Exam 10: Monopolistic Competition, Oligopoly, and Game Theory

There are three noodle shops in town. Their shares of the market are Nguyen's Noodles (50%), Pham's Pho (37%), and Nam's Noodles (13%). Nam lowers the price of its noodles, hoping to pressure the other noodle shops to lower their prices, but they do not. What type of game does this represent?

The key characteristic of monopolistic competition is

A dominant strategy occurs when one player chooses the same action regardless of what the other player chooses.

Firms A and B are within an oligopolistic market. Firm A lowers the price for one of its goods and in retaliation, firm B decides to set a policy that will keep the price for its comparable good lower than firm A's. Based on the given information, which statement is TRUE?

Which assumption is NOT shared by oligopoly models?

If the cast members on a major television sitcom threaten to walk off the set if they do not receive a large pay increase, and the television network in response threatens to replace the cast with new members, this situation is most likely to resemble a

Which equation calculates a monopolistically competitive firm's profit?

Which firm produces in an industry with the characteristics of monopolistic competition?

An example of a noncooperative game is

Murphy's Gas Station constantly monitors the price of unleaded gas at Johnson's Gas Station. If Johnson's lowers the price of gas, so will Murphy's. This is an example of

Which characteristic is NOT typical of monopolistic competition?

A market has three firms, all of which are suffering losses. However, none of the firms leaves the market, as each firm is hoping that another will. As a result, all firms continue to suffer losses. What type of game is this?

In a prisoner's dilemma, the players each select the strategy that will produce the best outcome for them personally.

Which game does NOT describe a prisoner's dilemma outcome?

Define product differentiation in a monopolistically competitive market and describe its impact on the firm's demand curve compared to the demand curve of a firm in a perfectly competitive market. Illustrate your response with a graph.

What is NOT a characteristic of an oligopoly?

The reason that oligopoly firms may have a kinked demand curve is due to

Monopolistically competitive firms have downward-sloping and very elastic demand curves.

(Figure: Monopolistic Competition) Based on the graph, under monopolistic competition in the short run, total revenue is represented by rectangle

A noncooperative game includes players who neither negotiate nor cooperate in any way.