Microeconomics Chapter 14

(Table: Demand Schedule of Gadgets) Use Table: Demand Schedule of Gadgets. The market for gadgets consists of two producers, Margaret and Ray. Each firm can produce gadgets with no marginal cost or fixed cost. If these two producers formed a cartel, split the production of output equally, and acted to maximize total industry profits, each firm's output would be _____, and each firm's profit would be _____.

250; $1,250

(Table: Demand Schedule of Gadgets) Use Table: Demand Schedule of Gadgets. The market for gadgets consists of two producers, Margaret and Ray. Each firm can produce gadgets with no marginal cost or fixed cost. If these two producers formed a cartel and acted to maximize total industry profits, total industry output would be _____, and the price would be _____.

500;$5

Which scenarios BEST describes an oligopolistic industry?

Coca-Cola and Pepsi sell most of the soft drinks consumed around the world.

_____ occurs when the only two firms in an industry agree to fix the price at a given level.

Collusion

An industry that consists of two firms is:

a duopoly.

To be called an oligopoly, an industry must have:

a small number of interdependent firms

An industry that is dominated by a few firms, each of which recognizes that its own choices can affect the choices of its rivals and vice versa, is:

an oligopoly.

An extreme case of oligopoly in which firms collude to raise joint profits is known as a:

cartel.

Oligopoly is a market structure that is characterized by a _____ number of _____ firms producing _____ products

small; interdependent; identical or differentiated

Tacit collusion is difficult to achieve in practice:

the larger the number of firms in the industry.

A well-known example of an international cartel is:

OPEc

The MOST important source of oligopoly in an industry is:

economies of scale

In an oligopoly:

firms recognize their interdependence.

The market structure that is characterized by only a small number of producers is:

oligopoly