Question 1

Which of the duopoly models to the parties not choose simultaneously?

Accepted Answer

A) Cournot 
B) Nash 
C) Bertrand 
D) Stackleberg 
A) Cournot 
B) Nash 
C) Bertrand 
D) Stackleberg D

Question 2

Suppose the market has two firms, and market demand is p = 200 - 4y. The cost functions for all firms are C(yi)= 600 + 30yi. The profit for each firm if they collude is:

Accepted Answer

A) 303.125. 
B) 103.125. 
C) 403.125. 
D) 203.125. 
A) 303.125. 
B) 103.125. 
C) 403.125. 
D) 203.125. A

Question 3

Given an infinitely repeated duopoly game, a particular punishment strategy, imposed when a collusive agreement is breached, is more likely to be successful:

Accepted Answer

A) the lower the rate of interest. 
B) the lower the gain from cheating. 
C) the less severe the punishment. 
D) the more difficult it is to detect cheating. 
A) the lower the rate of interest. 
B) the lower the gain from cheating. 
C) the less severe the punishment. 
D) the more difficult it is to detect cheating. B

Question 4

Suppose two firms form a cartel . Each have constant, but different, marginal costs. Explain why one firm will pay the other firm to produce no output.

Accepted Answer

The cartel's profits will be highest if

Question 5

Two firms share a market with demand curve Q=90-0.5P. Each has cost function C(q)=900+q2. Suppose that each firm maximizes its profit taking the other firm's production choice as given. What is the market price?

Accepted Answer

A) 60 
B) 75 
C) 90 
D) 45 
A) 60 
B) 75 
C) 90 
D) 45

Question 6

An oligopolist:

Accepted Answer

A) has an incentive to compete moderately. 
B) is closely watched by the competition authority. 
C) has an incentive to produce too much output. 
D) has an incentive collude and then cheat on a collusive agreement. 
A) has an incentive to compete moderately. 
B) is closely watched by the competition authority. 
C) has an incentive to produce too much output. 
D) has an incentive collude and then cheat on a collusive agreement.

Question 7

The Limit- Output model depends on all of the following except:

Accepted Answer

A) a natural monopoly. 
B) a natural barrier to entry. 
C) the entrant's residual demand. 
D) the Sylos postulate. 
A) a natural monopoly. 
B) a natural barrier to entry. 
C) the entrant's residual demand. 
D) the Sylos postulate.

Question 8

As fixed costs increase, the number of firms in the industry decreases.

Accepted Answer

A) True 
 B)False

Question 9

Suppose the market has two firms, and market demand is p = 200 - 4y. The cost functions for all firms are C(yi)= 600 + 30yi. The equilibrium number of firms this market can support under Cournot is:

Accepted Answer

A) 2. 
B) 5. 
C) 3. 
D) 4. 
A) 2. 
B) 5. 
C) 3. 
D) 4.

Question 10

An industry's market structure is determined in part by:

Accepted Answer

A) the aggressiveness of the firms. 
B) demand conditions. 
C) the magnitude of barriers to entry. 
D) the magnitude of set- up costs. 
A) the aggressiveness of the firms. 
B) demand conditions. 
C) the magnitude of barriers to entry. 
D) the magnitude of set- up costs.

Question 11

In a Cournot oligopoly, each firm:

Accepted Answer

A) maximizes profit subject to its competitor's output. 
B) is caught in a prisoner's dilemma. 
C) maximizes profit without regard to its competitors. 
D) maximizes profit subject to its competitor's price. 
A) maximizes profit subject to its competitor's output. 
B) is caught in a prisoner's dilemma. 
C) maximizes profit without regard to its competitors. 
D) maximizes profit subject to its competitor's price.

Question 12

Suppose the market has two firms, and market demand is p = 200 - 4y. The cost functions for all firms are C(yi)= 600 + 30yi. The Cournot duopoly profit for each firm is:

Accepted Answer

A) 152.79. 
B) 72.79. 
C) 102.79. 
D) 202.79. 
A) 152.79. 
B) 72.79. 
C) 102.79. 
D) 202.79.

Question 13

If two firms are in Bertrand competition they:

Accepted Answer

A) compete in quantities. 
B) minimize cost. 
C) do not maximize profit. 
D) compete in prices. 
A) compete in quantities. 
B) minimize cost. 
C) do not maximize profit. 
D) compete in prices.

Question 14

In a repeated game with a credible punishment a collusive equilibrium may revert to a Cournot equilibrium if

Accepted Answer

A) marginal costs increase 
B) interest rates rise 
C) output prices decrease 
D) taxes increase 
A) marginal costs increase 
B) interest rates rise 
C) output prices decrease 
D) taxes increase

Question 15

A penalty shot in soccer ( football in most of the world)requires that the keeper remain stationary until the shot is made. During a penalty shot in hockey, the goalie is permitted to move as soon as the offensive player touches the puck. Explain how this could be modeled using economic duopoly models and predict which penalty shot results in more goals.

Accepted Answer

The hockey penalty shot can be modeled a

Question 16

Two firms in a collusive duopoly that have an identical and constant MC will each produce:

Accepted Answer

A) one- half of the competitive output. 
B) the competitive output. 
C) the monopoly output. 
D) one- half of the monopoly output. 
A) one- half of the competitive output. 
B) the competitive output. 
C) the monopoly output. 
D) one- half of the monopoly output.

Question 17

The level of output per firm under Nash and Cournot equilibriums are:

Accepted Answer

A) never the same. 
B) often the same. 
C) always the same. 
D) seldom the same. 
A) never the same. 
B) often the same. 
C) always the same. 
D) seldom the same.

Question 18

A particular market is served by two firms. The market demand curve is given by p = 200 - y. Each firm incurs a constant cost per unit of $50. The Cournot MR function for firm 1 is given by:

Accepted Answer

A) 200 - 2y1. 
B) (200y1 - y2)/y1 - 1. 
C) 200 - 2y1 - y2. 
D) 200 - y1 - y2. 
A) 200 - 2y1. 
B) (200y1 - y2)/y1 - 1. 
C) 200 - 2y1 - y2. 
D) 200 - y1 - y2.

Question 19

In a Cournot model, the incentive to cheat on a collusive arrangement:

Accepted Answer

A) decreases with the number of firms. 
B) is independent of the number of firms. 
C) is prohibited by law. 
D) increases with the number of firms. 
A) decreases with the number of firms. 
B) is independent of the number of firms. 
C) is prohibited by law. 
D) increases with the number of firms.

Question 20

Two firms share a market with demand curve Q=90-0.5P. Each has cost function C(q)=900+q2. Suppose that each firm maximizes its profit taking the other firm's production choice as given. Suppose that firm 2 produces 20 units of output. How much should firm 1 produce in order to maximize profits, given that q2= 20?

Accepted Answer

A) 45/3 
B) 23/3 
C) 23/2 
D) 45/2 
A) 45/3 
B) 23/3 
C) 23/2 
D) 45/2

Which of the duopoly models to the parties not choose simultaneously?

Suppose the market has two firms, and market demand is p = 200 - 4y. The cost functions for all firms are C(y_i)= 600 + 30y_i. The profit for each firm if they collude is:

Given an infinitely repeated duopoly game, a particular punishment strategy, imposed when a collusive agreement is breached, is more likely to be successful:

Suppose two firms form a cartel . Each have constant, but different, marginal costs. Explain why one firm will pay the other firm to produce no output.

Two firms share a market with demand curve Q=90-0.5P. Each has cost function C(q)=900+q². Suppose that each firm maximizes its profit taking the other firm's production choice as given. What is the market price?

An oligopolist:

The Limit- Output model depends on all of the following except:

As fixed costs increase, the number of firms in the industry decreases.

Suppose the market has two firms, and market demand is p = 200 - 4y. The cost functions for all firms are C(y_i)= 600 + 30y_i. The equilibrium number of firms this market can support under Cournot is:

An industry's market structure is determined in part by:

In a Cournot oligopoly, each firm:

Suppose the market has two firms, and market demand is p = 200 - 4y. The cost functions for all firms are C(y_i)= 600 + 30y_i. The Cournot duopoly profit for each firm is:

If two firms are in Bertrand competition they:

In a repeated game with a credible punishment a collusive equilibrium may revert to a Cournot equilibrium if

Two firms in a collusive duopoly that have an identical and constant MC will each produce:

The level of output per firm under Nash and Cournot equilibriums are:

A particular market is served by two firms. The market demand curve is given by p = 200 - y. Each firm incurs a constant cost per unit of $50. The Cournot MR function for firm 1 is given by:

In a Cournot model, the incentive to cheat on a collusive arrangement:

Microeconomics: a Working Methodology

A Theory of Preferences

Demand Theory

More Demand Theory

Intertemporal Decision Making and Capital Values

Production Cost: One Variable Input

Production Cost: Many Variable Inputs

The Theory of Perfect Competition

Applications of the Competitive Model

Monopoly

Input Markets and the Allocation of Resources

Labour Market Applications

Competitive General Equilibrium

Price Discrimination Monopoly Practices

Introduction to Game Theory

Choice Making Under Uncertainty

Assymmetric Information, the Rules of the Game, and Externalities

The Theory of the Firm

Assymetric Information and Market Behaviour

Filters

Exam 16: Game Theory and Oligopoly

Which of the duopoly models to the parties not choose simultaneously?

Suppose the market has two firms, and market demand is p = 200 - 4y. The cost functions for all firms are C(yi)= 600 + 30yi. The profit for each firm if they collude is:

Given an infinitely repeated duopoly game, a particular punishment strategy, imposed when a collusive agreement is breached, is more likely to be successful:

Suppose two firms form a cartel . Each have constant, but different, marginal costs. Explain why one firm will pay the other firm to produce no output.

Two firms share a market with demand curve Q=90-0.5P. Each has cost function C(q)=900+q2. Suppose that each firm maximizes its profit taking the other firm's production choice as given. What is the market price?

An oligopolist:

The Limit- Output model depends on all of the following except:

As fixed costs increase, the number of firms in the industry decreases.

Suppose the market has two firms, and market demand is p = 200 - 4y. The cost functions for all firms are C(yi)= 600 + 30yi. The equilibrium number of firms this market can support under Cournot is:

An industry's market structure is determined in part by:

In a Cournot oligopoly, each firm:

Suppose the market has two firms, and market demand is p = 200 - 4y. The cost functions for all firms are C(yi)= 600 + 30yi. The Cournot duopoly profit for each firm is:

If two firms are in Bertrand competition they:

In a repeated game with a credible punishment a collusive equilibrium may revert to a Cournot equilibrium if

Two firms in a collusive duopoly that have an identical and constant MC will each produce:

The level of output per firm under Nash and Cournot equilibriums are:

A particular market is served by two firms. The market demand curve is given by p = 200 - y. Each firm incurs a constant cost per unit of $50. The Cournot MR function for firm 1 is given by:

In a Cournot model, the incentive to cheat on a collusive arrangement:

Microeconomics: a Working Methodology

A Theory of Preferences

Demand Theory

More Demand Theory

Intertemporal Decision Making and Capital Values

Production Cost: One Variable Input

Production Cost: Many Variable Inputs

The Theory of Perfect Competition

Applications of the Competitive Model

Monopoly

Input Markets and the Allocation of Resources

Labour Market Applications

Competitive General Equilibrium

Price Discrimination Monopoly Practices

Introduction to Game Theory

Choice Making Under Uncertainty

Assymmetric Information, the Rules of the Game, and Externalities

The Theory of the Firm

Assymetric Information and Market Behaviour

Filters

Suppose the market has two firms, and market demand is p = 200 - 4y. The cost functions for all firms are C(y_i)= 600 + 30y_i. The profit for each firm if they collude is:

Two firms share a market with demand curve Q=90-0.5P. Each has cost function C(q)=900+q². Suppose that each firm maximizes its profit taking the other firm's production choice as given. What is the market price?

Suppose the market has two firms, and market demand is p = 200 - 4y. The cost functions for all firms are C(y_i)= 600 + 30y_i. The equilibrium number of firms this market can support under Cournot is:

Suppose the market has two firms, and market demand is p = 200 - 4y. The cost functions for all firms are C(y_i)= 600 + 30y_i. The Cournot duopoly profit for each firm is: