FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 13: Oligopoly and Strategic Behavior

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

If antitrust laws did not prohibit efforts to restrict competition in markets:

A) no firms would attempt to collude on price and/or quantity.
B) attempts at collusion with rival firms on price and or/quantity would succeed all the time.
C) attempts at collusion with rival firms would probably fail more often than not.
D) all firms in the economy would earn negative economic profit in the long run.
E) all firms in the market would earn zero economic profit in the long run.

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

The accompanying table shows a small community's demand for monthly subscriptions to a streaming movie service.Assume that only two firms (Nextflix and Flixbuster) sell in this market,that each firm offers the same quality of service and movie selection,and that each firm's marginal cost is constant and equal to 0 (zero) due to excess capacity.Use this information to answer the questions that follow. -Listed below are four different collusive agreements that Nextflix and Flixbuster are considering.Assuming both firms will abide by the terms,which collusive agreement(s) would maximize total profit in the market? I.Nextflix supplies 400 subscriptions and Flixbuster supplies 500 subscriptions. II) Nextflix supplies 500 subscriptions and Flixbuster supplies 300 subscriptions. III) Nextflix supplies 250 subscriptions and Flixbuster supplies 250 subscriptions. IV) Nextflix supplies 100 subscriptions and Flixbuster supplies 400 subscriptions.

A) agreement I
B) agreements I and II
C) agreements II and III
D) agreement IV
E) agreements III and IV

Correct Answer

verified

Show Answer

Question 43

Multiple Choice

Review LaterAdd Note

When modeling economic situations using game theory,the economic participants are generally referred to as:

When more firms enter into a market that was previously characterized as a duopoly,it will:

Player A and Player B are playing a game involving several rounds of a prisoner's dilemma where their choices are to "cooperate" or "defect." After each round ends,one player roles a six-sided die.If the die lands on 6,the game ends; however,if the die lands on any other number,the game continues and players play another round.Prior to the game starting,the players formulate a strategy that specifies what they will do in every possible round they might find themselves in.If Player A is playing the tit-for-tat strategy,in the:

The __________ Act was passed in 1890,and the __________ Act was passed in 1914.

Which of the following industries is most likely an oligopoly?

Three firms are currently producing and selling in a market.When one of the three firms exits the market,economists expect that the equilibrium price:

In general,antitrust laws are __________ to enforce.

The accompanying table shows a small community's demand for monthly subscriptions to a streaming movie service.Assume that only two firms (Nextflix and Flixbuster) sell in this market,that each firm offers the same quality of service and movie selection,and that each firm's marginal cost is constant and equal to 0 (zero) due to excess capacity.Use this information to answer the questions that follow. -If this market were highly competitive instead of a duopoly,the market price would be __________ and the quantity of streaming movie subscriptions purchased each month would be __________.

In January 2011,Coca-Cola and Pepsi agreed to reduce their yearly advertising budgets by $1 million each,and neither firm reneged on the agreement throughout the year.In January 2012,Coca-Cola and Pepsi each announced that their company 2011 profits had increased by $1 million.Which of the following is a likely explanation for this increase?

Kit-N-Sit,Inc.and Kittysitters,Inc.are two cat-sitting services in Kent,Ohio.There are no other cat-sitting services so the market is considered to be a duopoly.According to the kinked demand curve theory,if Kit-N-Sit,Inc.cuts prices,Kittysitters will __________; if Kit-N-Sit,Inc raises prices,Kittysitters,Inc.will __________.

In 2011,three firms (Firm A,Firm B,and Firm C) were selling cellular phone service for a price of $40 per month in Hershey,Pennsylvania.Each firm serviced 100 cellphone customers; thus,all firms together serviced a total of 300 customers.Assume marginal cost is 0 (zero) for all firms and thus total revenue is equal to total profit.In 2012,Firms A and B continued to service 100 customers,but Firm C now serviced 150 customers; thus,all firms together serviced a total of 350 customers.All firms now charge $30 per month. Due only to the price effect,profits for each firm decline by $1,000.Due only to the output effect,profits for both Firm A and Firm B did not change,and profits for Firm C increased by $1,500.It was in Firm C's interest to increase output because:

Jason's JPMorgan Chase credit card has a 15% interest rate and a rewards program that gives him 1 point per $1 that he spends.The only option Jason has for point redemption is a $100 statement credit that would cost Jason 10,000 points.On January 7,2012,Jason noticed he has 8,750 reward points accumulated on his JPMorgan Chase card.On that same day,he received an offer from Bank of America for a credit card with an identical rewards program and an 8% interest rate.If Jason cancels his JPMorgan Chase card and accepts the offer for the Bank of America card,the accumulated 8,750 reward points that he will not be able to redeem are an example of a:

The accompanying table shows two firms in a single- stage duopoly game.Each firm makes its decision without knowledge of the other firm's decision.The payoffs for each firm represent economic profits,and each firm strictly prefers more economic profit than less.Assume firms are not able to collude.The Nash equilibrium total quantity of potatoes on the market is:

Deidra ________ a dominant strategy,and this game ________ a Nash equilibrium.

Facebook is by far the largest social-networking website in the world.Explain how network externalities help Facebook maintain its position as market leader.

A __________ externality exists when the number of customers who purchase a good or use it influences the quantity demanded.

A firm that produces a product that is characterized by __________ externalities finds it easier to keep its customers from switching to rivals.

The __________ effect occurs when a buyer's preference for a product increases as the number of people buying it increases.