Exam 13: Monopolistic Competition and Oligopoly

-The above figure shows the market demand curve for long-distance telephone calls. Suppose the marginal cost of a long-distance telephone call is 2¢ a minute for a call no matter how many minutes of calls are made and there are 3 firms in the industry. If the firms in the industry operate as a monopoly, there are ________ minutes of calls made per hour.

-The only two firms in a market are trying to decide what price to charge. The payoff matrix for this duopoly game is shown above. The payoffs are thousands of dollars of economic profit. In the above game, in the Nash equilibrium,

When oligopolies operate like firms in perfect competition, the firms produce at the point where the

If a firm has excess capacity, it

A two-firm oligopoly is called a

The Herfindahl-Hirschman Index measures market concentration in an industry by summing the square of the percentage market shares for

When firms in monopolistic competition are making an economic profit, firms will

Daryl's Inc. has formed a cartel with the two other firms in its industry. In which of the following market structures does Daryl's operate?

In an industry with a large number of firms,

-The figure above shows the market demand curve for a market with three firms. It also shows a firm's marginal cost curve. In this oligopoly, what is the range of output and prices? Why does this range of outcomes exist?

Advertising is a ________ cost that is incurred by ________.

A cartel is

What is excess capacity? What industry has excess capacity in the long run: perfect competition or monopolistic competition?

The range of output for a duopoly ranges between the

To maximize profit, a firm in monopolistic competition will produce the quantity where marginal revenue

What is the Herfindahl-Hirschman Index if the four firms in an industry account have market shares of 62 percent, 15 percent, 15 percent, and 8 percent?

To maximize its profit, the firm in the figure above will produce ________ jeans and set a price ________ per pair of jeans.

"The duopolists' dilemma occurs when firms in a duopoly coordinate their decisions to achieve the best possible outcome." Is the previous statement correct or incorrect? Why?

Each of the four firms in an industry has a market share of 25 percent. The Herfindahl-Hirschman Index equals

"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?