Exam 11: Monopolistic Competition and Oligopoly

Two firms would sometimes be better off if they got together and agreed to charge a high price,rather than to compete and risk having to charge a lower,competitive price.What is the greatest deterrent to this strategy?

If economies of scale are relatively unimportant in an industry,the typical firm's long-run average total cost curve will reach a minimum at a level of output that is a ________ fraction of total industry sales.The industry will be ________.

A monopolistically competitive firm that earns economic profits in the short run will be able to expand its market share even if the market size remains constant.

One reason why the "fast-casual" restaurant market is competitive is that

Table 11-7 Table 11-7 shows the payoff matrix for Walmart and Target from every combination of pricing strategies for the popular PlayStation 4. At the start of the game each firm charges a low price and each earns a profit of $7,000. -Refer to Table 11-7.Is the current strategy in which each firm charges the low price and earns a profit of $7,000 a Nash equilibrium? If not,why and what is the Nash equilibrium?

Suppose we want to use game theory to analyze how an oligopolist selects its optimal price.The payoff matrix shows

Marginal revenue for an oligopolist is

In monopolistic competition there is/are

The entry and exit of firms in a monopolistically competitive market guarantee that

Table 11-14 -Refer to Table 11-14.Saudi Arabia and Ecuador must decide how much oil to produce.Since the demand for oil is inelastic,relatively low production rates drive up prices and profits.Saudi Arabia,the world's largest and lowest-cost producer,is able to influence market price; it has an incentive to keep output low.Ecuador,on the other hand,is a relatively high-cost producer with much smaller reserves.Use the payoff matrix in Table 11-14 to answer the following questions. a.What is the dominant strategy for Saudi Arabia? b.What is the dominant strategy for Ecuador? c.What is the Nash equilibrium?

Unlike a perfectly competitive firm,a monopolistic competitor does not have a short-run shut-down point.

Who won a Nobel Prize in economics for his work in the development of game theory?

Suppose James and Katherine are successful in establishing a profitable market for their "ghost restaurants" in what is a monopolistically competitive industry.In the long run,James and Katherine will most likely find it ________ to remain profitable as they face ________ competition in the "ghost restaurant" market.

Table 11-4 Quantity Sold Price Total Revenue Marginal Revenue Total Cost Marginal Cost Profit 0 \ 10 \ 0 \@cdots \ 2 \ldots -\ 2 1 9 9 82 2 8 16 13 3 7 21 17 4 6 24 20 5 5 25 22 6 4 24 26 Table 11-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to universities and private research laboratories. -Refer to Table 11-4.Based on the data in the table,which of the following statements is true?

The justification for occupational licensing laws is that they protect the public from incompetent practitioners (for example,lawyers and medical doctors),but the laws also result in

Most economists are concerned about entry barriers.Why is this so important to them?

The reason that the "fast-casual" restaurant market is monopolistically competitive rather than perfectly competitive is because

In the United States,the average person mostly patronizes firms that operate in

What is a prisoner's dilemma?

Oligopoly differs from perfect competition and monopolistic competition in that