Question 1

Which of the following is not a feature of Sweezy oligopoly?

Accepted Answer

A) There are a few firms in the market serving many consumers. 
B) The firms produce differentiated products. 
C) Each firm believes that rivals will cut their prices in response to a price reduction, but will not raise their prices in response to a price increase. 
D) Free entry and exit occurs in the market. 
A) There are a few firms in the market serving many consumers. 
B) The firms produce differentiated products. 
C) Each firm believes that rivals will cut their prices in response to a price reduction, but will not raise their prices in response to a price increase. 
D) Free entry and exit occurs in the market.

Question 2

Which firm would you expect to make the lowest profits, other things equal?

Accepted Answer

A) Bertrand oligopolist. 
B) Cournot oligopolist. 
C) Sweezy oligopolist. 
D) Stackelberg leader. 
A) Bertrand oligopolist. 
B) Cournot oligopolist. 
C) Sweezy oligopolist. 
D) Stackelberg leader.

Question 3

Two identical firms compete as a Cournot duopoly.The demand they face is P = 100 - 2Q.The cost function for each firm is C(Q) = 4Q.Each firm earns equilibrium profits of:

Accepted Answer

A) $1,024. 
B) $2,048. 
C) $4,096. 
D) $512. 
A) $1,024. 
B) $2,048. 
C) $4,096. 
D) $512.

Question 4

The Cournot theory of oligopoly is based on the assumption that each firm believes that rivals will

Accepted Answer

A) keep their output constant if it changes its output. 
B) increase their output whenever it increases its output. 
C) decrease their output whenever it increases its output. 
D) randomly change output whenever it changes its output. 
A) keep their output constant if it changes its output. 
B) increase their output whenever it increases its output. 
C) decrease their output whenever it increases its output. 
D) randomly change output whenever it changes its output.

Question 5

Consider a Stackelberg duopoly with the following inverse demand function: P = 100 - 2Q1 - 2Q2.The firms' marginal cost are identical and given by MCi(Qi) = 2Qi.Based on this information the consumer surplus in this market is

Accepted Answer

A) $36.75. 
B) $73.50. 
C) $1,352.40. 
D) $2,704.80. 
A) $36.75. 
B) $73.50. 
C) $1,352.40. 
D) $2,704.80.

Question 6

Consider a market consisting of two firms where the inverse demand curve is given by P = 500 - 2Q1 - 2Q2.Each firm has a marginal cost of $50.Based on this information we can conclude that aggregate quantity in the different equilibrium oligopoly models will follow which of the following orderings.

Accepted Answer

A) QCollusion Stackelberg Cournot Bertrand. 
B) QCollusion Cournot Stackelberg Bertrand. 
C) QBertrand Collusion Cournot Stackelberg. 
D) QBertrand Stackelberg Cournot Collusion. 
A) QCollusion Stackelberg Cournot Bertrand. 
B) QCollusion Cournot Stackelberg Bertrand. 
C) QBertrand Collusion Cournot Stackelberg. 
D) QBertrand Stackelberg Cournot Collusion.

Question 7

Which of the following is a feature of a contestable market?

Accepted Answer

A) There are several firms in the market serving many consumers. 
B) There is a single firm in the market serving many consumers. 
C) The market price is equal to marginal cost. 
D) There is a single firm in the market serving many consumers and the market price is equal to marginal cost. 
A) There are several firms in the market serving many consumers. 
B) There is a single firm in the market serving many consumers. 
C) The market price is equal to marginal cost. 
D) There is a single firm in the market serving many consumers and the market price is equal to marginal cost.

Question 8

The market for widgets consists of two firms that produce identical products.Competition in the market is such that each of the firms independently produces a quantity of output, and these quantities are then sold in the market at a price that is determined by the total amount produced by the two firms.Firm 2 is known to have a cost advantage over Firm 1.A recent study found that the (inverse) market demand curve faced by the two firms is

Accepted Answer

@#IMG-DLM& and costs are @#IMG-DLM& and @#IMG-DLM& a.Determine the mar

Question 9

In Gelate, Pennsylvania, the market for compact discs has evolved as follows.There are two firms that each use a marquee to post the price they charge for compact discs.Each firm buys CDs from the same supplier at a cost of $5.00 per disc.The inverse market demand in their area is given by

Accepted Answer

@#IMG-DLM& , where Q is the total output produced

Question 10

Two identical firms compete as a Cournot duopoly.The inverse market demand they face is P = 80 - 4Q.The cost function for each firm is C(Q) = 8Q.The price charged in this market will be

Accepted Answer

A) $12. 
B) $32. 
C) $48. 
D) $56. 
A) $12. 
B) $32. 
C) $48. 
D) $56.

Question 11

Two firms produce different goods.Firm one has a positive-sloped reaction function.This can be explained best by

Accepted Answer

A) homogeneous product Cournot oligopoly. 
B) homogeneous product Bertrand oligopoly. 
C) heterogeneous product Bertrand oligopoly. 
D) none of the statements associated with this question are correct. 
A) homogeneous product Cournot oligopoly. 
B) homogeneous product Bertrand oligopoly. 
C) heterogeneous product Bertrand oligopoly. 
D) none of the statements associated with this question are correct.

Question 12

Which would you expect to make the highest profits, other things equal?

Accepted Answer

A) Bertrand oligopolist. 
B) Cournot oligopolist. 
C) Stackelberg leader. 
D) Stackelberg follower. 
A) Bertrand oligopolist. 
B) Cournot oligopolist. 
C) Stackelberg leader. 
D) Stackelberg follower.

Question 13

Consider a Cournot duopoly with the following inverse demand function: P = 50 - 0.2Q1 - 0.2Q2.The firms' marginal cost are identical and given by MCi(Qi) = 2.Based on this information firm 1 and 2's reaction functions are

Accepted Answer

A) r1(Q2) = 4.8 - 0.5Q1 and r2(Q1) = 4.8 - 0.5Q2. 
B) r1(Q2) = 4.8 - 0.5Q2 and r1(Q2) = 4.8 - 0.5Q1. 
C) Q1 = 25 - 0.75Q2 and Q2 = 25 - 0.75Q1. 
D) Q1 = 240 - 0.5Q2 and Q2 = 240 - 0.5Q1. 
A) r1(Q2) = 4.8 - 0.5Q1 and r2(Q1) = 4.8 - 0.5Q2. 
B) r1(Q2) = 4.8 - 0.5Q2 and r1(Q2) = 4.8 - 0.5Q1. 
C) Q1 = 25 - 0.75Q2 and Q2 = 25 - 0.75Q1. 
D) Q1 = 240 - 0.5Q2 and Q2 = 240 - 0.5Q1.

Question 14

Consider a Cournot duopoly with the following inverse demand function: P = 10 - 0.5Q1 - 0.5Q2.The firms' marginal cost are identical and given by MCi(Qi) = 3.Based on this information firm 1 and 2's reaction functions are

Accepted Answer

A) r1(Q2) = 7 - 0.5Q1 and r2(Q1) = 7 - 0.5Q2. 
B) r1(Q2) = 14 - 0.25Q2 and r1(Q2) = 14 - 0.25Q1. 
C) Q1 = 7 - 0.5Q2 and Q2 = 7 - 0.5Q1. 
D) Q1 = 14 - 0.25Q2 and Q2 = 14 - 0.25Q1. 
A) r1(Q2) = 7 - 0.5Q1 and r2(Q1) = 7 - 0.5Q2. 
B) r1(Q2) = 14 - 0.25Q2 and r1(Q2) = 14 - 0.25Q1. 
C) Q1 = 7 - 0.5Q2 and Q2 = 7 - 0.5Q1. 
D) Q1 = 14 - 0.25Q2 and Q2 = 14 - 0.25Q1.

Question 15

Two firms compete as a Stackelberg duopoly.The demand they face is P = 100 - 3Q.The cost function for each firm is C(Q) = 4Q.The profits of the two firms are:

Accepted Answer

A) $\pi$L = $384; $\pi$F = $192. 
B) $\pi$L = $192; $\pi$F = $91. 
C) $\pi$L = $56; $\pi$F = -$28. 
D) $\pi$L = $56; $\pi$F = $28. 
A) $\pi$L = $384; $\pi$F = $192. 
B) $\pi$L = $192; $\pi$F = $91. 
C) $\pi$L = $56; $\pi$F = -$28. 
D) $\pi$L = $56; $\pi$F = $28.

Question 16

A new firm enters a market which is initially serviced by a Bertrand duopoly charging a price of $30.Assuming that the new firm is equally as efficient as the incumbent firms, what will the new price be should the three firms co-exist after the entry?

Accepted Answer

A) Above $30. 
B) Below $30. 
C) Equal to $30. 
D) Unable to tell given the information provided. 
A) Above $30. 
B) Below $30. 
C) Equal to $30. 
D) Unable to tell given the information provided.

Question 17

Which of the following is true about a differentiated-product Bertrand duopoly?

Accepted Answer

A) Firm 1 and firm 2's prices will exceed marginal cost. 
B) Firm 1 and firm 2's prices will equal marginal cost. 
C) Firm 1's price will always be above marginal cost, while firm 2's price will be greater than marginal cost. 
D) Firms in a differentiated-product Bertrand duopoly cannot earn positive economic profits in the long run. 
A) Firm 1 and firm 2's prices will exceed marginal cost. 
B) Firm 1 and firm 2's prices will equal marginal cost. 
C) Firm 1's price will always be above marginal cost, while firm 2's price will be greater than marginal cost. 
D) Firms in a differentiated-product Bertrand duopoly cannot earn positive economic profits in the long run.

Question 18

Which of the following is not a type of market structure?

Accepted Answer

A) monopolistic competition. 
B) perfect competition. 
C) monopolistic oligopoly. 
D) monopoly. 
A) monopolistic competition. 
B) perfect competition. 
C) monopolistic oligopoly. 
D) monopoly.

Question 19

In the late 1990s, Chrysler announced a new incentive program on its minivans that included subsidized interest rates and cash allowances.Under the plan, consumers could enjoy financing rates as low as 4.9 percent, as well as a $500 cash allowance toward the lease or purchase of a new minivan.What changes in sales would you anticipate if you were the manager of a Dodge/Plymouth franchise? Why?

Accepted Answer

Other things equal, your sales would ris

Question 20

The (inverse) demand in a Cournot duopoly is

Accepted Answer

@#IMG-DLM& and cost are @#IMG-DLM& and @#IMG-DLM& .Show that the Courn

Which of the following is not a feature of Sweezy oligopoly?

Which firm would you expect to make the lowest profits, other things equal?

Two identical firms compete as a Cournot duopoly.The demand they face is P = 100 - 2Q.The cost function for each firm is C(Q) = 4Q.Each firm earns equilibrium profits of:

The Cournot theory of oligopoly is based on the assumption that each firm believes that rivals will

Consider a Stackelberg duopoly with the following inverse demand function: P = 100 - 2Q₁ - 2Q₂.The firms' marginal cost are identical and given by MC_i(Q_i) = 2Q_i.Based on this information the consumer surplus in this market is

Which of the following is a feature of a contestable market?

In Gelate, Pennsylvania, the market for compact discs has evolved as follows.There are two firms that each use a marquee to post the price they charge for compact discs.Each firm buys CDs from the same supplier at a cost of $5.00 per disc.The inverse market demand in their area is given by

Two identical firms compete as a Cournot duopoly.The inverse market demand they face is P = 80 - 4Q.The cost function for each firm is C(Q) = 8Q.The price charged in this market will be

Two firms produce different goods.Firm one has a positive-sloped reaction function.This can be explained best by

Which would you expect to make the highest profits, other things equal?

Consider a Cournot duopoly with the following inverse demand function: P = 50 - 0.2Q₁ - 0.2Q₂.The firms' marginal cost are identical and given by MC_i(Q_i) = 2.Based on this information firm 1 and 2's reaction functions are

Consider a Cournot duopoly with the following inverse demand function: P = 10 - 0.5Q₁ - 0.5Q₂.The firms' marginal cost are identical and given by MC_i(Q_i) = 3.Based on this information firm 1 and 2's reaction functions are

Two firms compete as a Stackelberg duopoly.The demand they face is P = 100 - 3Q.The cost function for each firm is C(Q) = 4Q.The profits of the two firms are:

A new firm enters a market which is initially serviced by a Bertrand duopoly charging a price of $30.Assuming that the new firm is equally as efficient as the incumbent firms, what will the new price be should the three firms co-exist after the entry?

Which of the following is true about a differentiated-product Bertrand duopoly?

Which of the following is not a type of market structure?

The (inverse) demand in a Cournot duopoly is

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Exam 9: Basic Oligopoly Models

Which of the following is not a feature of Sweezy oligopoly?

Which firm would you expect to make the lowest profits, other things equal?

Two identical firms compete as a Cournot duopoly.The demand they face is P = 100 - 2Q.The cost function for each firm is C(Q) = 4Q.Each firm earns equilibrium profits of:

The Cournot theory of oligopoly is based on the assumption that each firm believes that rivals will

Consider a Stackelberg duopoly with the following inverse demand function: P = 100 - 2Q1 - 2Q2.The firms' marginal cost are identical and given by MCi(Qi) = 2Qi.Based on this information the consumer surplus in this market is

Consider a market consisting of two firms where the inverse demand curve is given by P = 500 - 2Q1 - 2Q2.Each firm has a marginal cost of $50.Based on this information we can conclude that aggregate quantity in the different equilibrium oligopoly models will follow which of the following orderings.

Which of the following is a feature of a contestable market?

In Gelate, Pennsylvania, the market for compact discs has evolved as follows.There are two firms that each use a marquee to post the price they charge for compact discs.Each firm buys CDs from the same supplier at a cost of $5.00 per disc.The inverse market demand in their area is given by

Two identical firms compete as a Cournot duopoly.The inverse market demand they face is P = 80 - 4Q.The cost function for each firm is C(Q) = 8Q.The price charged in this market will be

Two firms produce different goods.Firm one has a positive-sloped reaction function.This can be explained best by

Which would you expect to make the highest profits, other things equal?

Consider a Cournot duopoly with the following inverse demand function: P = 50 - 0.2Q1 - 0.2Q2.The firms' marginal cost are identical and given by MCi(Qi) = 2.Based on this information firm 1 and 2's reaction functions are

Consider a Cournot duopoly with the following inverse demand function: P = 10 - 0.5Q1 - 0.5Q2.The firms' marginal cost are identical and given by MCi(Qi) = 3.Based on this information firm 1 and 2's reaction functions are

Two firms compete as a Stackelberg duopoly.The demand they face is P = 100 - 3Q.The cost function for each firm is C(Q) = 4Q.The profits of the two firms are:

A new firm enters a market which is initially serviced by a Bertrand duopoly charging a price of $30.Assuming that the new firm is equally as efficient as the incumbent firms, what will the new price be should the three firms co-exist after the entry?

Which of the following is true about a differentiated-product Bertrand duopoly?

Which of the following is not a type of market structure?

The (inverse) demand in a Cournot duopoly is

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Consider a Stackelberg duopoly with the following inverse demand function: P = 100 - 2Q₁ - 2Q₂.The firms' marginal cost are identical and given by MC_i(Q_i) = 2Q_i.Based on this information the consumer surplus in this market is

Consider a Cournot duopoly with the following inverse demand function: P = 50 - 0.2Q₁ - 0.2Q₂.The firms' marginal cost are identical and given by MC_i(Q_i) = 2.Based on this information firm 1 and 2's reaction functions are

Consider a Cournot duopoly with the following inverse demand function: P = 10 - 0.5Q₁ - 0.5Q₂.The firms' marginal cost are identical and given by MC_i(Q_i) = 3.Based on this information firm 1 and 2's reaction functions are