Deck 14: Oligopoly

Question 1

The sum of the squared market shares of each firm in an industry is the:

A)concentration ratio.
B)employment rate.
C)Herfindahl-Hirschman index.
D)market number.

Answer 1

C

Question 2

In an oligopoly:

A)there are many sellers.
B)there are no barriers to entry.
C)firms recognize their interdependence.
D)total surplus is maximized.

Answer 2

C

Question 3

To be called an oligopoly, an industry must have:

A)independence in decision making.
B)a horizontal demand curve.
C)a small number of interdependent firms.
D)relatively easy entry and exit.

Answer 3

C

Question 4

A firm that is in an oligopoly knows that its ________ affect its ________ and that the ________ of its rivals will affect it.

A)actions; rivals; reactions
B)price changes; total revenue in a positive way; reactions .C.actions rarely; rivals; actions
D)price increases; total revenue in the long run only; large but not small price changes

Question 5

Oligopoly is a market structure characterized by:

A)independence in decision making.
B)uncertainty about the behavior of rival firms.
C)substantial diseconomies of scale.
D)a large number of small firms.

Question 6

The most important source of oligopoly in an industry is:

A)economies of scale.
B)government regulation.
C)technological inferiority.
D)ownership of plentiful resources.

Question 7

The market structure that is characterized by only a small number of producers is referred to as a(n):

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

Question 8

The Herfindahl-Hirschman index is a measure of concentration found by:

A)squaring the percentage market share of each firm in the industry.
B)squaring the percentage market share of each firm in the industry and then summing the squared market shares.
C)summing the percentage market shares of each firm in the industry.
D)squaring the sums of the concentration ratios found in an industry survey of the largest four and largest eight firms.

Question 9

Which of the following scenarios best describes an oligopolistic industry?

A)A single cable company serves customers in a small town.
B)Thousands of soybean farmers sell their output in a global commodities market.
C)Coca-Cola and Pepsi sell most of the soft drinks consumed around the world.
D)A college has one bookstore selling textbooks to students.

Question 10

Oligopoly is a market structure that is characterized by a ________ number of firms that produce products.

A)large; relatively small and independent; identical
B)small; independent; identical or differentiated
C)large; relatively small and independent; differentiated .D.small; interdependent; identical or differentiated

Question 11

Which of the following Herfindahl-Hirschman indices is most likely to indicate a perfectly competitive market?

A)100
B)1,800.
C)10,000.
D)100,000.

Question 12

A monopoly will have a Herfindahl-Hirschman index (HHI) equal to:

A)1.
B)100.
C)1,000.
D)10,000.

Question 13

The market structure characterized by a few interdependent firms and barriers to entry is called:

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

Question 14

An industry is dominated by a few firms.Each of these firms acknowledges that its own choices affect the choices of its rivals.Each firm also recognizes that its rivals' choices affect the decisions it makes.This industry is an example of:

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

Question 15

In oligopoly, a firm must realize that:

A)what it does has no effect on the other firms in the industry.
B)its behavior will be ignored by other firms in the industry.
C)another major firm may dominate choices in the industry, and it will need to behave accordingly.
D)collusion was made legal in 2004.

Question 16

Oligopoly is a market structure that is characterized by a:

A)small number of interdependent firms producing identical or differentiated products.
B)small number of independent firms producing identical or differentiated products.
C)large number of relatively small independent firms producing differentiated products.
D)large number of relatively small independent firms producing identical products.

Question 17

To calculate the Herfindahl-Hirschman index (HHI), one must:

A)sum the market shares of the four largest firms in the industry.
B)sum the market shares of all of the firms in the industry.
C)divide the market share of the largest firm by the sum of the four largest firms in the industry.
D)sum the squared market shares of all firms in the industry.

Question 18

The largest HHI possible is ________ and the industry is a(n) _ .

A)10; monopoly
B)10,000; monopoly
C)100,000; monopoly
D)100,000; oligopoly

Question 19

An industry characterized by a few interdependent firms and by barriers to entry is called:

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

Question 20

An industry that is dominated by a few firms, each of whose firms recognizes that its own choices can affect the choices of its rivals and vice versa, is:

A)a monopoly.
B)an oligopoly.
C)characterized by monopolistic competition.
D)characterized by perfect competition.

Question 21

In which of the following situations does overt collusion exist?

A)Smaller firms in an industry have an unspoken agreement to charge the same price as the largest firm.
B)Firms in an industry agree openly on price and output, and they jointly make other decisions aimed at achieving monopoly profits.
C)Competition among a large number of small firms generates similar but slightly different prices.
D)Competition among a large number of small firms generates a stable market price.

Question 22

An extreme case of oligopoly in which firms collude to raise joint profits is known as a:

A)duopoly.
B)cartel.
C)dominant producer.
D)price war.

Question 23

A duopoly is an industry that consists of:

A)a single firm.
B)two firms.
C)three or more firms.
D)a large number of small firms.

Question 24

A cartel is an example of:

A)price extortion.
B)price leadership.
C)overt collusion.
D)tacit collusion.

Question 25

(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets.The market for gadgets is dominated by two producers, Margaret and Ray.Each firm can produce gadgets at a marginal cost of $0.The table shows the market demand schedule for gadgets.If these two producers formed a cartel and acted to maximize total industry profits, total industry profit would be:

A)$10,000.
B)$5,000.
C)$2,500.
D)$1,250.

Question 26

The owners of the gas stations in a town are trying to set up a cartel that will raise the price of gasoline.Which of the following will increase the chances that the cartel will fail because of cheating by the owners?

A)All of the gas stations face the same costs.
B)There are only a few gas stations..
C)The gas stations are producing as much as they can.
D)The gas stations vary in terms of the services that they provide.

Question 27

Overt collusion exists if:

A)firms agree openly on price and output and they jointly make other decisions aimed at achieving monopoly profits.
B)smaller firms in an industry tacitly agree to charge the same price as the largest firm.
C)competition among a large number of small firms generates a stable market price.
D)competition among a large number of small firms generates similar but slightly different prices.

Question 28

Gary's Gas and Frank's Fuel are the only two providers of gasoline in their small town.Gary and Frank decide to form a cartel to raise the price of gasoline.The total industry profits are highest when ________, and Gary's profits are highest when _.

A)neither firm cheats on the agreement; neither firm cheats on the agreement
B)neither firm cheats on the agreement; Gary cheats on the agreement and Frank does not cheat
C)both firms cheat on the agreement; Gary cheats on the agreement and Frank does not cheat
D)both Gary and Frank cheat on the agreement; both Gary and Frank cheat on the agreement

Question 29

By practicing , firms openly agree on price and output and jointly make other decisions in order to achieve monopoly profits.

A)overt collusion
B)tacit collusion
C)leadership price
D)competitive game

Question 30

An industry that consists of two firms is:

A)a duopoly.
B)a monopoly.
C)a monopsony.
D)monopolistic competition.

Question 31

(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets.The market for gadgets is dominated by two producers, Margaret and Ray.Each firm can produce gadgets at a marginal cost of $0.The table shows the market demand schedule for gadgets.Suppose that these two producers have formed a cartel and are maximizing total industry profits.If Margaret decides to cheat on the agreement and sell 100 more gadgets, the market price of gadgets will be _.

A)$4
B)$5
C)$6
D)$7

Question 32

Which of the following characteristics make an industry more conducive to collusive behavior?

A)Firms in the industry have very different marginal costs of production.
B)Firms in the industry produce goods with significantly different product attributes.
C)Firms in the industry are operating at a maximum productive capacity that cannot be easily altered in the short run.
D)Firms in the industry serve customers that can easily switch between firms as they search for the best price.

Question 33

Collusive agreements are typically difficult for cartels to maintain because each firm can increase profits by:

A)producing more output than the quantity that maximizes joint cartel profits.
B)producing less output than the quantity that maximizes joint cartel profits.
C)increasing the price above the price that maximizes joint cartel profits.
D)engaging in less advertising than the level of advertising that maximizes joint cartel profits.

Question 34

If the only two firms in an industry agree to fix the price at a given level, this is an example of:

A)collusion.
B)satisfying demand.
C)price extortion.
D)price leadership.

Question 35

When firms openly agree on price and output and they jointly make other decisions aimed at achieving monopoly profits, those firms are practicing:

A)overt collusion.
B)tacit collusion.
C)leadership price.
D)competitive game.

Question 36

An industry with only two firms is generally called:

A)a monopoly.
B)monopolistic competition.
C)a duopoly.
D)perfect competition.

Question 37

Large barriers to entry in the gas station business explain why the two only gas stations in a small town:

A)can earn an economic profit in the long run.
B)must produce at the minimum average total cost in the long run.
C)have no fixed costs in the long run.
D)must produce a level of output such that MR = MC in order to maximize their profit.

Question 38

If there are two gas stations in a very small town,, then the gas station business there is probably best characterized as:

A)perfectly competitive.
B)monopolistically competitive.
C)monopolistic.
D)oligopolistic.

Question 39

The Herfindahl-Hirschman index equals ________ when ________ have (has) of the market.

A)10,000; four firms each; 25%
B)5,000; three firms each; 50%
C)5,000; two firms each; 50%
D)100,000; one firm; 100%

Question 40

In an oligopolistic market structure, collusion between firms usually leads to higher profits than noncooperative behavior.However, formal, overt collusion doesn't usually occur in the United States because:

A)it is illegal.
B)there is an incentive for each firm to cheat on a collusive agreement.
C)an oligopolistic firm will typically prefer lower profits if the only way to make higher profits is to improve the profit position of its rivals.
D)it is illegal and because there is an incentive for each firm to cheat on a collusive agreement.

Question 41

Figure: Monopoly Profits in Duopoly (Figure: Monopoly Profits in Duopoly) In the figure Monopoly Profits in Duopoly, two firms could engage in and reap monopoly profits.

A)game theory
B)the prisoners' dilemma
C)collusive behavior
D)measuring the four-firm concentration ratio

Question 42

Figure: Monopoly Profits in Duopoly (Figure: Monopoly Profits in Duopoly) Given the duopoly industry illustrated in the figure Monopoly Profits in Duopoly, if each firm acted on the belief that it faced demand curve D2 and acted without consideration of the other, each firm would attempt to maximize economic profits by producing quantity ________ and setting price equal to _.

A)Q4; P₁
B)Q4; P₂
C)Q₁; P₄
D)Q₂; P₂

Question 43

Figure: Monopoly Profits in Duopoly (Figure: Monopoly Profits in Duopoly) The figure Monopoly Profits in Duopoly illustrates the situation in which an industry consisting of two firms that face identical demand curves (D1) can collude to increase profits.If the firms collude and agree to share the market demand equally, then each firm will act as if its demand curve is given by:

A)D1.
B)D2.
C)MR1.
D)2 × D1.

Question 44

(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets.The market for gadgets is dominated by two producers, Margaret and Ray.Each firm can produce gadgets at a marginal cost of $2.The table shows the market demand schedule for gadgets.Suppose that these two producers have formed a cartel and are maximizing total industry profits.If Margaret decides to cheat on the agreement and sell 100 more gadgets, Margaret's profit will be _______, and Ray's profit will be _.

A)$1500; $1,000
B)$900; $600
C)$1,400; $1,000
D)$1,000; $1,400

Question 45

Figure: Monopoly Profits in Duopoly
(Figure: Monopoly Profits in Duopoly) In the figure Monopoly Profits in Duopoly, each firm faces an identical demand curve, D1, and the market demand curve is D2.The figure illustrates how firms can reap monopoly profits even in an industry with:

A)free entry and exit.
B)two firms.
C)monopolistic competition.
D)a four-firm concentration ratio of 50.

Question 46

(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets.The market for gadgets is dominated by two producers, Margaret and Ray.Each firm can produce gadgets at a marginal cost of $2.The table shows the market demand schedule for gadgets.If the industry was a perfectly competitive industry, the output would be gadgets, and the
Price would be _.

A)0; $10.
B)500; $5.
C)600; $4.
D)800; $2.

Question 47

(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets.The market for gadgets is dominated by two producers, Margaret and Ray.Each firm can produce gadgets at a marginal cost of $2.The table shows the market demand schedule for gadgets.If these two producers formed a cartel and acted to maximize total industry profits, each firm's output would be ________, and each firm's profit would be _ .

A)500; $2,500
B)200; $800
C)1,000; $500
D)1,000; $10,000

Question 48

(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets.The market for gadgets is dominated by two producers, Margaret and Ray.Each firm can produce gadgets at a marginal cost of $2.The table shows the market demand schedule for gadgets.Suppose that these two producers have formed a cartel and are maximizing total industry profits.If Margaret decides to cheat on the agreement and sell 100 more gadgets but Ray continues to sell 200 gadgets, Ray's profits will be:

A)$1,400.
B)$1,250.
C)$600.
D)$400.

Question 49

(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets.The market for gadgets is dominated by two producers, Margaret and Ray.Each firm can produce gadgets at a marginal cost of $2.The table shows the market demand schedule for gadgets.If industry output is 300 gadgets produced by Margaret and 200 gadgets produced by Ray and if Ray decides to increase output by 100, Margaret's profit will be , and Ray's profit will be _.

A)$1,750; $1,250.
B)$1,250; $1,250.
C)$1,400; $1,000.
D)$600; $600.

Question 50

Figure: Monopoly Profits in Duopoly (Figure: Monopoly Profits in Duopoly) Suppose the duopoly industry illustrated in the figure Monopoly Profits in Duopoly produces a perishable good.If the industry were perfectly competitive, the market price would likely end up being , and the combined economic
Profits of the firms would be _.

A)P₁; given by the area of the rectangle bounded by 0P₁CQ4
B)P₁; zero
C)P₃; given by the area of the rectangle bounded by 0P₃AQ₁
D)P₂; given by the area of the rectangle bounded by P₁P₂GB

Question 51

(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets.The market for gadgets is dominated by two producers, Margaret and Ray.Each firm can produce gadgets at a marginal cost of $0.The table shows the market demand schedule for gadgets.Suppose that these two producers have formed a cartel and are maximizing total industry profits.If Margaret decides to cheat on the agreement and sell 100 more gadgets, Margaret's price effect will be:

A)a decrease in profit of $400.
B)an increase in profit of $400.
C)an increase in profit of $250.
D)a decrease in profit of $250.

Question 52

Figure: Monopoly Profits in Duopoly
(Figure: Monopoly Profits in Duopoly) The figure Monopoly Profits in Duopoly illustrates the situation in which an industry consisting of two firms that face identical demand curves (D1) can collude to increase profits.If the firms collude and agree to share the market demand equally, then each firm will act as if its marginal revenue curve is given by:

A)MR1.
B)2 × MR1.
C)MR2.
D)MC.

Question 53

(Table: Demand Schedules of Gadgets) Look at the table Demand Schedule for Gadgets.The market for gadgets is dominated by two producers, Margaret and Ray.Each firm can produce gadgets at a marginal cost of approximately $0.The table shows the market demand schedule.If these two producers formed a cartel and acted to maximize total industry profits, total industry output would be:

A)10 gadgets.
B)5 gadgets.
C)50 gadgets.
D)500 gadgets.

Question 54

Figure: Monopoly Profits in Duopoly (Figure: Monopoly Profits in Duopoly) The figure Monopoly Profits in Duopoly illustrates the situation in which an industry consisting two firms that face identical demand curves (D1) can collude to increase profits.If the firms collude and agree to share the market demand equally, then each firm will act as if its demand curve is given by , while the market demand
Curve is given by _.

A)D1; MR2
B)D2; D1
C)D1; D2
D)MR1; MR2

Question 55

Figure: Monopoly Profits in Duopoly (Figure: Monopoly Profits in Duopoly) The efficient solution in the figure Monopoly Profits in Duopoly is found where price is ________ and quantity is _.

A)P₁; Q4
B)P₂; Q₂
C)P₂; Q₁
D)P₃; Q₁

Question 56

Figure: Collusion (Figure: Collusion) In the figure Collusion, panel (c) gives the combined marginal revenue, demand, and marginal cost curves for an industry containing several firms.Panels (a) and (b) give marginal cost curves for two of those firms.The price charged by the industry with collusion is shown by:

A)W.
B)X.
C)Y.
D)Z.

Question 57

(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets.The market for gadgets is dominated by two producers, Margaret and Ray.Each firm can produce gadgets at a marginal cost of $0.The table shows the market demand schedule for gadgets.If industry output is 350 gadgets produced by Margaret and 250 gadgets produced by Ray and if Ray decides to increase output by 100, industry price will be:

A)$3.
B)$2.
C)$1.
D)$0.

Question 58

Figure: Monopoly Profits in Duopoly (Figure: Monopoly Profits in Duopoly) If the two firms in the figure Monopoly Profits in Duopoly colluded to maximize their joint profits, the market price they set would be , and each
Firm's economic profit would be _.

A)P₂; given by the area of the rectangle bounded by P₁P₂EF = FEBG .B.P₁; P₁P₃AF
C)P₃; given by the area of the rectangle bounded by 0P₃AQ₁
D)P₂; given by the area of the rectangle bounded by P₁P₂BG

Question 59

Figure: Monopoly Profits in Duopoly (Figure: Monopoly Profits in Oligopoly) Firms in the duopoly industry illustrated in the figure Monopoly Profits in Duopoly have zero fixed costs.If the two firms colluded to maximize their combined economic profits, the market price they would set would be , and combined
Economic profits of the firms would be _.

A)P₁; given by the area of the rectangle bounded by 0P₁CQ4
B)P₁; zero
C)P₃; given by the area of the rectangle bounded by 0P₃AQ₁
D)P₂; given by the area of the rectangle bounded by P₁P₂BG

Question 60

Figure: Collusion (Figure: Collusion) In the figure Collusion, panel (c) gives the combined marginal revenue, demand, and marginal cost curves for an industry containing several firms.Panels (a) and (b) give marginal cost curves for two of those firms.The quantity of output produced by the industry with collusion is shown by:

A)Q.
B)R.
C)S.
D)T.

Question 61

(Table: Demand for Crude Oil) Look at the table Demand for Crude Oil.Assume that the crude oil industry is a duopoly and the marginal cost of producing crude oil equals zero.Suppose that the two firms are maximizing industry profit and splitting the profit evenly.If both firms decide to cheat and produce 10 more barrels each, industry output will be barrels.

A)100
B)120
C)110
D)160

Question 62

An analytical approach through which strategic choices can be assessed is called:

A)benefit-cost analysis.
B)econometric theory.
C)game theory.
D)monopolistic competition.

Question 63

(Table: Demand for Crude Oil) Look at the table Demand for Crude Oil.Assume that the crude oil industry is a duopoly and the marginal cost of producing crude oil equals zero.Suppose that the two firms are maximizing industry profit and splitting the profit evenly.If both firms engage in noncooperative behavior, the industry output will be barrels, and the price of crude oil will be _.

A)0; $160
B)80; $80
C)100; $60
D)160; $0

Question 64

Figure: Collusion (Figure: Collusion) In the figure Collusion, panel (c) gives the combined marginal revenue, demand, and marginal cost curves for an industry containing several firms.Panels (a) and (b) give marginal cost curves for two of those firms.The quantity of output produced by firm 2 when there is collusion in the industry is shown by:

A)H.
B)J.
C)K.
D)L.

Question 65

(Table: Demand for Crude Oil) The table Demand for Crude Oil shows the demand schedule for crude oil.Assume that the crude oil industry is a duopoly and the marginal cost of producing crude oil equals zero.If the two firms collude to share the market equally, the price of crude oil will be ________, firm 1 will produce ________ barrels, firm 2 will produce barrels,
And each firm will earn revenue equal to _.

A)$80; 80; 80; $6,400
B)$80; 40; 40; $3,200
C)$60; 50; 50; $3,000
D)$40; 60; 60; $2,400

Question 66

(Table: Demand for Crude Oil) Look at the table Demand for Crude Oil.Assume that the crude oil industry is a duopoly and the marginal cost of producing crude oil equals zero.Suppose that the two firms are maximizing industry profit and splitting the profit evenly.If both firms decide to cheat and produce 10 more barrels each, firm 1's profit will be , and firm 2's profit will be ______.

A)$3,200; $3,200
B)$3,200; $3,000
C)$3,000; $3,200
D)$3,000; $3,000

Question 67

(Table: Demand for Crude Oil) The table Demand for Crude Oil shows the demand schedule for crude oil.The marginal cost of producing crude oil equals zero.If the crude oil industry is a monopoly, the price of crude oil will be , the total quantity of crude oil produced by the
Monopoly will be ________ barrels, and the monopoly will earn revenue equal to _.

A)$80; 80; $6,400
B)$80; 80; $0
C)$160; 0; $0
D)$60; 100; $6,000

Question 68

(Table: Demand for Crude Oil) Look at the table Demand for Crude Oil.Assume that the crude oil industry is a duopoly and the marginal cost of producing crude oil equals zero.Suppose that the two firms are maximizing industry profit and splitting the profit evenly.If both firms decide to cheat and produce 10 more barrels each, the price of crude oil will be:

A)$160.
B)$80.
C)$70.
D)$60.

Question 69

The study of behavior in situations of interdependence is called:

A)benefit-cost analysis.
B)econometric theory.
C)game theory.
D)strategic theory.

Question 70

(Table: Demand for Crude Oil) Look at the table Demand for Crude Oil.Assume that the crude oil industry is a duopoly and the marginal cost of producing crude oil equals zero.Suppose that the two firms are maximizing industry profit and splitting the profit evenly.If firm 1 decides to cheat and increase production by 10 more barrels and firm 2 continues to produce 40 barrels, firm 2 will earn profits of:

A)$6,400.
B)$6,300.
C)$3,500.
D)$2,800.

Question 71

The study of behavior in situations of interdependence is known as:

A)dominant strategies.
B)game theory.
C)Nash equilibrium.
D)tacit collusion.

Question 72

(Table: Demand for Crude Oil) Look at the table Demand for Crude Oil.Assume that the crude oil industry is a duopoly and the marginal cost of producing crude oil equals zero.Suppose that the two firms are maximizing industry profit and splitting the profit evenly.If firm 1 decides to cheat and increase production by 10 more barrels, the price of crude oil will be:

A)$0.
B)$70.
C)$80.
D)$160.

Question 73

(Table: Demand for Crude Oil) Look at the table Demand for Crude Oil.Assume that the crude oil industry is a duopoly and the marginal cost of producing crude oil equals zero.Suppose that the two firms are maximizing industry profit and splitting the profit evenly.If the industry is operating in perfect competition, the industry output will be barrels, and the price of crude oil will be _.

A)0; $160
B)80; $80
C)100; $60
D)160; $0

Question 74

An analytical framework used in the analysis of strategic choices is:

A)the tacit supply curve model.
B)game theory.
C)perfect competition.
D)risk assessment.

Question 75

Game theory is commonly used to explain behavior in oligopolies, because oligopolies are characterized by:

A)large profits in the long run.
B)either homogeneous or heterogeneous products.
C)interdependence.
D)imperfect competition.

Question 76

In the classic prisoners' dilemma with two accomplices in crime, the dominant strategy for each individual is to:

A)not confess.
B)confess.
C)confess only if the other confesses.
D)This game does not have a dominant strategy.

Question 77

(Figure: Collusion) In the figure Collusion, panel (c) gives the combined marginal revenue, demand, and marginal cost curves for an industry containing several firms.Panels (a) and (b) give marginal cost curves for two of those firms.The quantity of output produced by firm 1 when there is collusion in the industry is shown by:

A)F.
B)G.
C)H.
D)K.

Question 78

(Table: Demand for Crude Oil) Look at the table Demand for Crude Oil.Assume that the crude oil industry is a duopoly and the marginal cost of producing crude oil equals zero.Suppose that the two firms are maximizing industry profit and splitting the profit evenly.If firm 1 decides to cheat and increase production by 10 more barrels, total industry output will be barrels.

A)160
B)100
C)90
D)80

Question 79

(Table: Demand for Crude Oil) Look at the table Demand for Crude Oil.Assume that the crude oil industry is a duopoly and the marginal cost of producing crude oil equals zero.Suppose that the two firms are maximizing industry profit and splitting the profit evenly.If firm 1 decides to cheat and increase production by 10 more barrels, firm 1 will earn profits of:

A)$6,400.
B)$6,300.
C)$3,500.
D)$2,800.

Question 80

In the classic prisoners' dilemma with two accomplices in crime, the Nash equilibrium is for:

A)neither to confess.
B)both to confess.
C)one to confess and the other not to confess.
D)This game does not have a Nash equilibrium.