Micro Econ final exam quiz #12 q's

Like monopolists, oligopolists are aware that an increase in the quantity of output always

reduces the price of their product.

Table 17-26. Two prescription drug manufacturers are faced with lawsuits. Refer to table 17-26. If both firms follow a dominant strategy, Firm A's profits (losses) will be

$-24m

Table 17-9. The table shows the demand schedule for a particular product. Refer to table 17-9. Suppose the market for this product is served by two firms that have formed a cartel. If the marginal cost of production is $4 and each firm incurs a fixed cost of $6, the combined profit of the cartel will be

$6.

Table 17-3 ; Imagine a small town in a remote area where only two residents, Maria and Miguel, own dairies that produce milk that is safe to drink. Each week Maria and Miguel work together to decide how many gallons of milk to produce. They bring milk to town and sell it at whatever price the market will bear. To keep things simple, suppose that Maria and Miguel can produce as much milk as they want without cost so that the marginal cost is zero. The weekly town demand schedule and total revenue schedule for milk is shown in the table below: Refer to table 17-3. If this market for milk were perfectly competitive instead of monopolistic, how many gallons of milk would be produced and sold?

12 gallons.

See the table in the previous question. Which outcome is the best for consumers?

Both producing at a high level.

Use the following table for the next three questions: Microsoft and Oracle are the primary competitors producing database software. The table below shows the payoff to each firm from pursuing different strategies. The payoff to Microsoft is in the right upper triangle of each payoff box and the payoff to Oracle is in the lower left.

Both producing at a low level.

See the table in the previous question. Which outcome is best for Microsoft?

Microsoft producing high and Oracle producing low.

Table 17-15. This table shows a game played between two players, A and B. The payoffs in the table are shown as (Payoff to A, Payoff to B). Refer to Table 17-15. Which of the following outcomes represents a Nash equilibrium in the game?

Middle-Right.

Table 17-24. Two firms are considering going out of business and selling their assets. Each considers what happens if the other goes out of business. The payoff matrix below shows the net gain or loss to each firm. Refer to table 17-24. Which firm's dominant strategy is to sell?

Neither firm A's nor firm B's.

Table 17-14. This table shows a game played between two players, A and B. The payoffs in the table are shown as (Payoff to A, Payoff to B). Refer to Table 17-14. Which outcome is the Nash equilibrium in this game?

Up-Left.