PRIN OF MICROECONOMICS
2nd Edition
ISBN: 9780393914085
Author: coppock
Publisher: Norton, W. W. & Company, Inc.
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Chapter 13, Problem 8QR
To determine
Network externalities and the oligopolist.
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This chapter discusses companies that are oligopolists in the market for the goods they sell. Many of the same ideas apply to companies that are oligopolists in the market for the inputs they buy. If sellers who are oligopolists try to increase the price of goods they sell, the goal of buyers who are oligopolists is to try to decrease the prices of goods they buy.
Major league baseball team owners have an oligopoly in the market for baseball players.
The owners' goal is to keep players' salaries .
True or False: This goal is difficult to achieve because teams can attract better players with higher salaries.
True
False
Baseball players went on strike in 1994 because they would not accept the salary cap that the owners wanted to impose.
True or False: The owners felt the need for a salary cap to help prevent any team from cheating.
True
False
Suppose that there were two competing types of high-definition DVD players, Greenbeam and Mosdef. Greenbeam enjoyed an initial advantage in the
market for high-definition DVD players because there were more motion-picture production companies offering movies compatible with its system.
Which of the following is an illustration of a network externality?
Mosdef benefited from more consumers buying Greenbeam DVD players.
O Consumers bought Mosdef players in increasing numbers, while Greenbeam lost market share and eventually went out of business.
Consumers bought Greenbeam players in increasing numbers, while Mosdef lost market share and eventually went out of business.
More production companies adopted the Mosdef format for their movies because the Mosdef player had the superior format, despite the
fact that more consumers purchased Greenbeam players.
Which firm would an economist most likely label as an oligopolist
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- Syukri, Iqmal and Amir run the only shop in Wang Ulu. They sell electrical goods such as televisions, washing machines, etc. However, their objectives are different from each other. Syukri wants to make as much profit as he can. Iqmal wants to sell as many goods as he can without losing money, and Amir wants to earn as much revenue as he can. The graph below illustrates their respective profits. Note: The length of each square on the Y-axis represents RM100, and the length of each square on the X-axis represents 100 units 1 what is the profit for suykri?arrow_forwardSyukri, Iqmal and Amir run the only shop in Wang Ulu. They sell electrical goods such as televisions, washing machines, etc. However, their objectives are different from each other. Syukri wants to make as much profit as he can. Iqmal wants to sell as many goods as he can without losing money, and Amir wants to earn as much revenue as he can. The graph below illustrates their respective profits. Note: The length of each square on the Y-axis represents RM100, and the length of each square on the X-axis represents 100 units 1 what is quantity for syukri? 2 what is quantity for iqmal? 3 what is quantity for amir? 4 what is price for amir? 5 what is price for iqmal? 6 what is price for syukri? 7 what is the profit for amir? 8 what is the profit for iqmal? 9 what is the profit for syukri?arrow_forwardwhat is the difference between nash equilibrium and dominated strategy?arrow_forward
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