Question 26 According to the kinked demand curve theory of oligopoly, each firm thinks its demand curve at prices below the existing price is a. more elastic than at prices above the existing price since price increases will be matched. b. less elastic than at prices above the existing price since price increases will be matched. c. more elastic than at prices above the existing price since price increases will not be matched. d. less elastic than at prices above the existing price since price increases will not be matched.

Question 26 According to the kinked demand curve theory of oligopoly, each firm thinks its demand curve at prices below the existing price is a. more elastic than at prices above the existing price since price increases will be matched. b. less elastic than at prices above the existing price since price increases will be matched. c. more elastic than at prices above the existing price since price increases will not be matched. d. less elastic than at prices above the existing price since price increases will not be matched.

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Oligopoly

Section: Chapter Questions

Problem 1CQQ

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9. Refer to the example below. Provide a clear explanation for why an oligopoly faces a kinked demand curve. Price ($) $600 $500 $400 $300 $200 $100 0 0 (5,000, $550) 5,000 (10,000, $500) (11,000, $300) 10,000 Quantity 15,000 20,000
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18. Horizontal Integration is most likely to lead to an industry that is: monopolistically competitive an oligopoly any of the other answers O perfectly competitive
3. Demand for a good produced by a duopoly is given by P = 100 - Q. Both firms have constant marginal costs, MC = 20 and zero fixed costs. Firms can choose to maximize profit or revenue. Suppose firm 1 choose to maximise profit and firm 2 choose to maximise revenue. Determine the equilibrium price and quantity of each firm.
1. Write a sentence or two defining the following terms in your own words. Give examples of each. s. Oligopoly t. Induced u. Inelastic Demand
1.) Suppose you have a 10 identical firm Cournot Oligopoly. You don't have a demand equation but you do know that the market elasticity of demand is equal to -0.5 and MC = $4. What is market price? $4.00. none of the available options. $10.00 $5.00. 2.) Refer to the previous question. Suppose 2 firms leave the market. What is the new price? $5.33. $8.00. $4.00. none of the available options.
Question 20 In the market for a brand name medicine with a single company selling the medicine, that company is a_______Eventually, the government lets other companies sell the medicine as a "generic" alternative to the brand name. The effect of this increased competition is to_______ the medicine's price.O. monopoly, decreaseO. oligopoly, decreaseO. monopoly, increaseO. oligopoly, increase
12. Homogeneous oligopoly exists where a small number of firms are: A) producing virtually identical products. B) setting price and output independently. C) setting price and output collusively. D) producing differentiated products.
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16 When does a kinked demand curve occur? When one firm in a duopoly cuts prices and forces the exit of the other firm BO When competing oligopoly firms agree to increase prices at the same time and rate CO When competing oligopoly firms commit to match price cuts but not price increases DO When a natural monopoly raises its prices and provides an opportunity for market entry