Question 1

"An oligopoly is an oligopoly.Firms behave the same no matter what type of oligopoly it is." This statement is true of:

Accepted Answer

A) Bertrand and Cournot oligopolies. 
B) Cournot and Stackelberg oligopolies. 
C) Bertrand and Stackelberg oligopolies. 
D) none of the statements associated with this question are correct. 
A) Bertrand and Cournot oligopolies. 
B) Cournot and Stackelberg oligopolies. 
C) Bertrand and Stackelberg oligopolies. 
D) none of the statements associated with this question are correct.

Question 2

If firms are in Cournot equilibrium, they could increase profits by

Accepted Answer

A) jointly increasing output. 
B) jointly reducing output. 
C) unilaterally increasing prices. 
D) unilaterally reducing prices. 
A) jointly increasing output. 
B) jointly reducing output. 
C) unilaterally increasing prices. 
D) unilaterally reducing prices.

Question 3

Which of the following are price-setting oligopoly models?

Accepted Answer

A) Stackelberg. 
B) Cournot. 
C) Bertrand. 
D) Cournot and Stackelberg. 
A) Stackelberg. 
B) Cournot. 
C) Bertrand. 
D) Cournot and Stackelberg.

Question 4

You are the manager of a firm in a new industry.You have gotten the jump on the only other producer in the market.You know what your competitor's cost function is, and it knows yours.Your products, although different to experts, are indistinguishable to the average consumer.Your marketing research team has provided you with the following market demand curve:

Accepted Answer

@#IMG-DLM& .Your cost function is @#IMG-DLM& .Your competito

Question 5

Profits are higher as isoprofit curves move closer to the

Accepted Answer

A) monopoly output, QM. 
B) Cournot output, QCournot. 
C) Bertrand output, QBertrand. 
D) peak of each isoprofit curve. 
A) monopoly output, QM. 
B) Cournot output, QCournot. 
C) Bertrand output, QBertrand. 
D) peak of each isoprofit curve.

Question 6

From a consumer's point of view, which type of oligopoly is most desirable?

Accepted Answer

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

Question 7

Two firms compete in a Stackelberg fashion and firm two is the leader, then

Accepted Answer

A) firm one views the output of firm two as given. 
B) firm two views the output of firm one as given. 
C) all of the statements associated with this question are correct. 
D) none of the statements associated with this question are correct. 
A) firm one views the output of firm two as given. 
B) firm two views the output of firm one as given. 
C) all of the statements associated with this question are correct. 
D) none of the statements associated with this question are correct.

Question 8

Consider two firms competing to sell a homogeneous product by setting price.The inverse demand curve is given by P = 6 - Q.If each firms' cost function is Ci(Qi) = 6 + 2Qi, then each firm will symmetrically produce _________ units of output and earn ___________.

Accepted Answer

A) 4 units; profits of $6. 
B) 2 units; profits of $2. 
C) 4 units; losses of $2. 
D) 2 units; losses of $6. 
A) 4 units; profits of $6. 
B) 2 units; profits of $2. 
C) 4 units; losses of $2. 
D) 2 units; losses of $6.

Question 9

"An oligopoly is an oligopoly.Firms behave the same no matter what type of oligopoly it is." This statement is:

Accepted Answer

A) true. 
B) false. 
C) true of homogeneous product industries. 
D) none of the statements associated with this question are correct. 
A) true. 
B) false. 
C) true of homogeneous product industries. 
D) none of the statements associated with this question are correct.

Question 10

In a Sweezy Oligopoly, a decrease in a firm's marginal cost generally leads to:

Accepted Answer

A) reduced output and a higher price. 
B) increased output and a lower price. 
C) higher output and a higher price. 
D) none of the statements associated with this question are true. 
A) reduced output and a higher price. 
B) increased output and a lower price. 
C) higher output and a higher price. 
D) none of the statements associated with this question are true.

Question 11

Compare and contrast the output levels and profits for the Cournot, Stackelberg, and Bertrand models.Use the following cost and demand conditions for your comparison, and suppose there are two firms:

Accepted Answer

@#IMG-DLM& .Each firm has a ma

Question 12

What real-world evidence would lead you to believe that firms were acting as Cournot oligopolists? Stackelberg oligopolists? Bertrand oligopolists?

Accepted Answer

Evidence of Cournot oligopoly would be a

Question 13

You are a potential entrant into a market that previously has had entry blocked by the government.Your market research has estimated that the inverse market demand curve for this industry is

Accepted Answer

@#IMG-DLM& , where @#IMG-DLM& You estimate that if you enter

Question 14

Which of the following is a profit-maximizing condition for a Cournot oligopolist?

Accepted Answer

A) MR = MC. 
B) Q1 = Q2 = ...= Qn. 
C) P = MR. 
D) all of the statements associated with this question are correct. 
A) MR = MC. 
B) Q1 = Q2 = ...= Qn. 
C) P = MR. 
D) all of the statements associated with this question are correct.

Question 15

Which of the following is true?

Accepted Answer

A) In Bertrand oligopoly markets each firm believes that their rivals will hold their output constant if it changes its output. 
B) In Cournot oligopoly market firms produce an identical product at a constant marginal cost and engage in price competition. 
C) In Sweezy oligopoly markets each firm believes rivals will cut their prices in response to a price reduction, but will not raise prices in response to price increases. 
D) In oligopoly market a change in marginal cost never has an affect on output or price. 
A) In Bertrand oligopoly markets each firm believes that their rivals will hold their output constant if it changes its output. 
B) In Cournot oligopoly market firms produce an identical product at a constant marginal cost and engage in price competition. 
C) In Sweezy oligopoly markets each firm believes rivals will cut their prices in response to a price reduction, but will not raise prices in response to price increases. 
D) In oligopoly market a change in marginal cost never has an affect on output or price.

Question 16

When firm one acts as a Stackelberg leader:

Accepted Answer

A) Firm two produces the monopoly output. 
B) Firm one's profit is less than its profit if they compete in a Cournot fashion. 
C) Firm two will earn more than if they compete in a Cournot fashion. 
D) None of the statements associated with this question are correct. 
A) Firm two produces the monopoly output. 
B) Firm one's profit is less than its profit if they compete in a Cournot fashion. 
C) Firm two will earn more than if they compete in a Cournot fashion. 
D) None of the statements associated with this question are correct.

Question 17

A new firm enters a market which is initially serviced by a Bertrand duopoly charging a price of $20.What will the new price be should the three firms co-exist after the entry?

Accepted Answer

A) $25. 
B) $20. 
C) $15. 
D) none of the statements associated with this question are correct. 
A) $25. 
B) $20. 
C) $15. 
D) none of the statements associated with this question are correct.

Question 18

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.The equilibrium output of each firm is:

Accepted Answer

A) 8. 
B) 16. 
C) 32. 
D) 36. 
A) 8. 
B) 16. 
C) 32. 
D) 36.

Question 19

An increase in firm 2's marginal cost will cause

Accepted Answer

A) a downward shift in firm 1's reaction function resulting in a new Cournot equilibrium where firm 1 is producing a lower quantity and firm 2 is producing a higher quantity. 
B) an upward shift in firm 1's reaction function resulting in a new Cournot equilibrium where firm 1 is producing a higher quantity and firm 2 is producing a lower quantity. 
C) a downward shift is firm 2's reaction function resulting in a new Cournot equilibrium where firm 1 is producing a higher quantity and firm 2 is producing a lower quantity. 
D) an upward shift in firm 2's reaction function resulting in a new Cournot equilibrium where firm 1 is producing a lower quantity and firm 2 is producing a higher quantity. 
A) a downward shift in firm 1's reaction function resulting in a new Cournot equilibrium where firm 1 is producing a lower quantity and firm 2 is producing a higher quantity. 
B) an upward shift in firm 1's reaction function resulting in a new Cournot equilibrium where firm 1 is producing a higher quantity and firm 2 is producing a lower quantity. 
C) a downward shift is firm 2's reaction function resulting in a new Cournot equilibrium where firm 1 is producing a higher quantity and firm 2 is producing a lower quantity. 
D) an upward shift in firm 2's reaction function resulting in a new Cournot equilibrium where firm 1 is producing a lower quantity and firm 2 is producing a higher quantity.

Question 20

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) = 2.Based on this information the leader's reaction function is

Accepted Answer

A) r1(Q2) = 24.5 - 0.5Q1 and r2(Q1) = 24.5 - 0.5Q2. 
B) r1(Q2) = 24.5 - 0.5Q2 and r1(Q2) = 24.5 - 0.5Q1. 
C) Q1 = 49 - 0.5Q2 and Q2 = 49 - 0.5Q1. 
D) The Stackelberg leader does not react to the output decision of its rival. 
A) r1(Q2) = 24.5 - 0.5Q1 and r2(Q1) = 24.5 - 0.5Q2. 
B) r1(Q2) = 24.5 - 0.5Q2 and r1(Q2) = 24.5 - 0.5Q1. 
C) Q1 = 49 - 0.5Q2 and Q2 = 49 - 0.5Q1. 
D) The Stackelberg leader does not react to the output decision of its rival.

"An oligopoly is an oligopoly.Firms behave the same no matter what type of oligopoly it is." This statement is true of:

If firms are in Cournot equilibrium, they could increase profits by

Which of the following are price-setting oligopoly models?

Profits are higher as isoprofit curves move closer to the

From a consumer's point of view, which type of oligopoly is most desirable?

Two firms compete in a Stackelberg fashion and firm two is the leader, then

Consider two firms competing to sell a homogeneous product by setting price.The inverse demand curve is given by P = 6 - Q.If each firms' cost function is C_i(Q_i) = 6 + 2Q_i, then each firm will symmetrically produce _ units of output and earn ___.

"An oligopoly is an oligopoly.Firms behave the same no matter what type of oligopoly it is." This statement is:

In a Sweezy Oligopoly, a decrease in a firm's marginal cost generally leads to:

Compare and contrast the output levels and profits for the Cournot, Stackelberg, and Bertrand models.Use the following cost and demand conditions for your comparison, and suppose there are two firms:

What real-world evidence would lead you to believe that firms were acting as Cournot oligopolists? Stackelberg oligopolists? Bertrand oligopolists?

You are a potential entrant into a market that previously has had entry blocked by the government.Your market research has estimated that the inverse market demand curve for this industry is

Which of the following is a profit-maximizing condition for a Cournot oligopolist?

Which of the following is true?

When firm one acts as a Stackelberg leader:

A new firm enters a market which is initially serviced by a Bertrand duopoly charging a price of $20.What will the new price be should the three firms co-exist after the entry?

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.The equilibrium output of each firm is:

An increase in firm 2's marginal cost will cause

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) = 2.Based on this information the leader's reaction function 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

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Exam 9: Basic Oligopoly Models

"An oligopoly is an oligopoly.Firms behave the same no matter what type of oligopoly it is." This statement is true of:

If firms are in Cournot equilibrium, they could increase profits by

Which of the following are price-setting oligopoly models?

Profits are higher as isoprofit curves move closer to the

From a consumer's point of view, which type of oligopoly is most desirable?

Two firms compete in a Stackelberg fashion and firm two is the leader, then

Consider two firms competing to sell a homogeneous product by setting price.The inverse demand curve is given by P = 6 - Q.If each firms' cost function is Ci(Qi) = 6 + 2Qi, then each firm will symmetrically produce _________ units of output and earn ___________.

"An oligopoly is an oligopoly.Firms behave the same no matter what type of oligopoly it is." This statement is:

In a Sweezy Oligopoly, a decrease in a firm's marginal cost generally leads to:

Compare and contrast the output levels and profits for the Cournot, Stackelberg, and Bertrand models.Use the following cost and demand conditions for your comparison, and suppose there are two firms:

What real-world evidence would lead you to believe that firms were acting as Cournot oligopolists? Stackelberg oligopolists? Bertrand oligopolists?

You are a potential entrant into a market that previously has had entry blocked by the government.Your market research has estimated that the inverse market demand curve for this industry is

Which of the following is a profit-maximizing condition for a Cournot oligopolist?

Which of the following is true?

When firm one acts as a Stackelberg leader:

A new firm enters a market which is initially serviced by a Bertrand duopoly charging a price of $20.What will the new price be should the three firms co-exist after the entry?

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.The equilibrium output of each firm is:

An increase in firm 2's marginal cost will cause

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) = 2.Based on this information the leader's reaction function 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 two firms competing to sell a homogeneous product by setting price.The inverse demand curve is given by P = 6 - Q.If each firms' cost function is C_i(Q_i) = 6 + 2Q_i, then each firm will symmetrically produce _ units of output and earn ___.

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) = 2.Based on this information the leader's reaction function is