Exam 15: Using Noncompetitive Market Models

Use the following table to answer the question : Table 15-3: Abbott and Costello are two firms that compete with each other in the market for ice-cream.They can price their product at a high,medium,or low price.The following matrix shows their profits from their respective pricing strategies. -Refer to Table 15-3.Using the method of iterated dominance it can be concluded that the outcome of the given payoff matrix is:

Figure 15-4 shows the profit-maximizing output and price of monopolist. Refer to Figure 15.4.Given that the monopolist is producing the profit-maximizing level of output,what is the maximum amount of revenue that the monopolist can give up and still remain in business?

Which of the following is not likely to be a social loss due to monopoly power?

Increasing competition in a market characterized by natural monopoly would:

Refco is company that manufactures parts of a car engine for two major car manufacturers.It decides to shut down an assembly line that produces parts that are specially tailored for one of the car manufacturers.The other manufacturer then increases its order for parts made by Refco.In this example,Refco was practicing a _____.

What is meant by iterated dominance?

Use the following table to answer the question : Table 15-2: shows the marginal revenue curve [MR],the demand curve,and the marginal cost curve [MC] for a monopolist with constant costs. -Suppose that the market in Figure 15-2 were served by an oligopoly such that the equilibrium output was 450.Then the welfare loss under oligopoly would be _____ percent of that under monopoly.

Assume that Bosch is a company that manufactures printers for home computers.The printers are designed such that they do not work as effectively after a certain number of prints have been taken.Bosch also offers a warranty on the printer equal to the average time it takes to print that many pages.This is an example of _____.

Use the following table to answer the question : Table 15-1: payoff matrix shows the profits accruing to two firms,Company C and Company D,under different pricing strategies.In each cell,the figure on the left indicates Company C's payoff and the figure on the right indicates Company D's payoff. -Refer to Table 15-1.If X = 145 and Y = 75,company D's strategy of choosing a _____ price is Dominated by a strategy of _____ price.

Use the following table to answer the question : Table 15-3: shows the average cost [AC],marginal cost [MC],and demand [D] curves for a natural monopoly;Qi denotes quantity and Pi denotes price. -Refer to Figure 15-3.Which of the following price and output combinations would an unregulated monopolist choose?

Which of the following will be true if a regulator uses average-cost pricing to regulate a natural monopoly?

Which of the following cannot directly be measured when calculating the deadweight loss from a monopoly?

Which of the following,if true,is the best example of a natural monopoly?

Use the following table to answer the question : Table 15-2: shows the marginal revenue curve [MR],the demand curve,and the marginal cost curve [MC] for a monopolist with constant costs. -Suppose that the market in Figure 15-2 were served by an oligopoly such that the equilibrium output was 450.Then the welfare loss would be _____ as compared to the welfare loss of _____ under monopoly.

Which of the following is true of public ownership of a natural monopoly?

Use the following table to answer the question : Table 15-2: shows the marginal revenue curve [MR],the demand curve,and the marginal cost curve [MC] for a monopolist with constant costs. -Based on Figure 15-2,it can be concluded that the change in producer surplus due to the shift from perfect competition to monopoly is _____.

Use the following table to answer the question : Table 15-2: shows the marginal revenue curve [MR],the demand curve,and the marginal cost curve [MC] for a monopolist with constant costs. -Refer to Figure 15-2.Since there is a positive deadweight loss from monopoly,which of the following statements must be true?

Antitrust laws state that the practice of predatory pricing is illegal as it allows the firm to consolidate monopoly power by driving other firms out of the market.What might be the challenges that a regulator may face while trying to prosecute a firm that is said to practice predatory pricing? (Predatory pricing is a pricing strategy where a firm prices a product below average variable cost (or short-run marginal cost)to drive rival firms out of the market)

Use the following table to answer the question : Table 15-2: shows the marginal revenue curve [MR],the demand curve,and the marginal cost curve [MC] for a monopolist with constant costs. -Based on Figure 15-2,one can conclude that the deadweight loss due to the monopoly is _____.

Use the following table to answer the question : Table 15-2: payoff matrix shows the profits accruing to two firms,Company A and Company B,under different pricing strategies.In each cell,the figure on the left indicates Company A's payoff and the figure on the right indicates Company B's payoff. -Refer to Table 15-2.Which of the following is true?