ECON

A group of firms that has entered into an agreement to restrict output and increase prices and profits is called

a cartel.

What does monopolistic competition have in common with perfect competition?

a large number of firms and freedom of entry and exit

Sammy's Inc. competes with a few other firms because there are natural barriers to entry. Sammy's operates in

an oligopoly

Firms in monopolistic competition have demand curves that are

downward sloping.

If two duopolists can stick to a cartel agreement to boost their prices, then both

earn greater profits than if they did not collude.

measure whether the market is dominated by a small number of firms.

earn zero economic profit

When firms in monopolistic competition incur an economic loss, some firms will

exit the industry, and demand will increase for the firms that remain.

Imagine a duopoly in which two firms, A and B, produce the monopoly profit-maximizing

firm A's profits increase and firm B's profits decrease

A Nash equilibrium

is named after the Nobel prize winning economist, John Nash. ii. occurs when each player chooses the best strategy given the strategy of the other player

One characteristic of monopolistic competition is that it has

many firms producing identical goods.

Concentration ratios

measure whether the market is dominated by a small number of firms.

When firms in an oligopoly successfully collude and do not cheat on a cartel agreement, they can achieve long-run economic profit similar to

monopoly.

The prisoners' dilemma is similar to the problem faced by firms in an oligopoly in the United States because

mutual interdependence exists, and collusion is illegal in the United States, so the firms cannot legally communicate.

An oligopoly created because of economies of scale is called a

natural oligopoly

In a prisoners' dilemma game, in the Nash equilibrium

neither player gets his or her best outcome.

If firms in monopolistic competition are earning economic profits, eventually

new firms enter the industry

Game theory is used to analyze the interactions among firms in ________.

oligopoly

If an oligopolistic game is repeatedly played, which of the following can occur?

players can learn ways to cooperate and earn an economic profit

In monopolistic competition, the entry of new firms

shifts existing firms' demand curves leftward.

In an oligopoly, output is

somewhere between the output in monopoly and that in perfect competition outcomes.

Firms in monopolistic competition determine the profit-maximizing level of output by producing

where marginal revenue equals marginal cost