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Exam 14: Oligopoly

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Question 41

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The breakup of Microsoft in 2005 was one of the first applications of antitrust policy in the United States.

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Question 42

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OPEC is a(n) _____ cartel that includes _____ national governments.

A) illegal;12
B) legal;12
C) illegal;11
D) legal;8

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Question 43

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Use the following to answer questions : $\begin{array}{l}\text { Table: Demand for Crude Oil }\\\begin{array} { c c c } \text { Quantity } & \begin{array} { c } \text { Price } \\\text { (\$/barrel) }\end{array} & \begin{array} { c } \text { Total } \\\text { Revenue (\$) }\end{array} \\\hline 0 & \$ 160 & \$ 0 \\10 & 150 & 1500 \\20 & 140 & 2800 \\30 & 130 & 3900 \\40 & 120 & 4800 \\50 & 110 & 5500 \\60 & 100 & 6000 \\70 & 90 & 6300 \\80 & 80 & 6400 \\90 & 70 & 6300 \\100 & 60 & 6000 \\110 & 50 & 5500 \\120 & 40 & 4800 \\130 & 30 & 3900 \\140 & 20 & 2800 \\150 & 10 & 1500 \\160 & 0 & 0\end{array}\end{array}$ -(Table: Demand for Crude Oil) Use Table: Demand for Crude Oil.Assume that the crude oil industry is a duopoly and the marginal cost of producing crude oil is 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:

An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry is an example of cooperative behaviour.

A strategy in which players cooperate initially but then mimic what the other players do is referred to as a:

Use the following to answer question 92: Figure: Payoff Matrix I for Blue Spring and Purple Rain -(Figure: Payoff Matrix I for Blue Spring and Purple Rain) Use Figure: Payoff Matrix I for Blue Spring and Purple Rain.The figure refers to two producers of bottled water.Each has two strategies available to it: a high price and a low price.The dominant strategy for Purple Rain is to:

If Air Canada offers free drinks and snacks on its flights and West Jet follows,they are engaging in non-price competition.

One framework used to analyze strategic choices is:

Use the following to answer questions : Scenario: Payoff Matrix for Firms X and Y The following payoff matrix depicts the profits for the only two firms in this oligopolistic industry. -(Scenario: Payoff Matrix for Firms X and Y) Payoff Matrix for Firms X and Y.If firm X were to choose its dominant strategy,it would:

A trust is a government agency that enforces laws limiting the power of oligopolies.

Both monopolists and cartel members will find that a drop in price leads to:

Oligopoly firms that produce only cement are less likely to collude than firms in a cell phone oligopoly.

Use the following to answer questions : $\begin{array}{l}\text { Table: Demand for Solar Water Heaters }\\\begin{array} { r c } \hline \text { Price } & \text { Quantity } \\\hline \$ 1400 & 30 \\1300 & 35 \\1200 & 40 \\1100 & 45 \\1000 & 50 \\900 & 55 \\800 & 60 \\700 & 65\end{array}\end{array}$ -(Table: Demand for Solar Water Heaters) Use Table: Demand for Solar Water Heaters.The marginal cost of producing solar water heaters is zero,and only two firms,Rheem and Calefi,produce them.Suppose they agree to produce only 25 water heaters each.If Rheem cheats on the agreement and produces 30 water heaters,what is the quantity effect for Rheem?

A customer with significant buying power in an industry would:

Use the following to answer questions : Figure: Payoff Matrix II for Blue Spring and Purple Rain -(Figure: Payoff Matrix II for Blue Spring and Purple Rain) Use Figure: Payoff Matrix II for Blue Spring and Purple Rain.The figure describes two producers of bottled water.The Nash equilibrium in the figure is reached when Blue Spring charges a _____ price and Purple Rain charges a _____ price.

Gary's Gas and Frank's Fuel are the only two providers of gasoline in their town.Gary and Frank decide to form a cartel.Later,Gary summarizes his pricing strategy as,"I'll cheat on the cartel because,regardless of what Frank does,cheating gives me the best payoff." This is an example of:

Use the following to answer questions : Figure: Payoff Matrix for Ajinomoto and ADM -(Figure: Payoff Matrix for Ajinomoto and ADM) Use Figure: Payoff Matrix for Ajinomoto and ADM.The optimal combination for maximum combined profit occurs when ADM produces _____ million kilograms and Ajinomoto produces _____ million kilograms.

Which statement does NOT describe OPEC?

Antitrust policy refers to government:

Oligopoly first became an issue in Canada in the second half of the nineteenth century,when the growth of railroads allowed for a national market for goods.