11 May HOW MIGHT OTHER FIRMS IN AN OLIGOPOLY INTERPRET YOUR DROP IN PRICE?
Explain what guaranteed price matching means. What are the consequences of such
a policy?
44)
Describe how if a price-fixing game is repeated over and over, the cooperative
outcome might be attained.
45)
Describe a grim trigger strategy.
46)
Describe a tit-for-tat strategy.
47)
How might other firms in an oligopoly interpret your drop in price?
8.7 The Insecure Monopolist and Entry Deterrence
1)
A monopoly faced with the possibility that another firm may enter is a(n)
A)
natural monopoly.
B)
competitive monopoly.
C)
insecure monopoly.
D)
oligopolistic monopoly.
2)
An insecure monopoly is one where
A)
a new patent has been granted.
B)
the possibility of a second firm entering exists.
C)
no other firms can enter.
D)
price-fixing is illegal under the Sherman Act.
3)
When a firm increases output and accepts a lower price to keep new firms from
entering, it is engaging in
A)
limit pricing.
B)
cartel behavior.
C)
collusion.
D)
price fixing.
1clip_image002.jpg”>
Figure 8.10
4)
In Figure 8.10, airline Fly Smart is initially a secure monopoly between two
cities X and Y at point M, serving 300 passengers per day at the profit
maximizing price of $300 per ticket. What is Fly Smart’s profit per ticket?
A)
$200
B)
$120
C)
$80
D)
$0
5)
In Figure 8.10, airline Fly Smart is initially a secure monopoly between two
cities X and Y at point M, serving 300 passengers per day at the profit
maximizing price of $300 per ticket. Suppose that Fly Smart discovers that a
second airline is contemplating entering the market. If Fly Smart accommodates
the entry, what will its profit be?
A)
$44,400
B)
$33,600
C)
$29,600
D)
$16,800
43)
Explain what guaranteed price matching means. What are the consequences of such
a policy? 44)
Describe how if a price-fixing game is repeated over and over, the cooperative
outcome might be attained. 45)
Describe a grim trigger strategy. 46)
Describe a tit-for-tat strategy. 47)
How might other firms in an oligopoly interpret your drop in price? 8.7 The Insecure Monopolist and Entry Deterrence1)
A monopoly faced with the possibility that another firm may enter is a(n)A)
natural monopoly.B)
competitive monopoly.C)
insecure monopoly.D)
oligopolistic monopoly. 2)
An insecure monopoly is one whereA)
a new patent has been granted.B)
the possibility of a second firm entering exists.C)
no other firms can enter.D)
price-fixing is illegal under the Sherman Act. 3)
When a firm increases output and accepts a lower price to keep new firms from
entering, it is engaging inA)
limit pricing.B)
cartel behavior.C)
collusion.D)
price fixing. 1clip_image002.jpg”>Figure 8.104)
In Figure 8.10, airline Fly Smart is initially a secure monopoly between two
cities X and Y at point M, serving 300 passengers per day at the profit
maximizing price of $300 per ticket. What is Fly Smart’s profit per ticket?A)
$200B)
$120C)
$80D)
$0 5)
In Figure 8.10, airline Fly Smart is initially a secure monopoly between two
cities X and Y at point M, serving 300 passengers per day at the profit
maximizing price of $300 per ticket. Suppose that Fly Smart discovers that a
second airline is contemplating entering the market. If Fly Smart accommodates
the entry, what will its profit be?A)
$44,400B)
$33,600C)
$29,600D)
$16,800
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