MC, Oligopoly and Game Theory

A key characteristic of monopolistically competitive firms is

• barriers to entry

• differentiated products

• few buyers and sellers

• long run economic profits

A key characteristic of oligopolistic firms is

• no barriers to entry or exit

• differentiated products

• interdependence between firms

• no long-run economic profits

The primary goal of a cartel is to

• increase demand to increase member profits

• increase market concentration

• decrease market concentration

• decrease supply to increase member profits

The kinked demand curve model assumes that your competition will

• not consider your actions

• match your price increases but not match your price decreases

• engage in predatory behavior

• match your price decreases but not match your price increases

If a firm follows their dominant strategy they will

• do what's best for them regardless of what their competition does

• do what's best of them in response to the actions of their competition

• pursue a strategy that leads to the best joint outcome for all firms involved

• not engage in pricing competition

Both monopolistically competitive and oligopolistic firms maximize profits where

• P > ATC

• P = ATC

• MR > MC

• MR = MC

Which market type is the least competitive?

• perfect competition

• monopolistic competition

• oligopoly

• monopoly

In general, industries in the U.S. are becoming __________ competitive.

• less

• more

Game theory is used to analyze the behavior of oligopolistic industries because

• there are many firms and it makes it easier to predict their behavior

• firms are interdependent

• it makes economics more enjoyable to learn

• firms do not compete with one another

Why do we not see cartels within the U.S.?

• They have been proven to be ineffective and unstable.

• They are illegal.

• They take too much time to manage and don't produce positive results for businesses or consumers.

• We do see many cartels within the U.S.