Question 1

A cartel is a group of firms that attempts to

Accepted Answer

A)  maximize joint revenue. 
B)  maximize joint profit. 
C)  behave independently. 
D)  increase consumer surplus. 
A)  maximize joint revenue. 
B)  maximize joint profit. 
C)  behave independently. 
D)  increase consumer surplus.

Question 2

In which of the following market structures with 2 identical firms do both firms produce more than the Cournot outcome?

Accepted Answer

A)  Stackelberg Oligopoly 
B)  Cartel 
C)  Perfect Competition 
D)  None of the above. 
A)  Stackelberg Oligopoly 
B)  Cartel 
C)  Perfect Competition 
D)  None of the above.

Question 3

In the long run,a monopolistically competitive firm

Accepted Answer

A)  earns zero economic profit. 
B)  produces at minimum average cost. 
C)  operates at full capacity. 
D)  All of the above. 
A)  earns zero economic profit. 
B)  produces at minimum average cost. 
C)  operates at full capacity. 
D)  All of the above.

Question 4

In the short run,a monopolistic competitor

Accepted Answer

A)  produces at minimum efficient scale. 
B)  produces where P = AC. 
C)  sets P = MC. 
D)  sets MR = MC. 
A)  produces at minimum efficient scale. 
B)  produces where P = AC. 
C)  sets P = MC. 
D)  sets MR = MC.

Question 5

Perfect competition and monopolistic competition are similar in that firms in both types of market structure will

Accepted Answer

A)  act as price takers. 
B)  produce a level of output where price equals marginal cost. 
C)  earn zero profit in the long run. 
D)  act as price setters. 
A)  act as price takers. 
B)  produce a level of output where price equals marginal cost. 
C)  earn zero profit in the long run. 
D)  act as price setters.

Question 6

Explain why a monopoly or a perfectly competitive firm does not consider a rival firm's behavior,but an oligopoly and a monopolistically competitive firm do.

Accepted Answer

A monopoly has no rivals.The market pric

Question 7

Monopolistically competitive firms

Accepted Answer

A)  have market power because they can set price above marginal cost. 
B)  have no market power because they earn zero economic profit. 
C)  have no market power because of free entry. 
D)  have no market power because price equals marginal cost. 
A)  have market power because they can set price above marginal cost. 
B)  have no market power because they earn zero economic profit. 
C)  have no market power because of free entry. 
D)  have no market power because price equals marginal cost.

Question 8

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.Compare the firms' profits if they behave as Cournot duopolists with their profits if they form a cartel and share the market.

Accepted Answer

First,the Cournot equilibrium.Firm A's p

Question 9

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.

Accepted Answer

Firm A's profit is π = [10 - (q_A + q_B)] @#IMG-DLM& -

Question 10

A firm with a flat demand curve

Accepted Answer

A)  has no brand loyalty. 
B)  has weak brand loyalty. 
C)  has strong brand loyalty. 
D)  isn't really worried about brand loyalty; flat demand curves guarantee zero profit. 
A)  has no brand loyalty. 
B)  has weak brand loyalty. 
C)  has strong brand loyalty. 
D)  isn't really worried about brand loyalty; flat demand curves guarantee zero profit.

Question 11

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

Accepted Answer

A)  Bertrand Oligopoly 
B)  Cournot Oligopoly 
C)  Cartel 
D)  All are equally preferable. 
A)  Bertrand Oligopoly 
B)  Cournot Oligopoly 
C)  Cartel 
D)  All are equally preferable.

Question 12

Cartels are inherently self-destructive because each member firm has the incentive to cheat on the cartel agreement.

Accepted Answer

A) True 
 B)False

Question 13

In comparing monopolistic competition to perfect competition,one can conclude that the lack of free entry is the key to having the ability to set price.

Accepted Answer

A) True 
 B)False

Question 14

Monopolistic competition and monopoly have all of the following in common EXCEPT

Accepted Answer

A)  P > MC. 
B)  firms are price setters. 
C)  barriers to entry. 
D)  MR = MC. 
A)  P > MC. 
B)  firms are price setters. 
C)  barriers to entry. 
D)  MR = MC.

Question 15

Strategic trade policy requires ALL of the following EXCEPT

Accepted Answer

A)  subsidies set before output levels. 
B)  non-retaliation of the trading partner. 
C)  credible actions on the part of the subsidizing government. 
D)  incomplete information on the part of the government. 
A)  subsidies set before output levels. 
B)  non-retaliation of the trading partner. 
C)  credible actions on the part of the subsidizing government. 
D)  incomplete information on the part of the government.

Question 16

If a cartel is unable to monitor its members and punish those firms that violate the agreement,then

Accepted Answer

A)  the member firms will each act as price setters. 
B)  the cartel will prosper in the long run. 
C)  the market will become a monopoly. 
D)  the cartel will fail. 
A)  the member firms will each act as price setters. 
B)  the cartel will prosper in the long run. 
C)  the market will become a monopoly. 
D)  the cartel will fail.

Question 17

Suppose duopolists face the market inverse demand curve P = 100 - Q,Q = q1 + q2,and both firms have a constant marginal cost of 10.If firm 1 is a Stackelberg leader and firm 2's best response function is q2 = (100 - q1)/2,at the Nash-Stackelberg equilibrium firm 1's output is

Accepted Answer

A)  30. 
B)  40. 
C)  60. 
D)  70. 
A)  30. 
B)  40. 
C)  60. 
D)  70.

Question 18

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?

Accepted Answer

A)  Cournot 
B)  Stackelberg 
C)  Monopoly 
D)  Cartel 
A)  Cournot 
B)  Stackelberg 
C)  Monopoly 
D)  Cartel

Question 19

What strategic advantage compared to a Cournot Oligopoly results in the Stackelberg outcome?

Accepted Answer

A)  the ability to move first 
B)  the ability to set price 
C)  the ability to set quantity 
D)  the ability to make independent decisions by the Stackelberg leader 
A)  the ability to move first 
B)  the ability to set price 
C)  the ability to set quantity 
D)  the ability to make independent decisions by the Stackelberg leader

Question 20

The Bertrand model of price setting assumes that a firm chooses its price

Accepted Answer

A)  independently of what price other firms charge. 
B)  subject to what price rival firms are charging. 
C)  so that joint profits are maximized. 
D)  without considering the shape of the demand curve. 
A)  independently of what price other firms charge. 
B)  subject to what price rival firms are charging. 
C)  so that joint profits are maximized. 
D)  without considering the shape of the demand curve.

A cartel is a group of firms that attempts to

In which of the following market structures with 2 identical firms do both firms produce more than the Cournot outcome?

In the long run,a monopolistically competitive firm

In the short run,a monopolistic competitor

Perfect competition and monopolistic competition are similar in that firms in both types of market structure will

Explain why a monopoly or a perfectly competitive firm does not consider a rival firm's behavior,but an oligopoly and a monopolistically competitive firm do.

Monopolistically competitive firms

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.Compare the firms' profits if they behave as Cournot duopolists with their profits if they form a cartel and share the market.

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.

A firm with a flat demand curve

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

Cartels are inherently self-destructive because each member firm has the incentive to cheat on the cartel agreement.

In comparing monopolistic competition to perfect competition,one can conclude that the lack of free entry is the key to having the ability to set price.

Monopolistic competition and monopoly have all of the following in common EXCEPT

Strategic trade policy requires ALL of the following EXCEPT

If a cartel is unable to monitor its members and punish those firms that violate the agreement,then

Suppose duopolists face the market inverse demand curve P = 100 - Q,Q = q₁ + q₂,and both firms have a constant marginal cost of 10.If firm 1 is a Stackelberg leader and firm 2's best response function is q₂ = (100 - q₁)/2,at the Nash-Stackelberg equilibrium firm 1's output is

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?

What strategic advantage compared to a Cournot Oligopoly results in the Stackelberg outcome?

The Bertrand model of price setting assumes that a firm chooses its price

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 13: Oligopoly and Monopolistic Competition

A cartel is a group of firms that attempts to

In which of the following market structures with 2 identical firms do both firms produce more than the Cournot outcome?

In the long run,a monopolistically competitive firm

In the short run,a monopolistic competitor

Perfect competition and monopolistic competition are similar in that firms in both types of market structure will

Explain why a monopoly or a perfectly competitive firm does not consider a rival firm's behavior,but an oligopoly and a monopolistically competitive firm do.

Monopolistically competitive firms

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.Compare the firms' profits if they behave as Cournot duopolists with their profits if they form a cartel and share the market.

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.

A firm with a flat demand curve

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

Cartels are inherently self-destructive because each member firm has the incentive to cheat on the cartel agreement.

In comparing monopolistic competition to perfect competition,one can conclude that the lack of free entry is the key to having the ability to set price.

Monopolistic competition and monopoly have all of the following in common EXCEPT

Strategic trade policy requires ALL of the following EXCEPT

If a cartel is unable to monitor its members and punish those firms that violate the agreement,then

Suppose duopolists face the market inverse demand curve P = 100 - Q,Q = q1 + q2,and both firms have a constant marginal cost of 10.If firm 1 is a Stackelberg leader and firm 2's best response function is q2 = (100 - q1)/2,at the Nash-Stackelberg equilibrium firm 1's output is

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?

What strategic advantage compared to a Cournot Oligopoly results in the Stackelberg outcome?

The Bertrand model of price setting assumes that a firm chooses its price

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Suppose duopolists face the market inverse demand curve P = 100 - Q,Q = q₁ + q₂,and both firms have a constant marginal cost of 10.If firm 1 is a Stackelberg leader and firm 2's best response function is q₂ = (100 - q₁)/2,at the Nash-Stackelberg equilibrium firm 1's output is