Exam 18: Oligopoly

Daryl's Inc.has formed a cartel with the two other firms in its industry.In which of the following market structures does Daryl's operate?

In 1911,Standard Oil Co.was declared a monopoly by the government under the Sherman Act and the company was ordered to break itself up into competing companies.Two oil companies,Exxon and Mobil,were the result of this breakup.A few years ago,Exxon and Mobil merged again to form ExxonMobil Corporation.Why did the government allow this merger now?

If an industry has a Herfindahl-Hirschman index of 800,it is considered a

Under the Clayton Act and its amendments,which of the following activities is illegal if it creates monopoly? i.contracts that require other goods to be bought from the same firm ii.contracts that prevent a buyer from reselling a product outside a specified area iii.becoming a director of a competing firm

Which of the following is an example of a territorial confinement?

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,the figure shows a ________ can profitably operate.

-Two firms are competing in a duopoly and are trying to decide which price to set.The two prices under consideration are a high monopoly price and a low competitive level.If both seller A and seller B chose the monopoly price,each will make $20 million of economic profit.However,if one picks the monopoly price while the other picks the competitive price,the high-price firm will lose $1 million while the low-price firm will make $32 million.If both sell at the competitive level,they both make zero economic profit.Complete the payoff matrix below and determine the Nash equilibrium.

-The figure above shows that ________ occurs at ________ units and that ________ firms should share the market.

When an oligopoly reduces its price with the intent of driving away its competitors,it is said to be engaging in

In order for the Federal Trade Commission to consider an industry concentrated,the industry must have a Herfindahl-Hirschman Index of

The range in which a duopoly's output falls is less than or equal to the output level in ________ and more than or equal to the output level in ________.

The Federal Trade Commission ________ the merger between AT&T and T-Mobile because the merger was projected to ________.

Suppose the industry for washing machines has only four firms.The market shares are: Firm A,40 percent; Firm B,20 percent; Firm C 20,percent; and Firm D,20 percent. a.What is the Herfindahl-Hirschman Index (HHI)? b.If Firms C and D were to announce a merger,would the Federal Trade Commission oppose the merger?

An oligopoly created because of economies of scale is called a

If a firm,Best Computer Buys,requires its customers to buy software from it whenever the customers purchase a computer,the company's policy is called

-The only two firms in a market are trying to decide what price to charge.The payoff matrix for this duopoly game is shown above.The payoffs are thousands of dollars of economic profit.In the Nash equilibrium,Firm A will set a price of ________ and Firm B will set a price of ________.

If Polka Cola prevents all of its retail outlets from selling any other competing soft drink,it is engaged in

The first antitrust law in the United States was the

Which of the following can be games played by firms in an oligopoly? i.choosing how much to spend on advertising ii.choosing how much to spend on R&D iii.choosing to enter a legal duopoly

Economists are skeptical that ________ occurs very often because firms engaging in it are certain to suffer an economic loss for a period of time.