Exam 13: Monopolistic Competition and Oligopoly

Price (dollars per unit) Quantity (units) 30 0 25 10 20 20 15 30 10 40 5 50 0 60 -The table above has the market demand schedule in an industry that has two firms in it. The marginal cost of this product is zero because these two firms have exclusive ownership of the resource and it does not cost any additional amount to produce additional units. a. If the firms cooperate with each other so that they operate as a monopoly, what price will they charge and what (total)output will they produce? b. If the firms cannot cooperate but instead behave as perfect competitors, what will be the price and the (total)output they produce?

The square of the percentage market share of each firm summed over the 50 largest firms in a market is the

Sammy's Inc. competes with a few other firms because there are natural barriers to entry. Sammy's operates in

A group of firms acting together to limit output, raise price, and increase economic profit is a called a

Nike is a firm in monopolistic competition. If Nike is earning an economic profit from new cross-training shoe, over time the demand for these shoes

What is a Nash equilibrium? Is this equilibrium the best outcome for the players? Give an example.

-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 Nash equilibrium, Firm A will set a price of ________ and Firm B will set a price of ________.

Suppose the airplane market is an oligopoly. According to the figure above, the price can range as high as ________ and as low as ________.

-The table above shows the payoff matrix offered to two suspected criminals, Bonnie and Clyde. The payoffs are the years they will spend in prison. The suspected criminals are not allowed to communicate. Which of the following statements correctly describes the equilibrium choices made by Bonnie and Clyde?

Why does a firm in monopolistic competition earn zero economic profit rather than an economic profit in the long run?

In monopolistic competition, the presence of a large number of firms making a differentiated product means that

The firm in the above figure has a markup of ________ per meal.

Firms in monopolistic competition have demand curves that are

How do the characteristics of perfect competition and monopolistic competition differ?

-Suppose MCI and AT&T can each charge either 3¢ or 4¢ a minute for a long distance call. The above table illustrates the payoffs, in millions of dollars, from each of the four possible outcomes that could occur in their duopoly setting. What must MCI's price be for AT&T to earn $500 million in profit?

Entry and exit continue in monopolistic competition until the remaining firms are

"Duopoly" is

-The above figure shows a motel engaged in monopolistic competition with other motels. The equilibrium price at this motel is ________ per room.

An industry with a large number of firms, differentiated products, and free entry and exit is called

Monopolistic competition is efficient when compared to