure: Monopoly Profits in Duopoly -(Figure: Monopoly Profits in Duopoly)Use Figure: Monopoly Profits in Duopoly.Suppose there are two firms in this industry.Each firm faces an identical demand curve,D₁, and the market demand curve is D₂.The figure illustrates how firms can reap monopoly profits,even in an industry with:

Game theory is commonly used to explain behavior in oligopolies because oligopolies are characterized by:

The purpose of antitrust policy is to:

Advertising is an example of:

Use the following to answer question: -(Table: Demand Schedule of Gadgets)Use Table: Demand Schedule of Gadgets.The market for gadgets consists of two producers,Margaret and Ray.Each firm can produce gadgets with no marginal cost or fixed cost.If these two producers formed a cartel,split the production of output equally,and acted to maximize total industry profits,each firm's output would be _____,and each firm's profit would be _____.

Use the following to answer question: -(Table: Demand for Crude Oil)Use Table: Demand for Crude Oil.Assume that the crude oil industry is a duopoly and the marginal and fixed costs of producing crude oil equal zero.Suppose that the two firms are maximizing industry profit and splitting the profit evenly.If both firms engage in noncooperative behavior,the industry output will be _____ barrels,and the price of crude oil will be _____.

The pattern of behavior in which one company tacitly sets prices for the industry as a whole is known as product differentiation.

Use the following to answer question: -(Table: Demand Schedule of Gadgets)Use Table: Demand Schedule of Gadgets.The market for gadgets consists of two producers,Margaret and Ray.Each firm can produce gadgets at a marginal cost of $2 and no fixed cost.Suppose that these two producers have formed a cartel,agreed to split production of output evenly,and are maximizing total industry profits.If Margaret decides to cheat on the agreement and sell 100 more gadgets,the market price of gadgets will be:

When firms in a particular industry informally agree to charge the same price as the largest firm in that industry,it is called:

Use the following to answer question: Figure: Payoff Matrix II for Blue Spring and Purple Rain -(Figure: Payoff Matrix II for Blue Spring and Purple Rain)Use Figure: Payoff Matrix II for Blue Spring and Purple Rain.The figure describes two producers of bottled water.Each has two strategies available to it: a high price and a low price.The dominant strategy for Purple Rain is to:

An industry is made up of five firms.Three of the firms make up 20% of the total market sales,one firm makes up 25%,and the remaining firm makes up 15%.What is the HHI for this industry?

If the Baltimore furniture market had only a few sellers,it would be considered an oligopoly.

The market structure that is characterized by only a small number of producers is:

In oligopoly,a firm must realize that:

Advertising is an example of price leadership.

Product differentiation is MOST likely to occur when firms:

Maximization of joint profits is MOST likely when firms are:

Use the following to answer question: -(Table: Demand Schedule of Gadgets)Use Table: Demand Schedule of Gadgets.The market for gadgets consists of two producers,Margaret and Ray.Each firm can produce gadgets with no marginal cost or fixed cost.If industry output is 700,each firm's profits will be _____ than they would be at the output of 500,which maximizes industry profit.

In the past,most of the cars sold in the United States were produced by the Big Three auto companies.General Motors would announce its prices for the new model year first,and then the other companies would match it.This practice was an example of:

Until recently,most other advanced countries did not have policies that prohibited price fixing.