Question :
21) In an oligopoly in which the firms have entered : 1238866
21) In an oligopoly in which the firms have entered into a cartel agreement, the Nash equilibrium exhibits which of the following?
A) firms jointly maximizing profits
B) the firms cheating on the cartel agreement, which benefits society
C) production at a price and output level close to monopolistic competition in the long run
D) the firms cheating on the cartel agreement, which harms society
E) one firm cheating on the cartel agreement and the other firms complying with the cartel agreement
22) Suppose Intel and AMD can each charge either $300 or $200 for a CPU (the computing unit of a computer). The above table illustrates the payoffs, in millions of dollars, from each of the four possible outcomes that could occur in their duopoly setting. If Intel charges $300 and AMD charges $300, then Intel’s profit will be ________ million and AMD’s profit will be ________ million.
A) $320; $160
B) $200; $180
C) $500; $100
D) $450; $220
E) $320; $220
23) Suppose Intel and AMD can each charge either $300 or $200 for a CPU (the computing unit of a computer). The above table illustrates the payoffs, in millions of dollars, from each of the four possible outcomes that could occur in their duopoly setting. What must Intel’s price be for AMD to earn $220 million in profit?
A) $200
B) $400
C) $220
D) either $300 or $400 because AMD earns $220 million in profit either way
E) None of the above answers is correct because the payoff matrix shows that it is not possible for AMD to earn $220 million in profit
24) Suppose Intel and AMD can each charge either $300 or $200 for a CPU (the computing unit of a computer). The above table illustrates the payoffs, in millions of dollars, from each of the four possible outcomes that could occur in their duopoly setting. If Intel charges $200 and AMD charges $300, then Intel’s profit will be ________ million and AMD’s profit will be ________ million.
A) $200; $180
B) $320; $160
C) $500; $100
D) $450; $220
E) $500; $220
25) Long-run economic profits are most likely to be earned in
A) perfect competition and oligopoly.
B) perfect competition and monopoly.
C) monopoly and oligopoly.
D) oligopoly and monopolistic competition.
E) perfect competition and monopolistic competition.
26) If two duopolists can stick to a cartel agreement to boost their prices, then both
A) make greater economic profits than if they did not collude.
B) price at marginal cost.
C) price below average total cost.
D) decrease their economic profits.
E) increase their production so that each produces more than if they did not collude.
27) If an oligopolistic game is repeatedly played, which of the following can occur?
A) Players can learn ways to cooperate and make an economic profit.
B) The competitive price and output consistently is the final result.
C) Firms can learn how to cheat more effectively on the other player.
D) One firm will be driven out of business.
E) An implicit agreement is reached in which one firm constantly cheats on the cartel and the other firm complies with it.
28) The only two firms in a market are trying to decide what price to charge. The payoff matrix for this duopoly game is shown above. The payoffs are thousands of dollars of economic profit. In the Nash equilibrium, Firm A will set a price of ________ and Firm B will set a price of ________.
A) $10; $20
B) $20; $10
C) $10; $10
D) $20; $20
E) $20; something, but more information is needed to determine Firm B’s price
29) The only two firms in a market are trying to decide what price to charge. The payoff matrix for this duopoly game is shown above. The payoffs are thousands of dollars of economic profit. In the above game, in the Nash equilibrium,
A) Firm A and Firm B are both making $40,000 in economic profit.
B) Firm A and Firm B are both making $55,000 in economic profit.
C) Firm A is making $60,000 and Firm B is making $55,000 in economic profit.
D) Firm A and Firm B are both making $60,000 in economic profit.
E) Firm A and Firm B are both making $35,000 in economic profit.
30) The only two firms in a market are trying to decide what price to charge. The payoff matrix for this duopoly game is shown above. The payoffs are thousands of dollars of economic profit. Which of the following statements is correct?
A) If the firms play this game repeatedly, one would end up charging $20 and the other $10.
B) If the firms cooperate, both could make $55,000 in economic profit.
C) The Nash equilibrium in this game is for both firms to set P = $20 because that maximizes their combined profit.
D) Firm B’s strategy is to always set P = $20 because that gives Firm B the highest possible profit.
E) If Firm B sets P = $20, then Firm A will maximize its profit by setting its P = $20.
