Exam 12: Price and Output Determination Under Oligopoly

If an industry has 16 firms of equal size, and each produces and sells the same quantity of output at the same price, what is the four-firm concentration ratio of this industry?

-In Exhibit L-5, if Southwest Airlines charges a high price, it will earn profits of

If a firm has significant market power, say, over 40 percent, the probability is high that

According to the text, U.S. manufacturing data show that

The owners of professional sports teams, such as those in the NFL, make collective decisions and agreements about sharing merchandising and television revenue, adding or disallowing expansion teams, and the scheduling of games. These decisions and agreements reflect that of a

Oligopoly pricing differs from pricing in other market structures. The essential difference is

There are many industries in the United States where only a few firms compete. These industries

The reason why weaker firms accept price leadership is that they

A merger between a shoelace company and a soup company might be undertaken to

The text uses many examples to illustrate ideas. In the analysis of mergers, it mentioned that R. J. Reynolds merged with all of the following firms except

If a firm in an oligopoly is said to face a kinked demand curve, what do you know to be true about the kink?

Oligopolies exist only in industries that produce large durable goods such as automobiles and refrigerators.

-In the godfather model of Exhibit L-1, the price and output combination for the godfather will be

What phenomenon does the kinked demand theory attempt to explain? What assumptions does it make?Finally, what criticism has been leveled against the theory?

Carson Bell and Renee Dohr own the only two firms in the United States that sell a unique herbal vitaminsupplement that has no close substitutes. They plan a secret meeting at the National Zoo in Washington,DC, to form a cartel in order to increase their profit. -How could Carson or Renee cheat?

In a situation where both firms in a two-firm, balanced oligopoly choose to avoid the worst case scenario

Conglomerate mergers provide each firm in the merger with some security against high industry risk. If one part of the merged firm suffers losses because of weak market demand,

A concentration ratio refers to the

-In Exhibit L-2, the table shows the market shares of five firms that operate in three different industries. According to the text, Industry III would be classified as a

If an increase in production costs (say, an increase in the wage rate) results in an upward shift in the MC curve, but the MC curve still passes through the MR gap created by the kinked demand curve, then the oligopolist will respond to that increase in production costs by