14. MICRO-CH-17

The market for hand tools (such as hammers and screwdrivers) is dominated by Black & Decker, Stanley, and Craftsman. This market is best described as

• competitive

• monopoly

• oligopoly

• duopoly

A market structure in which many firms sell products that are similar but not identical is known as

• perfect competition.

• monopoly.

• oligopoly.

• None of the answers is correct.

If oligopolists engage in collusion and successfully form a cartel, the market outcome is

• the same as if it were served by a monopoly

• the same as if it were served by competitive firms

• efficient because cooperation improves efficiency

• known as a Nash equilibrium

Suppose an oligopolist individually maximizes its profits. When calculating profits, if the output effect exceeds the price effect on the marginal unit of production, then the oligopolist

• has maximized profits

• should produce more units

• should produce fewer units

• should exit the industry

• is in a Nash equilibrium

As the number of sellers in an oligopoly grows larger, an oligopolistic market looks more like

• a monopoly

• a duopoly

• a competitive market

• a collusion solution

When an oligopolist individually chooses its level of production to maximize its profits, it produces an output that is

• more than the level produced by a monopoly and less than the level produced by a competitive market

• less than the level produced by a monopoly and more than the level produced by a competitive market

• more than the level produced by either a monopoly or a competitive market

• less than the level produced by either a monopoly or a competitive market

When an oligopolist individually chooses its level of production to maximize its profits, it charges a price that is

• more than the price charged by a monopoly and less than the price charged by a competitive market

• less than the price charged by a monopoly and more than the price charged by a competitive market

• more than the price charged by either a monopoly or a competitive market

• less than the price charged by either a monopoly or a competitive market

As the number of sellers in an oligopoly increases,

• collusion is more likely to occur because a larger number of firms can place pressure on any firm that defects

• output in the market tends to fall because each firm must cut back on production

• the price in the market moves further from marginal cost

• the price in the market moves closer to marginal cost

A situation in which oligopolists interacting with one another each choose their best strategy given the strategies that all the other oligopolists have chosen is known as a

• collusion solution

• cartel

• Nash equilibrium

• dominant strategy

The table shows the demand schedule for tickets to watch amateur baseball games. The city provides the ballparks, and the players play for free, so the marginal cost of providing the games is zero. The city has authorized two companies to provide baseball games in two stadiums, and the public considers the games in each stadium to be equivalent. Under competition, the price and quantity in this market would be

• $8; 800

• $6; 1,200

• $4; 1,600

• $2; 2,000

• $0; 2,400