Exam 18: Oligopoly

Suppose two companies, Sony and Magnavox, are competing in a duopoly.If both companies charge a high price, they each make $700 million in economic profit.If both companies charge a low price, they each make $500 million in economic profit.If one company charges a high price and the other a low price, the company charging the higher price makes $450 million in economic profit and the company charging the lower price makes $800 million in economic profit. a∙Complete the payoff matrix below for Sony and Magnavox. b∙Find the Nash equilibrium.

If price fixing is necessary because without it a firm will go bankrupt, is the price fixing legal?

The range of output for a duopoly ranges between the

In the United States, antitrust laws

In the 1970s, when a gasoline price ceiling was imposed that was below the equilibrium price of gasoline, some gas stations required that buyers of gas also purchase other products sold at the station.This policy is an example of which of the following?

If a duopoly has reached the monopoly outcome and only one firm increases its production, that firm's profit ________ and the other firm's profit ________.

Imagine a duopoly in which two firms, A and B, produce the monopoly profit-maximizing output and equally share the economic profit.If firm A increases its output, the market price ________ and total economic profit of the two firms combined ________.

"A Nash equilibrium occurs when both parties to a game end up worse off as a result of the decisions that are made." Is the previous definition of a Nash equilibrium correct or incorrect?

Why are cartels among firms usually kept secret?

A group of firms that has entered into an agreement to restrict output and increase prices and profits is called

Briefly explain resale price maintenance.Is it legal or illegal? Does it create efficiency or inefficiency?

The Federal Trade Commission uses ________ to help determine whether to challenge a possible merger.

A cartel is

Resale price maintenance is a form of

-Suppose Intel and AMD can each charge either $300 or $200 for a CPU (the computing unit of a computer).The above table illustrates the payoffs, in millions of dollars, from each of the four possible outcomes that could occur in their duopoly setting.If Intel charges $300 and AMD charges $300, then Intel's profit will be ________ million and AMD's profit will be ________ million.

The very best joint outcome possible for the firms in a duopoly is to produce the

The possible alternatives for an oligopoly range from the monopoly case with ________ to the perfectly competitive case with ________.

If Sony required all its retailers not to sell televisions from other companies, Sony would be engaging in what kind of activity? Is Sony's requirement legal or does it violate the Clayton Act?

Price fixing

For a duopoly, the highest price is charged when the duopoly achieves