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Exam 17: Oligopoly

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Question 221

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Table 17-10 The table shows the town of Driveaway's demand schedule for gasoline.Assume the town's gasoline seller(s) incurs a cost of $2 for each gallon sold,with no fixed cost. -Refer to Table 17-10.If there are exactly five sellers of gasoline in Driveaway and if they collude,then which of the following outcomes is most likely?

A) Each seller will sell 20 gallons,charge a price of $6,and earn a profit of $80.
B) Each seller will sell 30 gallons,charge a price of $5,and earn a profit of $90.
C) Each seller will sell 40 gallons,charge a price of $4,and earn a profit of $120.
D) Each seller will sell 50 gallons,charge a price of $3,and earn a profit of $50.

E) A) and C)
F) A) and B)

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Question 222

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Table 17-1 Imagine a small town in which only two residents,Abby and Brad,own wells that produce safe drinking water.Each week Abby and Brad work together to decide how many gallons of water to pump.They bring water to town and sell it at whatever price the market will bear.To keep things simple,suppose that Abby and Brad can pump as much water as they want without cost so that the marginal cost is zero.The weekly town demand schedule and total revenue schedule for water is shown in the table below: -Which of the following companies may be the federal government's next big antitrust target?

A) Spalding
B) Google
C) Linux
D) Apple

E) A) and B)
F) B) and C)

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Question 223

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What are the three examples of controversial business practices that antitrust laws often prohibit?

Table 17-10 The table shows the town of Driveaway's demand schedule for gasoline.Assume the town's gasoline seller(s) incurs a cost of $2 for each gallon sold,with no fixed cost. -Refer to Table 17-10.If there are exactly five sellers of gasoline in Driveaway and if they collude,then which of the following outcomes is most likely?

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.Suppose the town enacts new antitrust laws that prohibit Rochelle and Alec from operating as a monopoly.What will be the price of water once Rochelle and Alec reach a Nash equilibrium?

In a duopoly situation,the logic of self-interest results in a total output level that

Table 17-24 Two firms are considering going out of business and selling their assets.Each considers what happens if the other goes out of business.The payoff matrix below shows the net gain or loss to each firm. -Refer to Table 17-24.Which firm's dominant strategy is to sell?

Scenario 17-3.Consider two countries,Muria and Zenya,that are engaged in an arms race.Each country must decide whether to build new weapons or to disarm existing weapons.Each country prefers to have more arms than the other because a large arsenal gives it more influence in world affairs.But each country also prefers to live in a world safe from the other country's weapons.The following table shows the possible outcomes for each decision combination.The numbers in each cell represent the country's ranking of the outcome (4 = best outcome,1 = worst outcome) . -Refer to Scenario 17-3.If Zenya chooses to disarm its existing weapons,then Muria will