130 oligopolies can end up looking like competitive

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Exploring Microeconomics
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Chapter 15 / Exercise 1
Exploring Microeconomics
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130. Oligopolies can end up looking like competitive firms if the number of firms is: A. large and they all cooperate B. small and they all cooperate C. large and they do not cooperate D. small and they do not cooperate ANS: C PTS: 1 DIF: Easy TOP: How the size of an oligopoly
affects the market outcome 131. Which of the following explains why oligopolies can fail to maintain cooperation? (i) the story of the prisoners’ dilemma (ii) the cartel theory (iii) the fact that self-interest is not consistent with collective group interest PTS: 1 DIF: Moderate TOP: Oligopolies as a prisoners’
dilemma SHORT ANSWER
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The document you are viewing contains questions related to this textbook.
Exploring Microeconomics
The document you are viewing contains questions related to this textbook.
Chapter 15 / Exercise 1
Exploring Microeconomics
Sexton
Expert Verified
1. Briefly contrast the difference between equilibrium market outcomes in a monopoly, oligopoly and perfect competition. M
PTS: 1 DIF: Moderate TOP: Between monopoly and perfect competition 2. Even when allowed to collude, firms in an oligopoly will choose to cheat on their agreements with the rest of the cartel. Why?
PTS: 1 DIF: Moderate TOP: Competition, monopolies and cartels 3. If there is an increase in the number of firms in an oligopoly, what effect would this have on the market if: (a) they act independently of each other, and (b) they collude and enforce a cartel agreement? ANS: If there is an increase in the number of firms with no collusion, the oligopolistic market will look more and more like a competitive market. Prices will be lower and output will be higher. If there is an effective cartel, then the number of firms will have no effect on the price and output supplied to the market. The price and output will be maintained at the monopoly level.
PTS: 1 DIF: Moderate TOP: How the size of an oligopoly affects the market outcome 4. Suppose three firms are in an oligopoly and each firm has a dominant production strategy. Would it be possible to determine the Nash Equilibrium solely from knowledge about the firms’ dominant strategies? Suppose one of the three firms is irrational and plays a strategy other than its dominant strategy. Is it possible to determine the best course of action of the other two firms?
PTS: 1 DIF: Moderate TOP: Oligopolies as a prisoners’ dilemma 5. Table 16-7 The demand for a product that is produced at zero marginal cost is reflected in the table.

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