Exam 11: Oligopoly and Monopolistic Competition

In a Bertrand model with identical firms and a non-differentiated product, price will increase in response to

-The above figure shows the reaction functions for two pizza shops in a small isolated town. The Cournot equilibrium is at point

The market for electricians in a small town might have a different structure than in a large city because

The Cournot Model of Oligopoly assumes that

If AC > p where MR = MC,

In the long run, a monopolistic competitor

Cartels are inherently self-destructive because each member firm has the incentive to cheat on the cartel agreement.

Assuming a homogeneous product, the Bertrand equilibrium price is

Two identical firms that share a market and produce a homogeneous good will find which of the following market outcomes LEAST desirable?

In a sense, a cartel is self-destructive because

Cartels can detect cheating by

In the simplest version of the Cournot model, we assume

In the Cournot model, the output that a firm chooses to produce increases as

Explain why gasoline stations across the street from each other with large signs displaying their prices may "legally" jointly set monopoly prices.

If, holding the strategies of all other firms constant, no firm can obtain a higher profit by choosing a different strategy, then

If AC < p where MR = MC,

A cartel might fail because

In the long run, a monopolistically competitive firm

A Nash equilibrium occurs when

Price and quantity in Bertrand and Cournot models