Exam 13: Between Competition and Monopoly

If a game is a prisoners' dilemma, neither player has dominant strategy.

Price leadership may sometimes be an example of covert collusive behavior by oligopolies.

One of the most famous cartels is OPEC.

Monopolistic competition has at least one similarity to perfect competition: firms are free to enter and leave the industry.

Briefly and concisely define the following terms and explain their importance in the study of economics. a. excess capacity theorem b. price leadership c. kinked demand curve d. perfectly contestable market

All four market forms discussed in the text maximize profit where

Because members of a cartel have a strong incentive to cheat on production and pricing agreements, these groups often develop complicated enforcement arrangements.

____ is one in which exactly the amount one competitor gains must be lost by other competitors.

Define the following terms and explain their importance to the study of economics. a. monopolistic competition b. oligopoly c. cartel d. oligopolistic interdependence

What are the four types of industry structures? Compare and contrast them with the number of firms in the industry, whether firms produce homogeneous or heterogeneous products, whether there are economic profits in long-run equilibrium, and how frequently the model appears in the real world.

A market in which firms can enter if they choose and exit without losing money invested is

Monopolistic competition is a market structure characterized by many small firms selling a homogeneous product.

Define the following terms and explain their importance to the study of economics. a. maximin criterion b. Nash equilibrium c. Dominant Strategy d. Zero-sum game e. Credible threat

Long-run equilibrium under monopolistic competition requires that

Average cost is higher with a monopolistically competitive firm than with a perfectly competitive firm.

According to the kinked demand curve model, an oligopolist may face

If five firms constitute all of the producers in the wristwatch industry, we would call this market a duopoly.

In a perfectly contestable market in the long run, each firm

There are generally, in most areas, a large number of qualified physicians whose services are highly personalized. In addition to price, factors such as age, sex, location, and personality influence the choice of physician. Thus, the market is best described as

In the long run, a monopolistically competitive firm's demand curve must be tangent to its average cost curve.