Question 1

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

Accepted Answer

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

Question 2

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 equilibrium solution is:

Accepted Answer

A) p * = p * = 70. 
B) y * = y * = 20. 
C) y * = y * = 50. 
D) p * = p * = 50. 1 2 1 2 1 2 1 2 
A) p * = p * = 70. 
B) y * = y * = 20. 
C) y * = y * = 50. 
D) p * = p * = 50. 1 2 1 2 1 2 1 2

Question 3

Which of the following statements is not true of oligopoly markets?

Accepted Answer

A) Significant economies of scale often exist in such industries. 
B) Firms seek to avoid price competition. 
C) Firms often compete through the use of advertising campaigns. 
D) Firms act independently and are not worried about the actions of their competitors. 
A) Significant economies of scale often exist in such industries. 
B) Firms seek to avoid price competition. 
C) Firms often compete through the use of advertising campaigns. 
D) Firms act independently and are not worried about the actions of their competitors.

Question 4

Suppose the demand function in the industry is p = 100 - y and each firm has a constant marginal cost of $40 and no fixed costs. If the Cournot model of oligopoly accurately reflects firm behaviour in this industry, then the aggregate equilibrium output of n + 1 firms can be expressed as:

Accepted Answer

A) 160(n + 1)/(n + 2). 
B) 20(n + 1). 
C) 60(n + 1)/(n + 2). 
D) 160n/(n + 1). 
A) 160(n + 1)/(n + 2). 
B) 20(n + 1). 
C) 60(n + 1)/(n + 2). 
D) 160n/(n + 1).

Question 5

An iso- profit curve shows all of the values of firm ones output that produce the same level of profit as a function of

Accepted Answer

A) the other firm's output 
B) input prices 
C) the other firm's price 
D) output prices 
A) the other firm's output 
B) input prices 
C) the other firm's price 
D) output prices

Question 6

Suppose the demand function in the industry is p = 100 - y and each firm has a constant marginal cost of $40. Suppose there is a monopoly firm and a potential entrant. The inducement to entry is:

Accepted Answer

A) 225. 
B) 275. 
C) 250. 
D) 200. 
A) 225. 
B) 275. 
C) 250. 
D) 200.

Question 7

The limit price may be defined as:

Accepted Answer

A) the price that consumers are willing to pay for the monopolist's profit- maximizing output. 
B) the price at the tangency between a potential entrant's LAC curve and the market demand curve. 
C) the maximum price permitted by law. 
D) the highest price existing firms can charge to deter entry. 
A) the price that consumers are willing to pay for the monopolist's profit- maximizing output. 
B) the price at the tangency between a potential entrant's LAC curve and the market demand curve. 
C) the maximum price permitted by law. 
D) the highest price existing firms can charge to deter entry.

Question 8

If the LAC curve of a potential entrant into an imperfectly competitive industry lies everywhere above the residual demand curve, the current level of industry output necessarily:

Accepted Answer

A) maximizes industry profit. 
B) falls short of the limit output. 
C) is equal to the limit output. 
D) exceeds the limit output. 
A) maximizes industry profit. 
B) falls short of the limit output. 
C) is equal to the limit output. 
D) exceeds the limit output.

Question 9

Under a Cournot equilibrium, each firm will produce:

Accepted Answer

A) the same output as a monopolist. 
B) as much output as possible. 
C) as little output as possible. 
D) the same output as each other firm. 
A) the same output as a monopolist. 
B) as much output as possible. 
C) as little output as possible. 
D) the same output as each other firm.

Question 10

Initially there is one firm in a market for cars. The firm has a linear cost function: C(q)= 2q. The market inverse demand function is given by P(Q)= 9 - Q.
i)What price will the firm charge? What quantity of cars will the firm sell? How much profit will the firm make?
Now, a second firm enters the market. The second firm has an identical cost function.
ii)What will the Cournot equilibrium output for each firm be? How much profit will each firm make in the Cournot game?
iii)Which type of market do consumers prefer: monopoly or Cournot duopoly? Why?

Accepted Answer

i)The monopolist has profit function giv

The level of output per firm under Bertrand 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 equilibrium solution is:

Which of the following statements is not true of oligopoly markets?

Suppose the demand function in the industry is p = 100 - y and each firm has a constant marginal cost of $40 and no fixed costs. If the Cournot model of oligopoly accurately reflects firm behaviour in this industry, then the aggregate equilibrium output of n + 1 firms can be expressed as:

An iso- profit curve shows all of the values of firm ones output that produce the same level of profit as a function of

Suppose the demand function in the industry is p = 100 - y and each firm has a constant marginal cost of $40. Suppose there is a monopoly firm and a potential entrant. The inducement to entry is:

The limit price may be defined as:

If the LAC curve of a potential entrant into an imperfectly competitive industry lies everywhere above the residual demand curve, the current level of industry output necessarily:

Under a Cournot equilibrium, each firm will produce:

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

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Exam 16: Game Theory and Oligopoly

The level of output per firm under Bertrand 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 equilibrium solution is:

Which of the following statements is not true of oligopoly markets?

Suppose the demand function in the industry is p = 100 - y and each firm has a constant marginal cost of $40 and no fixed costs. If the Cournot model of oligopoly accurately reflects firm behaviour in this industry, then the aggregate equilibrium output of n + 1 firms can be expressed as:

An iso- profit curve shows all of the values of firm ones output that produce the same level of profit as a function of

Suppose the demand function in the industry is p = 100 - y and each firm has a constant marginal cost of $40. Suppose there is a monopoly firm and a potential entrant. The inducement to entry is:

The limit price may be defined as:

If the LAC curve of a potential entrant into an imperfectly competitive industry lies everywhere above the residual demand curve, the current level of industry output necessarily:

Under a Cournot equilibrium, each firm will produce:

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