13 OLIGOPOLY.

Presentation on theme: "13 OLIGOPOLY."— Presentation transcript:

13 OLIGOPOLY

Q1: In ________, a firm’s output depends ________.
A oligopoly; only on its own marginal revenue and marginal cost B monopolistic competition; in part on its competitors’ price and quantity decisions C oligopoly; in part on its competitors’ price and quantity decisions D monopolistic competition; only on its own marginal revenue C oligopoly; in part on its competitors’ price and quantity decisions © 2012 Pearson Addison-Wesley

C perfectly competitive D monopolistically competitive
Q2: Two firms make most of the consumer alkaline batteries in the country: Duracell and Energizer. The market for batteries is most likely _______. A a monopoly B an oligopoly C perfectly competitive D monopolistically competitive B an oligopoly © 2012 Pearson Addison-Wesley

B Only one firm will cheat. C Neither firm will cheat.
Q3: In a duopoly game, we observe the following payouts: If the two firms collude, they will each make \$50,000. If one firm cheats, then it makes \$60,000 and the other firm makes \$10,000. If both firms cheat, then they each make zero economic profit. In this game, what is the Nash equilibrium? A Both firms cheat. B Only one firm will cheat. C Neither firm will cheat. D It is impossible to say. A Both firms cheat. © 2012 Pearson Addison-Wesley

A Both firms will conduct R&D. B Both firms will steal R&D.
Q4: Intel has 80 percent of the market for microprocessors, AMD has the rest. Conducting R&D is very expensive, so suppose that each firm can either undertake R&D or not. If both firms undertake R&D, each firm will make a profit of \$50 million. If one firm does not undertake R&D, that firm makes a loss of \$10 million while the other firm makes a profit of \$100 million. If both neither firm undertakes R&D, each firm breaks even. What is the outcome of this game? A Both firms will conduct R&D. B Both firms will steal R&D. C The outcome will be a dominant strategy equilibrium. D Only one firm will conduct R&D, but we cannot predict which firm will conduct R&D. A Both firms will conduct R&D. © 2012 Pearson Addison-Wesley

Q5: The main purpose of antitrust law is to _______.
A prohibit firms from becoming a monopoly or behaving like a monopoly B regulate advertising C encourage the formation of cartels D regulate the price that firms in oligopoly charge A prohibit firms from becoming a monopoly or behaving like a monopoly © 2012 Pearson Addison-Wesley