Exam 14: Oligopoly and Monopolistic Competition

The profit earned by a monopolistic competitor in the long run after the entry of new firms is ________.

Which option correctly sorts different market structures in terms of number of firms operating in them,from the most to the least?

In which of the four market structures do sellers act as price-takers?

An industry composed of two identical firms and one twice as large as each of the two others is likely to have a Herfindahl-Hirschman Index of ________.

The price charged by a monopolistic competitor is ________.

Firm X is a monopolistic competitor that produces Good X.If the market for Good X were perfectly competitive,would it have charged the same price and earned the same amount of profit that it does now? Explain your answer with the help of relevant diagrams.

The following table shows the payoffs (profits) of the two firms in a duapoly industry who produce a nondifferentiated product. Each firm has two options: charge a high price of $70, or the minimum possible price of $50. The first number in the payoff cells is the profit of Firm A, and the second number is the profit of Firm B. Assume that both firms are after maximum profit. -Refer to the table above.If both firms decide to collude and charge $70 for their product,

The industry for personal care products in Petrovia is monopolistically competitive in nature.The firms in this industry earn positive economic profits in the short run.Do the firms continue to earn positive profits in the long run? Explain your answer.

Scenario: The market demand for soccer balls in a small town is 2,500 units, and there are two rival sports brands selling soccer balls in this town, Sporty and Go! The products of the two brands are identical. -Refer to the scenario above.The market for Good A in Corinthia is an example of a ________.

Scenario: The market demand for soccer balls in a small town is 2,500 units, and there are two rival sports brands selling soccer balls in this town, Sporty and Go! The products of the two brands are identical. -Refer to the scenario above.If ________,the demand for Sporty's soccer balls will be 1,250 units.

Distinguish between a perfectly competitive firm and a monopolistically competitive firm on the basis of the long-run equilibrium price.

Which of the following markets is likely to be perfectly competitive?

In a duopoly with homogeneous products,the best response of a firm is to charge a lower price than its rival as long as ________.

The automobile industry in Petrovia has a Herfindahl-Hirschman Index of 5,600.This implies that the automobile industry in Petrovia is ________.

The market for tea in Petrovia is perfectly competitive,while the market for candy bars is monopolistically competitive.Which market is likely to have excess capacity and why? Explain your answer with the help of suitable diagrams.

Collusion can work if ________.

The Code of Federal Regulation (CFR)Title 39 Section 320.6 allows delivery of certain types of mail,generally called "extremely urgent" mail,by someone other than the U.S.Postal Service.Today,FedEx and UPS hold more than 75 percent of market share in the delivery of items permitted under the law.This is an example of ________.

Alpha Corp.and Beta Corp.are the only firms in an industry.It is found that Alpha loses its entire market share to Beta when Beta lowers its price.What is the optimum pricing strategy for Alpha?

Scenario: There are two firms in an industry, Firm A and Firm B, and they consider entering into a colluding agreement. If the two firms collude, then they agree that they would both produce less than what they would if they were competing against each other in an oligopolistic market. Since Firm A expects Firm B to produce a small quantity of output in the colloding agreement, Firm A is facing a demand curve with the same slope but with a higher intercept. The following figure depicts demands that face Firm A in both the colluding agreement and the oligopolistic market. -Refer to the scenario above.If the two firms agree that they both should produce 1 unit,what is the profit each firms gets?

Consider the following table.Which option correctly fills the blanks in the table?