Exam 12: Between Competition and Monopoly

Define the following terms and explain their importance to the study of economics. a.monopolistic competition b.oligopoly c.cartel d.oligopolistic interdependence

In the long run, zero economic profit exists in monopolistic competition and perfect competition.

In a perfectly contestable market in the long run, each firm

Which of the following attitudes will be held by a typical firm in a typical cartel?

Why is oligopoly more difficult to model than competition or monopoly?

An oligopoly will always use game theory to maximize sales rather than profits.

The short-run equilibrium of the firm under monopolistic competition has excess capacity.

Economists would describe cartels as

The game theory approach to the analysis of oligopoly assumes that oligopolists

Unlike a perfectly competitive firm, a monopolistically competitive firm

Oligopolies are difficult to analyze because of the interdependent nature of management decisions.

Figure 12-3 -In Figure 12-3, demand curve CAD represents a market in which oligopolists will match the price changes of rivals and demand curve EAB represents a market in which oligopolists will ignore the price changes of rivals.According to the kinked demand model, the relevant demand curve will be

Price leadership is a form of

In ____, each competing firm is determined to sell at a price that is lower than the prices of its rivals, often regardless of whether that price covers the pertinent cost.

Sales maximization may be a goal of a firm if

Economic theory of market forms between pure monopoly and perfect competition was largely nonexistent until the work of

In the long run, a monopolistically competitive firm produces at minimum average cost.

The demand curve for a monopolistic competitor is likely to be flatter than that of a monopolist.

The excess capacity theorem states that

A dominant strategy is one that is best for one player regardless of the strategy chosen by the other player.