Give an example of an oligopolistic market. Explain why it is oligopolist.
What will be an ideal response?
Answers will vary, but should show a thorough understanding of oligopoly.
Common examples include automobiles, cigarettes, commercial airlines, computers,
soda, sports drinks, steel, and video games. Oligopolistic markets are dominated by a
few large sellers that control most or all of the production and sales in their industry.
There are typically high barriers to entry due to factors such as economies of large-
scale production, high start-up costs, high spending on advertising, and/or high
research and development costs. Government regulations (e.g., patents, import tariffs and quotas, and licensing) and control over a key resource or input may also help
explain why the example market is oligopolist.
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The quantity sold in a market will decrease if the government
a. decreases a binding price floor in that market. b. increases a binding price ceiling in that market. c. increases a tax on the good sold in that market. d. All of the above are correct.
Assume the United States can use a given amount of its resources to produce either 20 airplanes or 8 automobiles and Japan can employ the same amount of its resources to produce either 20 airplanes or 10 automobiles. The U.S. should specialize in:
a. neither good. b. automobiles. c. airplanes. d. both goods.
What is the deadweight loss due to profit-maximizing monopoly pricing under the following conditions: The price charged for goods produced is $10 . The intersection of the marginal revenue and marginal cost curves occurs where output is 100 units and
marginal revenue is $5 . The socially efficient level of production is 110 units. The demand curve is linear and downward sloping, and the marginal cost curve is constant.
A ________ describes the possible moves in a game in sequence and lists the payoffs to each possible combination of moves.
A. payoff matrix B. decision tree C. multi-period game D. game graph