FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 17: Oligopoly

Show Answer

Share

---

All types

Filters

Study Flashcards

Question 1

Multiple Choice

Review LaterAdd Note

Review Later

In the game in which two oil companies own adjacent oil fields,the companies will not use the oil efficiently because

A) neither company has a dominant strategy in the game.
B) the companies collude and produce a quantity of oil that is less than the socially-efficient quantity.
C) the pool from which they recover the oil is a common resource.
D) the pool from which they recover the oil is not large enough to allow both companies to earn a positive profit.

E) All of the above
F) A) and D)

Correct Answer

verified

Show Answer

Question 2

Multiple Choice

Review LaterAdd Note

Review Later

Consider the diagram below,which shows the market demand curve for a particular product.Suppose this market is served by two duopolists who each face the marginal cost curve shown in the diagram.The marginal revenue curve that a monopolist would face in this market is also shown.Which of the following statements is true?

A) The total output in this market will likely be 2 units when the market is served by a duopoly.
B) The price in this market will likely be $6 when the market is served by a duopoly.
C) The total revenue to each firm will likely be more than $16 when the market is served by a duopoly.
D) The total output in this market will likely be less than 4 units when the market is served by a duopoly.

E) B) and C)
F) A) and D)

Correct Answer

verified

Show Answer

Question 3

Multiple Choice

Review LaterAdd Note

Consider a game of the "Jack and Jill" type in which a market is a duopoly and each firm decides to produce either a "high" quantity of output or a "low" quantity of output.If the two firms successfully reach and maintain the cooperative outcome of the game,then

Figure 17-3.Katie and Taylor are roommates.On a particular day,their lawn needs to be mowed.Each person has to decide whether to take part in mowing the lawn.At the end of the day,either the lawn will be mowed (if one or both roommates take part in mowing) ,or it will remain unmowed (if neither roommate mows) .With happiness measured on a scale of 1 (very unhappy) to 10 (very happy) ,the possible outcomes are as follows: -Refer to Figure 17-3.In pursuing her own self-interest,Taylor will

Table 17-12.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 17-12.Which outcome is the Nash equilibrium in this game?

OPEC is able to raise the price of its product by

Table 17-1 Imagine a small town in which only two residents,Lisa and Mark,own wells that produce safe drinking water.Each week Lisa and Mark work together to decide how many gallons of water to pump.They bring the water to town and sell it at whatever price the market will bear.To keep things simple,suppose that Lisa and Mark 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 is shown in the table below: -Refer to Table 17-1.If this market for water were perfectly competitive instead of monopolistic,what price would be charged?

Suppose a market is initially perfectly competitive with many firms selling an identical product.Over time,however,suppose the merging of firms results in the market being served by only three or four firms selling this same product.As a result,we would expect

Which of the following would be most likely to contribute to the breakdown of a cartel in a natural resource (e.g. ,bauxite) market?

As the number of firms in an oligopoly increases,the magnitude of the price effect increases.

Table 17-8.For a certain small town,the table shows the demand schedule for water.Assume the marginal cost of supplying water is constant at $4 per bottle. -Refer to Table 17-8.If there were many suppliers of bottled water,what would be the price and quantity?

The simplest type of oligopoly is

Table 17-2.The table shows the town of Pittsville's demand schedule for gasoline.For simplicity,assume the town's gasoline seller(s) incur no costs in selling gasoline. -Refer to Table 17-2.If the market for gasoline in Pittsville is a monopoly,then the profit-maximizing monopolist will charge a price of

Even when allowed to collude,firms in an oligopoly may choose to cheat on their agreements with the rest of the cartel.Why?

The Sherman Antitrust Act

Whether an oligopoly consists of 3 firms or 10 firms,the level of output likely will be the same.

The practice of tying is used to

Table 17-19.The Chicken Game is named for a contest in which drivers test their courage by driving straight at each other.John and Paul have a common interest to avoid crashing into each other,but they also have a personal,competing interest to not turn first to demonstrate their courage to those observing the contest.The payoff table for this situation is provided below.The payoffs are shown as (John,Paul) . -Refer to Table 17-19.What is John's dominant strategy?

Tying can be thought of as a form of price discrimination.

Table 17-1 Imagine a small town in which only two residents,Lisa and Mark,own wells that produce safe drinking water.Each week Lisa and Mark work together to decide how many gallons of water to pump.They bring the water to town and sell it at whatever price the market will bear.To keep things simple,suppose that Lisa and Mark 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 is shown in the table below: -Refer to Table 17-1.If Lisa and Mark operate as a profit-maximizing monopoly in the market for water,what price will they charge?