Answer the following statements true (T) or false (F)
1) Chess is an example of a sequential game.
2) A terminal node in a game tree is the starting point of the game.
3) In an entry game, it is not necessary for managers to consider the best response of their competitor(s).
4) If Happy Feet advertises that it will undercut any competitor's price to keep another firm from entering the market, advertising will both increase and decrease Happy Feet's profit.
5) All else equal, the greater the cost of a commitment to prevent a rival firm from entering the market, the less likely the commitment will be undertaken.
1) TRUE
2) FALSE
3) FALSE
4) TRUE
5) TRUE
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For the monopolistic competitor, which of the following is INCORRECT?
A) Because the firm is not a perfect competitor, its demand curve slopes downward. B) The marginal revenue curve is downward sloping and lies below the demand curve. C) The profit-maximizing rate of output arises at the point at which the marginal cost curve intersects the marginal revenue curve. D) If the firm in a monopolistically competitive industry were making economic losses, new firms will enter the industry.
What is the effect of profits in a monopoly?
a. Society is faced with a deadweight loss equal to the profit. b. Consumer losses are offset by producer gains. c. Producer losses are offset by consumer gains. d. Society gains at the monopolist’s expense.
Which one of the following is not a retaliation strategy that firms would apply to one that cheated on a price-fixing scheme by selling at a price below the agreed-upon fixed price?
A. All other firms sell at the same low price as the cheating firm. B. All other firms sell at a price that ensures zero economic profit for all firms. C. Each period, all other firms sell at the price picked by the cheater in the previous period. D. All other firms would reduce their output.
If the profit-maximizing markup factor in a 10-firm Cournot oligopoly is ?2, what is the corresponding market elasticity of demand?
A. ?2.0 B. ?1.2 C. ?1.0 D. None of the statements is correct.