HW3 - Oligopolies

If firms in an oligopolistic industry consistently cut their price to sell more​ output, what price and output will​ result? A. the competitive price and output B. the monopolistically competitive price and output C. the monopoly price and output D. a price lower than the competitive price and more output than the competitive amount E. a price lower than the competitive price and less output than the competitive amount

the competitive price and output

Which of the following statements is​ correct? A. If one oligopolist reduces the price of its​ product, its demand curve shifts leftward. B. It is in the​ self-interest of each firm in an oligopoly to take the actions that maximize all the​ firms' joint profit. C. If firms in oligopoly look only at their own​ self-interest in deciding the output they should​ produce, the total market output will exceed that of a monopoly. D. A firm in oligopoly will charge a price that is lower than the price charged in perfect competition. E. Because many producers join to form a​ cartel, the market becomes monopolistic competition.

If firms in oligopoly look only at their own​ self-interest in deciding the output they should​ produce, the total market output will exceed that of a monopoly

​Sammy's Inc. competes with a few other firms because there are natural barriers to entry.​ Sammy's operates in A. a perfectly competitive market. B. a monopoly. C. an oligopoly. D. a natural monopolistically competitive market. E. a monopolistically competitive market.

an oligopoly

Imagine a duopoly in which two​ firms, A and​ B, produce the monopoly​ profit-maximizing output and equally share the economic profit. If firm A increases its​ output, the market price​ ________ and total economic profit of the two firms combined​ ________. A. falls; decreases B. ​falls; increases C. ​falls; does not change D. ​rises; decreases E. rises; increases

falls; decreases

The​ prisoners' dilemma is an example of A. game theory. B. product differentiation. C. collusion. D. decision making in a monopoly. E. monopolistic competition.

game theory

When a city licenses only 3 taxi firms to serve the​ market, the city has created a A. cartel. B. legal oligopoly. C. natural oligopoly. D. monopolistically competitive market. E. legal monopoly.

legal oligopoly.

Game theory is used to analyze the interactions among firms in​ ________. A. oligopoly B. monopoly C. perfect competition D. monopolistic competition E. Both answers A and D are correct.

oligopoly

Which of the following is found ONLY in​ oligopoly? A. one​ firm's actions affect another​ firm's profit B. the​ firm's demand curve is horizontal C. producers who sell identical products D. sellers face a downward sloping demand curve for their product E. entry into the industry is blocked

one​ firm's actions affect another​ firm's profit

The fact that firms in oligopoly are interdependent means that A. they definitely compete with each other so that the price is driven down to the monopoly level. B. there are too many of them for any one firm to influence price. C. there are barriers to entry. D. one​ firm's profits are affected by other​ firms' actions. E. they can produce either identical or differentiated goods.

one​ firm's profits are affected by other​ firms' actions

The table above shows the payoff matrix offered to two suspected​ criminals, Bonnie and Clyde. The payoffs are the years they will spend in prison. The suspected criminals are not allowed to communicate. Given the information in the payoff​ matrix, the Nash equilibrium is A. both Bonnie and Clyde confess to the crime. B. Clyde confesses and Bonnie might either confess or not​ confess, either outcome is consistent with the Nash equilibrium. C. Bonnie confesses only if she thinks Clyde denies committing the crime. D. Clyde confesses only if he thinks Bonnie denies committing the crime. E. both Bonnie and Clyde deny committing the crime.

both Bonnie and Clyde confess to the crime

A group of firms acting together to limit​ output, raise​ price, and increase economic profit is a called a A. duopoly. B. multi-firm competitive monopoly. C. monopolistic oligopoly. D. cartel. E. competitive oligopoly.

cartel

In an oligopoly in which the firms have entered into a cartel​ agreement, the Nash equilibrium exhibits which of the​ following? A. production at a price and output level close to monopolistic competition in the long run B. the firms cheating on the cartel​ agreement, which benefits society C. firms jointly maximizing profits D. one firm cheating on the cartel agreement and the other firms complying with the cartel agreement. E. the firms cheating on the cartel​ agreement, which harms society

the firms cheating on the cartel​ agreement, which benefits society

For a​ duopoly, the highest price is charged when the duopoly achieves A. the competitive outcome. B. the monopoly outcome. C. an outcome between the competitive outcome and the monopoly outcome. D. its noncooperative Nash equilibrium. E. Both answers A and D are correct because both refer to the same price.

the monopoly outcome