Practice Chapter 17 Quiz

The table shows the town of Marietta's demand schedule for gasoline. For simplicity, assume the town's gasoline seller(s) incur marginal costs of $2 per gallon in selling gasoline. Refer to Table above. If the market for gasoline in Marietta is perfectly competitive, then the equilibrium price of gasoline is

$2 and the equilibrium quantity is 800 gallons

Imagine a small town in which only two residents, Jamal and Jim, own wells that produce safe drinking water. Each week Jamal and Jim work together to decide how many gallons of water to pump, to bring the water to town, and to sell it at whatever price the market will bear. Assume Jamal and Jim can pump as much water as they want without cost so that the marginal cost of water equals zero. The weekly town demand schedule and total revenue schedule for water are shown in the table below. Refer to Table above. Since Jamal and Jim operate as a profit-maximizing monopoly ( NOT A PERFECTLY COMPETITIVE) in the market for water, what price will they charge at what quantity for water

$6 and 150 gallons

In the prisoners' dilemma game, self-interest leads

All of the above are correct

Which of the following statements is correct?

All of the above are correct

Which of the following is true about Nash equilibrium?

All of the above are true

Two suspected bank robbers are stopped by the highway patrol for speeding. The officer searches the car and finds a small bag of stolen money and arrests the two. During the interrogation, each is separately offered the following: "If you confess to dealing drugs and testify against your partner, you will be given immunity and released while your partner will get 20 years in prison. If you both confess, you will each get 2 years." If neither confesses, there is no evidence of drug dealing, you will set free". According the prisoner dilemma game economist agrees that you should _____

Confess regardless of the partner's decision

Which of the following statements is correct?

When oligopoly firms collude, they are behaving as a cartel

Suppose that Zeynep and Kenny are duopolists. Zeynep is producing 700 units of output, and Kenny is producing 500 units of output. When Kenny produces 500 units, Zeynep maximizes profit by producing 700 units. When Zeynep produces 700 units of output, Kenny maximizes profit by producing 500 units. Zeynep and Kenny are

at the Nash equilibrium

The likely outcome of the standard prisoners' dilemma game is that

both prisoner confesses

Two home-improvement stores in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their store and parking lot to accommodate potential growth in their customer base. The following game depicts the strategic outcomes that result from the game. Increases in annual profits of the two home-improvement stores are shown in the table below. Refer to Table above. Increasing the size of its store and parking lot is a dominant strategy for

both stores

As a group, oligopolists would always earn the highest profit if they would

charge the same price that a monopolist would charge if the market were a monopoly

0 / 5 points In a particular town, DigiTV and Pompast are the only two providers of cable TV service. DigiTV and Pompast constitute a

duopoly, whether they collude or not

In game theory general, is the study of

how people behave in strategic situations

Economists claim that a resale price maintenance agreement is not anti-competitive because

if a supplier has market power, it will be likely to exert that power through wholesale price rather than retail price

The practice of tying is illegal on the grounds that

it allows firms to expand their market power

Game theory is important for the understanding of

oligopoly

Antitrust laws in general are used to

prevent oligopolists from acting in ways that make markets less competitive

Kelani Computer Co. sells computers to retail stores for $500. If Kelani requires the retailers to charge customers $600 for the computers, then it is engaging in

resale price maintenance

Because each oligopolist cares about its own profit rather than the collective profit of all the oligopolists together,

they are unable to maintain the same degree of monopoly power enjoyed by a monopolist

Two home-improvement stores in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their store and parking lot to accommodate potential growth in their customer base. However, if they both expand they will have to cut their prices and profits since there will be an excess of supply. The following game depicts the strategic outcomes that result from the game. Increases in annual profits of the two home-improvement stores are shown in the table below.

will be larger for both firms combined if they agree not to expand