Exam 11: Monopolistic Competition and Oligopoly

Firms such as Caribou Coffee and Diedrich Coffee operate hundreds of coffeehouses nationwide while firms such as Dunn Brothers Coffee operate only in four states.How would you characterize these stores?

Collusion would be common in an oligopoly and a monopolistically competitive industry.

Which of the following is not an example of a monopolistically competitive market?

A monopolistically competitive firm maximizes profit where

The DeBeers Company of South Africa was able to block competition through

Assume that price exceeds average variable cost over the relevant range of demand.If a monopolistically competitive firm is producing at an output where marginal revenue is $111.11 and marginal cost is $118,then to maximize profits the firm should increase its output.

If price exceeds average variable cost but is less than average total cost,a firm

Table 11-3 Table 11-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 11-3.What is the best course of action for the firm in the short run?

Figure 11-10 -Refer to Figure 11-10.Figure 11-10 depicts a monopolistically competitive barber shop.Use the diagram to answer the following questions. a.Suppose the average variable cost of production is $15 when output equals 110 haircuts and $15.25 when output equals 140 haircuts.If the firm wants to maximize its profit or minimize its losses,how many haircuts will it produce and what price should it charge? Explain your answer. b.Calculate the firm's profit or loss. c.What is likely to happen in this industry over time as it moves to its new long-run equilibrium? d.Suppose the barber shop depicted in the diagram remains in the industry.Is this barber shop likely to produce this same quantity of haircuts as in part (a)in the long run?

Table 11-5 Table 11-5 shows the payoff matrix for Wal-Mart and Target from every combination of pricing strategies for the popular PlayStation 3.At the start of the game each firm charges a low price and each earns a profit of $7,000. -Refer to Table 11-5.For each firm,is there a better outcome than the current situation in which each firm charges the low price and earns a profit of $7,000?

Unlike a perfectly competitive firm,for a monopolistically competitive firm

Monopolistic competition differs from oligopoly in that in monopolistic competition firms act independently while in oligopoly firms act interdependently.

All of the following are characteristics of game theory except

Explain how collusion makes firms better off.Given the incentives to collude,briefly explain why every industry does not become a cartel.

An oligopolist's demand curve is

How does the demand curve for an oligopoly firm differ from the demand curves for firms in competitive market structures?

The key characteristics of a monopolistically competitive market structure include

Consider two oligopolistic industries selling the same product in different locations.In the first industry,firms always match price changes by any other firm in the industry.In the second industry,firms always ignore price changes by any other firm.which of the following statements is true about these two industries,holding everything else constant?

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.

Which of the following is the best example of an oligopolistic industry?