The number of firms in an oligopoly must be: O a) Large enough so that firms cannot coordinate. O b) Small enough so that revenues are large enough to support advertising expenditures. c) Small enough so that one firm's decisions have a significant impact on the total revenues and market shares of the other firms in the industry. d) Four.

The number of firms in an oligopoly must be: O a) Large enough so that firms cannot coordinate. O b) Small enough so that revenues are large enough to support advertising expenditures. c) Small enough so that one firm's decisions have a significant impact on the total revenues and market shares of the other firms in the industry. d) Four.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Oligopoly

Section: Chapter Questions

Problem 4CQQ

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Which of the following is an assumption of the theory of oligopoly? O Firms produce and sell either homogeneous or differentiated products. O There are no barriers to entry. O a and c There are many sellers and many buyers.
Which of the following is a characteristic of oligopoly? O A single firm selling a unique product. O Many buyers and sellers. No barriers to entry. O Mutual interdependence of firms.
1. Best responses in a Cournot Oligopoly Firm A and Firm B sell identical goods Total market demand for the good is: The inverse demand function is therefore 1 P(QM) = 780 -Q=780 -0.02222QM 45 QM is total market production (i.e., combined production of firm's A and B. That is: Q(P) = 35, 100- 45P 2M = A +QB As a result, the inverse demand curve for each firm is: P(QA, QB) = 780- -1/32₁-752 45 Unlike the example in class, the two firms have different costs. = 4000A TCA (QA) TCB (QB) = 260QB = 780 -0.022220A -0.02222QB a. Using the demand function and the cost functions above, what is firm A's profit function. b. Using the profit function above and assuming that firm B produces Qg, calculate what firm A's best response is to firm B’s decision to produce QB- Note: Firm A's best response should be a function of B
One key difference between an oligopoly market and a competitive market is that oligopolistic firms O are price takers while competitive firms are not. sell their product at a price equal to marginal cost while competitive firms do not. O can affect the profit of other firms in the market by the choices they make while firms in competitive markets do not affect each other by the choices they make. O sell completely unrelated products while competitive firms do not
bok rint An oligopoly producing a homogeneous product is comprised of three firms that act like a cartel. Assume that these three firms have identical cost schedules. Assume also that if any one of these firms sets a price for the product, the other two firms charge the same price. As long as they all charge the same price they will share the market equally; and the quantity demanded of each will be the same. Below is the total-cost schedule of one of these firms and the demand schedule that confronts it when the other firms charge the same price as this firm. Complete the marginal-cost and marginal- revenue schedules facing the firm. erences Mc Graw Hill Output Total cost Marginal cost Price Quantity demanded Marginal revenue 0 1 23456 7 8 $0 180 300 480 720 1,020 1,380 1,800 2,280 Short Anewor LA JUL 26 $780 720 660 600 540 480 420 360 Toolbar navigation (a) What price would be charged, what output would be produced, and what profit would be made by this firm? (b) If the firms…
If three firms that comprise an oligopoly form a cartel, which of the following statements is likely to be true. O Each firm will increase output. O The costs of each firm will decline. O In the industry the market price will increase. All of the above are likely to be true.
QUESTION 4 If Bertrand duopolists respectively have marginal costs of 10 (firm 1) and 8 (firm 2), which of the prices below can arise in Nash equilibrium? (Assume that prices must be quoted in full cents, e.g. $0.99 or $1, but $0.995 is not possible. If prices are equal, half of the customers buy from each firm.) O Both firms charge $8.01. Firm 1 charges $10 and firm 2 charges $8. Both firms charge $9. Firm 1 charges $10 and firm 2 charges $9.99.
One of the predictions of the oligopoly model is that: non-price competition is uncommon and price-cutting competition among rivals is common. O prices tend to remain relatively stable despite short-run fluctuations in market demand. the firms' costs of production (raw material, labor, advertising) remain constant over time. only one buyer (monopsony) will result in the long run. MacBook Pro -> G Search or type URL %23 3 4. 7 8 W R Y
Monopolistic Competition, Oligopoly, and Game Theory: End of Chapter Problems 10. Poker players are known to bluff once in a while, meaning that they will make a large bet despite holding inferior cards in an effort to pressure other players to fold their hands. Would bluffing be considered a dominant strategy in poker? Yes, because it is the main strategy used by players. O No, because if a player bluffs on every hand, other players will catch on and call his or her bluff. No, because bluffing is usually not successful and is therefore considered a secondary strategy. Yes, because it usually results in a winning hand. Incorrect Question Source: Chiang 4e - Economics Principles For A Changing World Publisher: Worth Publi 11:12 PM 44°F 12/13/2021 近
The payoff matrix below is for two firms, A and B, deciding the quantity of their output levels. What is the dominant strategy of each firm? icrosc Firm B Strategy High output Low output High output 100, 80 0, 125 Firm A Low output 65, 0 40, 65 Both firms produce low levels of output. DO cGill Both firms produce high levels of output. Temp Firm A's dominant strategy is to produce low levels of output, but Firm B does not have a dominant strategy. Order Article O Firm B's dominant strategy is to produce low levels of output, but Firm A does not have a dominant strategy. Neither firm has a dominant strategy. oy 00 halysis
The graph below shows a demand curve for a firm operating in an oligopolistic market. Kinked Demand Price 100 90 80 70 MC 60 50 40 30 20 10 MR D 10 20 30 40 60 70 80 90 100 Quantity Compared to a price of $75, at a price of $60 demand is O relatively more elastic. O relatively more inelastic. O perfectly elastic. O perfectly inelastic.
Consider two firms that produce identical products in a situation of duopoly. The two firms have the same marginal cost. Which of the following statements is true: O Under Cournot competition, the equilibrium price is lower than the equilibrium price under Bertrand competition O Under Cournot competition, the equilibrium price will be at the same level as the equilibrium price under perfect competition Under Cournot competition, the equilibrium price will be at the same level as the price under a monopoly O Under Bertrand competition, the equilibrium price will be at the same level as the equilibrium price under perfect competition O The two firms will end up producing different levels of output