AP Micro - Monopolistic Comp & Oligopoly

Front

Which of the following is true of both monopolistically competitive and perfectly competitive firms in long-run equilibrium?
Marginal revenue equals average total cost.
Marginal cost equals average total cost.
Price equals average total cost.
Production occurs at minimum average total cost.

Back

Price equals average total cost.

Front

A monopolistically competitive firm advertises in order to

Back

make the demand for its product less price elastic

Front

Which of the following correctly describes the strategy of each firm in the cartel formed by Bmine and Gmine?

Back

Gmine's dominant strategy is to not cheat; Bmine's dominant strategy is to cheat.

Front

A cartel is difficult to maintain for which of the following reasons? Consumers substitute away from the good when the price increases. Individual cartel members are tempted to cheat on the agreement. Although the total gain to cartel members is positive, all members lose when everyone sticks to the agreement. Some firms will reduce output in an effort to lower costs of production.

Back

Individual cartel members are tempted to cheat on the agreement.

Front

If the only two firms in an industry successfully collude to maximize their joint profit, the price for the product will be

Back

above the marginal cost of production

Front

What happens in the short run if one firm in an oligopolistic industry colludes and then violates the agreement by charging a lower price or selling a larger quantity?

Back

The firm that cheats will earn higher profits, and industry profits will be lower.

Front

Given that each firm is aware of the information in the payoff matrix, which of the following is true?
Options:
Neither Alpha nor Beta has a dominant strategy.
Both Alpha and Beta have a dominant strategy to price high.
Both Alpha and Beta have a dominant strategy to price low.
Alpha has a dominant strategy to price low, whereas Beta has a dominant strategy to price high.

Back

Both Alpha and Beta have a dominant strategy to price low.

Front

A Nash equilibrium results under which of the following conditions?
- When Evergreen bids low, no matter what Nature View’s bid is
- When both firms bid high and when both firms bid low
- When Evergreen bids high and Nature View bids low
- When both firms bid low

Back

When Evergreen bids high and Nature View bids low

Front

One difference between oligopolies and monopolistically competitive markets is that there are fewer firms in oligopolistic markets than in monopolistically competitive ones.

Back

There are fewer firms in oligopolistic markets than in monopolistically competitive ones.

Front

If the four largest firms in a market produce 88 percent of total industry output, the market is

Back

an oligopoly