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Exam 17: Oligopoly.

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Question 121

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In a duopoly if the firms have agreed to jointly maximize profits,then each firm can increase its current profits by producing more.

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Question 122

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Table 17-19 Consider a small town that has two grocery stores from which residents can choose to buy a gallon of milk. The store owners each must make a decision to set a high milk price or a low milk price. The payoff table, showing profit per week, is provided below. The profit in each cell is shown as (Store 1, Store 2) . -Refer to Table 17-19.If grocery store 2 sets a low price,what price should grocery store 1 set? And what will grocery store 1's payoff equal?

A) Low price, $500
B) High price, $800
C) Low price, $100
D) High price, $100

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Question 123

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Table 17-20 Nadia and Maddie are two college roommates who both prefer a clean common space in their dorm room, but neither enjoys cleaning. The roommates must each make a decision to either clean or not clean the dorm room's common space. The payoff table for this situation is provided below, where the higher a player's payoff number, the better off that player is. The payoffs in each cell are shown as (payoff for Nadia, payoff for Maddie) . -Refer to Table 17-20.If Nadia chooses to clean,then Maddie will

In the prisoners' dilemma game,self-interest leads

Table 17-15 This table shows a game played between two players, A and B. The payoffs in the table are shown as (Payoff to A, Payoff to B) . -Refer to Table 17-15.Which of the following statements regarding this game is true?

Figure 17-2. Hector and Bart are roommates. On a particular day, their apartment needs to be cleaned. Each person has to decide whether to take part in cleaning. At the end of the day, either the apartment will be completely clean (if one or both roommates take part in cleaning) , or it will remain dirty (if neither roommate cleans) . With happiness measured on a scale of 1 (very unhappy) to 10 (very happy) , the possible outcomes are as follows: -Refer to Figure 17-2.In pursuing his own self-interest,Hector will

Table 17-20 Nadia and Maddie are two college roommates who both prefer a clean common space in their dorm room, but neither enjoys cleaning. The roommates must each make a decision to either clean or not clean the dorm room's common space. The payoff table for this situation is provided below, where the higher a player's payoff number, the better off that player is. The payoffs in each cell are shown as (payoff for Nadia, payoff for Maddie) . -Refer to Table 17-20.What is the Nash Equilibrium in this dorm room cleaning game?

In a two-person repeated game,a tit-for-tat strategy starts with

For a firm,strategic interactions with other firms in the market become more important as the number of firms in the market becomes larger.

In game theory,a Nash equilibrium is

Table 17-9 Only two firms, Acme and Pinnacle, sell a particular product. The table below shows the demand curve for their product. Each firm has the same constant marginal cost of $10 and zero fixed cost. -Refer to Table 17-9.Acme and Pinnacle agree to jointly maximize profits.If Acme and Pinnacle each break the agreement and each produce 100 more than agreed upon,how much less profit does each make?

Tying is always profitable for a monopoly.

Table 17-19 Consider a small town that has two grocery stores from which residents can choose to buy a gallon of milk. The store owners each must make a decision to set a high milk price or a low milk price. The payoff table, showing profit per week, is provided below. The profit in each cell is shown as (Store 1, Store 2) . -Refer to Table 17-19.What is grocery store 1's dominant strategy?

Table 17-21 The Chicken Game is named for a contest in which drivers test their courage by driving straight at each other. John and Paul have a common interest to avoid crashing into each other, but they also have a personal, competing interest to not turn first to demonstrate their courage to those observing the contest. The payoff table for this situation is provided below. The payoffs are shown as (John, Paul) . -Refer to Table 17-21.If John chooses Drive Straight,what will Paul choose to do and what will Paul's payoff equal?

Table 17-14 This table shows a game played between two players, A and B. The payoffs in the table are shown as (Payoff to A, Payoff to B) . -Refer to Table 17-14.If player A chooses his/her best strategy,player B should

Table 17-1 Imagine a small town in which only two residents, Rochelle and Alec, own wells that produce safe drinking water. Each week Rochelle and Alec work together to decide how many gallons of water to pump. They bring the water to town and sell it at whatever price the market will bear. To keep things simple, suppose that Rochelle and Alec can pump as much water as they want without cost so that the marginal cost of water equals zero. The weekly town demand schedule and total revenue schedule for water is shown in the table below: -Refer to Table 17-1.If the market for water were perfectly competitive instead of monopolistic,how many gallons of water would be produced and sold?

Figure 17-3. Katie and Taylor are roommates. On a particular day, their lawn needs to be mowed. Each person has to decide whether to take part in mowing the lawn. At the end of the day, either the lawn will be mowed (if one or both roommates take part in mowing) , or it will remain unmowed (if neither roommate mows) . With happiness measured on a scale of 1 (very unhappy) to 10 (very happy) , the possible outcomes are as follows: -Refer to Figure 17-3.The dominant strategy for Taylor is to

Describe the output and price effects that influence the profit-maximizing decision faced by a firm in an oligopoly market.How does this differ from output and price effects in a monopoly market?

We must be knowledgeable of how people behave in strategic situations if we are to understand

If a market is a duopoly and additional firms enter and do not cooperate,then