Exam 11: Monopolistic Competition and Oligopoly

Table 11-9 Alpha and Beta are the only firms selling gyros in the upscale town of Delphi. Each firm must decide on whether to offer a discount to students to compete for customers. If one firm offers a discount but the other does not, then the firm that offers the discount will increase its profit. Table 11-9 shows the payoff matrix for this game. -Refer to Table 11-9.How are the firms in this game caught in a prisoner's dilemma?

Collusion is common in oligopoly and monopolistically competitive industries.

Consumers in a monopolistically competitive market do not receive any consumer surplus because the price paid for the product exceeds the marginal cost of production.

Consider a U-shaped long-run average cost curve that has a minimum efficient scale at 6,000 units of output.In this case,this industry would be

Figure 11-17 -Refer to Figure 11-17.What is the productively efficient output for the firm represented in the diagram?

Why are demand and marginal revenue represented by the same curve for a firm in a perfectly competitive market,but by separate curves for a firm in a monopolistically competitive market?

Figure 11-11 -Refer to Figure 11-11.The diagram depicts a firm

In most business situations where firms compete,often they can escape the prisoner's dilemma and reach the most profitable outcome.Which of the following is a reason for this?

Figure 11-13 -Refer to Figure 11-13.If the diagram represents a typical firm in the market,what is likely to happen in the long run?

If firms are protected by substantial barriers to entry,short-run profits can turn into long-run profits.

Figure 11-4 Figure 11-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 11-4.What is the area that represents the total fixed cost of production?

An agreement among firms to charge the same price or otherwise not to compete is called

Firms in monopolistic competition compete by selling similar,but not identical products.

Which of the following is true of a typical firm in a monopolistically competitive industry?

In which of the following cartels is total cartel profit likely to be the highest?

Table 11-8 Suppose OPEC has only two producers, Saudi Arabia and Ecuador. Saudi Arabia has far more oil reserves and is the lower-cost producer compared to Ecuador. The payoff matrix in Table 11-8 shows the profits earned per day by each country. "Low output" corresponds to producing the OPEC assigned quota and "high output" corresponds to producing the maximum capacity beyond the assigned quota. -Refer to Table 11-8.What is the Nash equilibrium in this game?

Which of the following is not a reason why government officials are willing to impose entry barriers?

Figure 11-3 -Refer to Figure 11-3.What is the marginal revenue of the sixth unit of output?

In the long run,if price is less than average cost

Table 11-1 Quantity Price (dollars) Total Revenue (dollars) 1 \ 7.50 \ 7.50 2 7.00 14.00 3 6.50 19.50 4 6.00 24.00 5 5.50 27.50 6 5.00 30.00 -Refer to Table 11-1.The Table shows