Two players (I and II) can either choose C or D with the payoff matrix above. Th

Question

Two players (I and II) can either choose C or D with the payoff matrix above. The numbers represent millions of dollars the player gets. Player I`s payoffs are shown first. If both play their dominant strategy then:

We can not say what the outcome would be.

2.

A few questions in this problem set are based on the comments made by James Love to Congress regarding antitrust policy and the Petroleum industry. These are found at the end of the module on Antitrust Policy. Try to read the entire article carefully first... and then see if you can answer the questions (rather than fishing out the answer each time). Obviously you will go back and check to make sure you have it correct ... but to absorb the content it is best read it all first before going back.

What is it about the petroleum industry that simultaneoulsy prevents entry and fosters joint ventures and other collaberations?

High fixed (and sunk) costs

3.

A few questions in this problem set are based on the comments made by James Love to Congress regarding antitrust policy and the Petroleum industry. These are found at the end of the module on Antitrust Policy. Try to read the entire article carefully first... and then see if you can answer the questions (rather than fishing out the answer each time). Obviously you will go back and check to make sure you have it correct ... but to absorb the content it is best read it all first before going back.

Why is less concentration a problem for a cartel?

If you can not concentrate you lose focus.

4.

few questions in this problem set are based on the comments made by James Love to Congress regarding antitrust policy and the Petroleum industry. These are found at the end of the module on Antitrust Policy. Try to read the entire article carefully first... and then see if you can answer the questions (rather than fishing out the answer each time). Obviously you will go back and check to make sure you have it correct ... but to absorb the content it is best read it all first before going back.

What is the weakness of the Herfindahl index according to James Love?

It assumes all firms are acting independently

5.

An industry has 25 firms all with identical market shares. Two of the firms then merge together. By how much does the Herfindahl index rise? (please do this without a calculator... for your own good)

8

6.

An industry has 25 firms all with identical market shares. What is the Herfindahl index? (please do this without a calculator... for your own good)

6250

7.

Assume males are willing to pay much more than females in the following markets. Which one will have the easiest time price-discriminating?

Toothpaste

8.

For a profit-maximizing firm in monopolistic competition:

A. Mutual gains will be 5 million. B. They will minimize mutual gains. C. They will maximize mutual gains. D.

We can not say what the outcome would be.

2.

A few questions in this problem set are based on the comments made by James Love to Congress regarding antitrust policy and the Petroleum industry. These are found at the end of the module on Antitrust Policy. Try to read the entire article carefully first... and then see if you can answer the questions (rather than fishing out the answer each time). Obviously you will go back and check to make sure you have it correct ... but to absorb the content it is best read it all first before going back.

What is it about the petroleum industry that simultaneoulsy prevents entry and fosters joint ventures and other collaberations?

A. The high dependence on patent holding by those already in the industry B. The licensing requirments prior to entering C. All of these are mentioned and significant D.

High fixed (and sunk) costs

3.

A few questions in this problem set are based on the comments made by James Love to Congress regarding antitrust policy and the Petroleum industry. These are found at the end of the module on Antitrust Policy. Try to read the entire article carefully first... and then see if you can answer the questions (rather than fishing out the answer each time). Obviously you will go back and check to make sure you have it correct ... but to absorb the content it is best read it all first before going back.

Why is less concentration a problem for a cartel?

A. It is harder to monitor cheating within the cartel. B. Licensing fees must be paid on an individual basis - resulting in wasted costs collectively. C. More attention will be paid by regulators as more firms are in the industry D.

If you can not concentrate you lose focus.

4.

few questions in this problem set are based on the comments made by James Love to Congress regarding antitrust policy and the Petroleum industry. These are found at the end of the module on Antitrust Policy. Try to read the entire article carefully first... and then see if you can answer the questions (rather than fishing out the answer each time). Obviously you will go back and check to make sure you have it correct ... but to absorb the content it is best read it all first before going back.

What is the weakness of the Herfindahl index according to James Love?

A. It arbitrarily places greater weight on the existence of larger firms within the industry B. it is hard to define the boundaries of the industry C. It does not place greater weight on larger firms within the industry D.

It assumes all firms are acting independently

5.

An industry has 25 firms all with identical market shares. Two of the firms then merge together. By how much does the Herfindahl index rise? (please do this without a calculator... for your own good)

A. 32 B. 125 C. 16 D.

8

6.

An industry has 25 firms all with identical market shares. What is the Herfindahl index? (please do this without a calculator... for your own good)

A. 400 B. 125 C. 100 D.

6250

7.

Assume males are willing to pay much more than females in the following markets. Which one will have the easiest time price-discriminating?

A. Body tattoos B. Beer in a grocery store C. Beer purchased online D.

Toothpaste

8.

For a profit-maximizing firm in monopolistic competition:

A. AVC will equal MC B. The price charged will be greater than MC C. AVC will be greater than MC D. MR will be greater than MC

Explanation / Answer

1. B is Correct as both will play dominant of their own which will make one better off and other worse off.

2. B is Correct, prior to entering petroleum inductry there is licensing requirement.

3. A is Correct

4. D is Correct, In petroleum industry there seems to have Joint venture and collabrative aggrement hence the index outwieghs the effect of those.

5. A is Correct

Previous HHI=25 x .0016=.0400

New HHI=.0064 + 23 x .0016=.0432

6. A is Correct

7. C is Correct

8. C is Correct, AVC is greater than MC

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.