Chapter 10

Question 1

Monopolistic Competition

Answer 1

Many small sellers

Differentiated products(close substitutes)

Easy Entry and exit

Question 2

Different Product

Answer 2

Different Product

Question 3

Demand curve more elastic than monopoly, because of

Answer 3

substitutes

Question 4

Long run, Price > 0

Answer 4

entry of new firms, price decreases
Leftward to your demand curve
Demand curve becomes more elastic

Question 5

Non-Price competition

Answer 5

Quality
Advertising
Increase ATC
Long run equilibrium : Price = 0

Question 6

Long run equilibrium

profit = ?, price = ?

Answer 6

0, ATC

Question 7

Excess capacity = ? - ?

Answer 7

Qc - Qm

Question 8

SRMC Goes through ?

Answer 8

min[SRATC]

Question 9

LRMC Goes through ?

Answer 9

min[LRAC]

Question 10

Oligopoly

Answer 10

Few large firms(n

Question 11

Long Run effects of Homogenous

? entry = ? competition

Answer 11

easy, perfect

Question 12

Long Run effects of Differentiated

? entry = ? competition

Answer 12

easy, monopolistic

Question 13

Mutual interdependence

Answer 13

Bring price lower to min[SRAVC]
Price leadership
Non-price competition
Price cartel

Question 14

Kinked Demand Curve, If one firm increases price, elasticity?

Answer 14

Others firms will not follow, elastic

Question 15

Kinked Demand Curve, If one firm decrease price, elasticity?

Answer 15

Others firms will follow, inelastic

Question 16

Dominant strategy

Answer 16

same strategy a player always chooses regardless of anything

Question 17

Tit for Tat Strategy

Answer 17

Choose what your opponent choose in the previous round

Question 18

prisoner’s dilemma game

Answer 18

Both companies will chose highest profit decision(dominant), eventually (L,L)

Question 19

Coordination Game

Answer 19

Two Nash Equilibrium
No dominant strategy
Strategy changes based on first company’s decision