Exam 14: Oligopoly and Monopolistic Competition

For the following, please answer "True" or "False" and explain why. -Firms in all types of market structures pay attention to current rival firms' behavior.

Suppose the demand for pizza in a small isolated town is p = 10 - Q.There are only two firms,A and B,and each has a cost function TC = 2 + q.Determine the Cournot equilibrium.

Consider a market with just one firm.The demand in the market is p = 18 - Q and the firm has a linear cost function C(Q)= 2Q. a.How much output will this firm produce.What will be the profit and consumers surplus? b.Suppose a second firm with the same cost function enters the market and the two firms compete in a Cournot style (simultaneous output choice).What will be the equilibrium price and quantity in the market? What is the total market profit and CS?

Assuming a homogeneous product,the Bertrand duopoly equilibrium price is

Market failure or inefficient consumption will take place in the market structures EXCEPT for

If an incumbent cannot commit and faces an identical potential entrant with relatively high fixed costs that are below the level where entry is blockaded,the incumbent will

Two identical firms that share a market and produce a homogeneous good will find which of the following market outcomes LEAST desirable?

In the long run,a monopolistic competitor

In a Duopoly Nash-Cournot equilibrium,

Consider a market with inverse demand p = 100 - 2Q.Firms have no fixed cost and constant marginal cost c. a.Derive the firms' outputs and profits when this market is served by Cournot duopolists. b.How do outputs and profits vary with c? Specifically,use calculus to find the derivative of the output of each firm and profit of each firm with respect to c. c.Suppose the firm's also have a fixed cost of F in addition to the marginal cost c.How does F alter the best response functions and NE? Explain in words.(For technical reasons,assume that both firms still produce a positive level of output in equilibrium)

Which of the following models results in the greatest total profit,assuming a fixed number of firms with identical costs and a given demand curve?

Suppose in the ice-cream market with 10 firms,the elasticity of market demand is -1,and each firm has a constant marginal cost at $2.The Nash-Cournot equilibrium price is

The outcome of the Stackelberg model is

Which of the following market models results in the highest level of consumer surplus,assuming a fixed number of firms with identical costs and a given demand curve?

Assuming a homogeneous product,the Bertrand equilibrium price is

The number of firms in a monopolistically competitive market will be smaller if

Explain why gasoline stations across the street from each other with large signs displaying their prices may "legally" jointly set monopoly prices.

The Stackelberg model is more appropriate than the Cournot model in situations where

Monopolistically competitive firms

Which of the following models results in the highest level of output assuming a fixed number of firms with identical costs and a given demand curve?