Question

16) . the same results as would exist if a 16) The oligopolistic model in which firms produce exactly called the model B) price monopolist controlled the entire industry is A) collusion Q maximin strategy D) Coumot the output that would be produced if the would be produced if the industry was 17) 17) In the Cournot model the final level of output is industry was a monopoly, and is the output that perfectly competitive. A) equal to; less than less thany greaber than -the output B) greater than; less than D) greater thang equal to 1S) Industry A has two firms that each control 50 percent of the market. Industry B has three firms one firm controls 70 percent of the market and the other two firms control 15 percent of the market each According to the HHl, which industry is more concentrated? A) Industry A B) IndustryB Q) Both industries are equally concentrated D) indeterminate from the given information. 18)- where Rfer to the information provided in Figure 14.1 belowe to ansuver the questionis) that follour Demand and cost conditions for the Chewing Gum Industry MC 40 35 T ATC MR 12 14 16 Packs of chewing gum in thousands Figure 14. to Figure 14.1. Six firms that produce chewing gum form a cartel. The cartel faces the market 19) demand curve given by D. To maximize profits, the cartel should produce-packs of chewing gum and the price should be一一 -- A) 14,000 5.30 B) 12,000; $.25 C) 16,000; $.35 D) 12,000,$.40 Refer to Figure 14.1. Six chewing gum producing firms form a cartel. The firms have identical cost structures. If the cartel produces the profit-maximizing output level, each firm should produce A) 2,000 packs of chewing gum B) 6,000 packs of chewing gum 12000 packs of chewing gum D) indeterminate output levels from this information.

Answer 1

16.

Answer: B

This is price leadership in which the dominant firm in the industry sets a price that is followed by other firms and experiencing the same result.

Other options are not relevant here:

Collusion is the agreement between firms to manipulate the market.

Maximin strategy is the game theory of two firms.

Cournot is a oligopolistic model taking independent decision of production.

17.

Answer: A

In this model the, the output level is determined through the point where MR and MC meet; (MR = MC). This is same as monopoly market; therefore, in both these cases output is equal.

In perfectly competitive market, the output is determined at a point where price and MC meet; (P = MC). It gives higher output compare to Cournot model.

18.

Answer: B

HHI of A = 50^2 + 50^2 = 2,500 + 2,500 = 5,000

HHI of B = 70^2 + 15^2 + 15^2 = 4,900 + 225 + 225 = 5,350

HHI of B is more concentrated, since its number is higher than the industry A.

19.

Answer: D

In case of maximizing profit, the equilibrium condition is (MR = MC). The corresponding output is 12,000 units in the horizontal axis; the corresponding price in the horizontal axis, connected to D, is $0.40.

20.

Answer: A

In case of maximizing profit, the equilibrium condition is (MR = MC). The corresponding output is 12,000 units in the horizontal axis. Since there are 6 firms, each firm will produce (12,000 / 6 =) 2,000 units.