Exam 11: Monopolistic Competition and Oligopoly

As customers switch from renting DVDs to downloading or streaming movies from the Internet,Netflix will likely find it ________ to remain profitable as they face ________ competition with streaming movies than with mail order DVD rental.

Oligopolies are difficult to analyze because

Does the fact that monopolistically competitive firms do not achieve productive efficiency or allocative efficiency mean that there is a significant loss in consumer welfare?

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

For a monopolistically competitive firm,price equals average revenue.

According to a Wall Street Journal article,hhgregg has differentiated itself from its competition,particularly from large chain stores such as Best Buy,

If the demand curve for a firm is downward-sloping,its marginal revenue curve

Table 11-2 Eco Energy is a monopolistically competitive producer of a sports beverage called Power On.Table 11-2 shows the firm's demand and cost schedules. -Refer to Table 11-2.What is the marginal profit from producing and selling the 5th case?

If a typical monopolistically competitive firm is making short-run losses,then

Long-run equilibrium under monopolistic competition is similar to that under perfect competition in that

If a monopolistically competitive firm breaks even,the firm

In theory,in the long run,monopolistically competitive firms earn zero profits.However,in reality there are some ways by which a firm can avoid losing profits.Which of the following is one such way?

Explain the differences between total revenue,average revenue,and marginal revenue.

Explain why OPEC is caught in a prisoner's dilemma?

What is the incentive for a firm to join a cartel?

The equilibrium in the prisoner's dilemma is a dominant strategy Nash equilibrium.

Table 11-2 Eco Energy is a monopolistically competitive producer of a sports beverage called Power On.Table 11-2 shows the firm's demand and cost schedules. -Refer to Table 11-2.What is the output (Q)that maximizes profit and what is the price (P)charged?

Table 11-6 Suppose OPEC has only two producers,Saudi Arabia and Nigeria.Saudi Arabia has far more oil reserves and is the lower cost producer compared to Nigeria.The payoff matrix in Table 11-6 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 11-6.Which of the following statements is true?

If a monopolistically competitive firm breaks even,the firm is earning as much in this industry as it could in any other comparable industry.

Consider two single-malt whiskey distillers,Laphroaig and Knockando.If they advertise,they can both sell more whiskey and increase their revenue.However,the cost of advertising more than offsets the increased revenue so that each distiller ends up with a lower profit than if they do not advertise.On the other hand,if only one advertises,that distiller increases its market share and also its profit. a.Construct a payoff matrix using the following hypothetical information: If neither distiller advertises: each earns a profit of $35 million per year.If both advertise: each earns a profit of $20 million per year.If one advertises and the other does not: the distiller who advertises earns a profit of $50 million and the distiller who does not advertise earns a profit of $9 million. b.If the two distillers agree to coordinate their strategies,what is the outcome?