Question

SET A

1.) Name the 7 Barriers to Entry in an Oligopoly Market. Are barriers to entry Low, Moderate or High in an Oligopoly Market?Why ?

2.) What is Game Theory (definition)? How does Game Theory apply to an Oligopoly Market?

3. Are Concentration RatiosLow, Moderate or High in a Monopolistic Competitive Market? Explain why its low, moderate or high.

4. Explain how Monopolistically Competitive Firms develop A.)Market Power and B.) Firm's Control over Price. Also, describe and explain The Shape of the Monopolistic Competitive Firm's Demand Curve.

5. What is an Export(Definition)? Give an example of an exported product from the United States. What is an Import (Definition)?Give an example of an Imported product to the United States.

Answer 1

1)

The seven barriers to entry in an oligopoly market:

1. Economies of scale experienced by incumbent firms
2. Network effects
3. Ownership of key scarce resource
4. Large set-up costs
5. Large Research and development cost.
6. Predatory pricing by incumbent firms
7. Advertising

The barriers to entry are moderate.

Answer 2

2.)  Game theory is the process of modeling the strategic interaction between two or more players in a situation containing set rules and outcomes. An oligopoly, firms are affected not only by their own production decisions, but by the production decisions of other firms in the market as well. Game theory models situations in which each actor, when deciding on a course of action, must also consider how others might respond to that action.