Exam 13: Monopolistic Competition and Oligopoly

Assume that there are only two full-service airline firms in a country.The service provided to the consumers by each of them is marginally different.Given that the full-service airline industry has high entry costs,the _____ model of the market is most applicable to this industry.

Product differentiation in monopolistically competitive markets:

Product differentiation and a certain degree of monopoly power are characteristics of:

The output of a cartel that maximizes profits is closest to the equilibrium output of:

A single firm serves a large part of the market.The rest of the market is served by a large number of competitive firms.Which market model is best applicable to this type of industry?

How does the Stackelberg model of oligopoly differ from the dominant firm model?

In Cournot's duopoly model,a firm's profit-maximizing level of output:

In an industry where one firm with a high market share uses the reaction curves of other firms to set output,the _____ model is most applicable.

Answer the following: (a)Assume two firms face a market demand curve of P = a - bQ,where a and b are positive constants,and marginal cost equals c for both firms.Fill in the following table,identify the respective points of equilibrium on the graph below,and explain the relevant characteristics of each model as you work through them. b)Following your answers above,explain intuitively how output and price vary by market structure.

In the dominant firm model of oligopoly,the dominant firm maximizes profits by producing at the point where:

A monopolistically competitive firm differs from a perfectly competitive firm in that:

A duopoly is defined as an industry with _____.

Compared to a Cournot equilibrium,the _____ in a Stackelberg equilibrium.

Given the same demand and cost conditions,_____ for a Stackelberg model as compared to a Cournot duopoly model.

Suppose that most consumers who buy portable camping stoves buy the ones produced by Marshall and Blatt (M&b..Besides M&B,the portable stove market has a large number of smaller suppliers.The market demand curve for portable stoves is given by Q_D = 100 - 0.5P.The supply curve for all the other firms taken together is Q_S = 0.5P.M&B's total cost function has been estimated to be C = 5Q_M.Given that M&B sets output first,calculate how the total quantity supplied in the market is divided between M&B and the other firms.What is the price in the market?

A monopolistically competitive firm is considered to have excess capacity because it:

Suppose ABC Concrete is the dominant firm in a market consisting of five firms.ABC's market share is 40% of the market.The elasticity of market demand is 0.8 and the elasticity of Supply for the remaining firms is 6.What is the elasticity of demand for ABC's product?

Which of the following is true of the Cournot duopoly model?

Which of the following is a key element of the Cournot model?

One of the earliest oligopoly models,as explained by Augustin Cournot,took the example of two firms that produced a homogeneous product: bottled spring water.Both firms faced zero marginal costs and a linear demand curve.Using this information,show that the Cournot equilibrium output is 2/3^rd of the perfectly competitive equilibrium output.