Please Read Chapter 10 and Answer the Following Questions:

1211 Words Apr 9th, 2013 5 Pages
Please read chapter 10 and answer the following questions:
1. (Varieties of Oligopolies) do the firms in an oligopoly act independently or interdependently? Explain your answer.

2. (Price Leadership) why might a price–leadership model of oligopoly not be an effective means of collusion in an oligopoly? * Price leadership practices violate US anti-trust laws. * The more differentiated the product is, the less effective price leadership is as a means of collusion. * There is no guarantee firms will follow the leader forcing the leading firm to reduce prices. * Cheating may occur. * A new entry can destabilize the price leader's position…

-If a price leader in an oligopolistic market sets price and output in order
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If both students sign the statement, each will receive an “F” for the course. If only one signs, he is allowed to withdraw from the course while the other student is expelled. If neither signs, both receive a “C” since the professor does not have sufficient evidence to prove cheating. Which outcome do you expect? Why?

* Prisoners’ Dilemma…

* In this case, both students will probably confess if they’re coherent about life. Why? Because each Student gets a better payoff by confessing no matter what the other the student does. Student #1 thinks, “I don’t know what student # 2 is going to do, so if I confess it’s the best way to keep myself from getting expelled. If he keeps quiet, I get a “C”. Yet if he confesses, I get expelled instead of receiving an “F” for the course.” In other words, confessing is the only way to keep the other Student from being able to get me expelled.

5.(Market Structures) Determine whether each of the following is a characteristic of perfect competition, monopolistic competition, oligopoly, and/or monopoly:

a. A large number of sellers /… Perfect competition

b. Product is a commodity…/ Government Monopoly (Utility)
c. Advertising by firms…/ Oligopoly

d. Barriers to entry… / Monopoly

e. Firms that are price makers…/a monopoly is a price maker as it holds a large amount of power over the price it charges.

6. OPEC is the