Exam 13: Monopolistic Competition and Oligopoly

-Two competing firms in a duopoly must decide whether or not to offer consumers a coupon for their good. The payoff matrix above represents the daily profit available to the firms under the different coupon strategies. a. What strategies and payoffs are represented by quadrant A? b. What strategy will Firm 1 pursue if it believes that Firm 2 is offering a coupon? c. What quadrant represents the equilibrium that will result if the firms act independently (compete)? d. What quadrant represents the equilibrium that will result if the firms successfully collude?

One of the main tools economists use to analyze strategic behavior is

If a few oil-producing countries in the Middle East decide to jointly limit the production of oil,

Why are firms in monopolistic competition unable to earn an economic profit in the long run?

-Which of the following is true? In the above figure, if the market is

What market structures other than oligopoly have the characteristic of one firm's actions affecting the actions of its competitors? Explain your answer.

When oligopolies seek to operate as a single-price monopoly, the firms produce at the point where:

A characteristic common in both oligopoly and monopolistic competition is:

Excess capacity exists when a firm produces

-The above figure shows a restaurant engaged in monopolistic competition with other restaurants. The equilibrium price at this restaurant is ________ per meal.

Game theory is used to analyze the interactions among firms in ________.

Which of the following four-firm concentration ratios would be the best indication of a perfectly competitive industry?

The figure above shows the market for airplanes. -Suppose the airplane market is an oligopoly. If the firms act as a monopolist, the price will be ________ and if the firms act as competitors the price will be ________.

Because of the number of firms in monopolistic competition

"Because firms in an oligopoly are so large, they do not need to consider each other's actions." Is the previous statement correct or incorrect? Explain your answer.

A market is considered competitive if the Herfindahl-Hirschman Index (HHI)is ________ and its four-firm concentration ratio is ________.

Which of the following is an advantage to society of monopolistic competition?

-The above figure shows the market for the three moving companies in a small nation. If the movers act as perfect competitors, what is the price per mile and the number of miles per year? If the movers collude and act as a single monopoly, what is the price per mile and the number of lines per year?

Firms in oligopoly can achieve an economic profit

The United Company competes with many other firms each producing slightly different products. Firms freely enter and exit this industry. The type of industry United Company operates in is ________.