Ag Econ quiz 8

A breakdown in price leadership leading to successive rounds of price cuts is known as:

a price war

OPEC provides an example of:

an international cartel

Which of the following is the best example of oligopoly?

automobile manufacturing

The kinked-demand curve of an oligopolist is based on the assumption that:

competitors will follow a price cut but ignore a price increase.

The monopolistically competitive seller maximizes profit by producing at the point where:

marginal revenue equals marginal cost.

The restaurant, legal assistance, and clothing industries are each illustrations of:

monopolistic competition.

Which of the following is a unique feature of oligopoly?

mutual interdependence

When a monopolistically competitive firm is in long-run equilibrium:

MR = MC and P > minimum ATC.

Cartels are difficult to maintain in the long run because:

individual members may find it profitable to cheat on agreements.

Game theory:

is the analysis of how people (or firms) behave in strategic situations.