Exam 12: Between Competition and Monopoly

In the past, the Department of Transportation allowed airline mergers that gave the merged airlines market shares of 79 and 82 percent, respectively, in their hub cities.The concept the DOT used to allow mergers where there was obvious concentration was most likely

The contestable market theory best applies to

If a market is contestable, then

Price leadership is an example of explicit collusion by oligopolies.

What is the long-run effect on the demand curve of a monopolistically competitive firm when more firms enter the market?

When oligopolists join together in a cartel, they

Tacit collusion is

Oligopolists seldom change prices, because they don't like change.

Oligopolistic firms that practice sales revenue maximization will produce

Figure 12-4 -The above matrix (Figure 12-4) displays the possible profit results of two firms, A and B, from following two different possible strategies: charging a high price and charging a low price.In each cell, the first number is the profit of firm A, and the second number is the profit of firm B. a. Assume that collusion is not possible.Determine the optimal strategy for each firm.Explain why it is the best strategy to follow. a., explain why firms collude.What are the pitfalls of collusion? b. Based on your answer to

What are the four types of industry structures? Compare and contrast them with the number of firms in the industry, whether firms produce homogeneous or heterogeneous products, whether there are economic profits in long-run equilibrium, and how frequently the model appears in the real world.

What are the advantages and disadvantages of resource allocation under monopolistic competition compared to perfect competition?

In reality, firms may seek to maximize

Economists place cartels among the least-desirable forms of market organization.

To maximize sales revenue, an oligopoly will expand output until the price is zero.

Monopolistic competition has at least one similarity to perfect competition: firms are free to enter and leave the industry.

The cost-revenue diagrams for a monopolist and a monopolistic competitor are similar except that the demand curve for the monopolistic competitor is flatter.

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

The entry of new firms into a monopolistically competitive industry will cause the long-run equilibrium price to rise.

Everything else equal, the more rivals a firm has, the