Author Question: If firms in duopoly collude and operate as a monopoly, the industry produces more output compared to ... (Read 99 times)

lindiwe

  • Hero Member
  • *****
  • Posts: 577
If firms in duopoly collude and operate as a monopoly, the industry produces more output compared to the Nash equilibrium. True or false? Explain.
 
  What will be an ideal response?

Question 2

Because of a decrease in labor costs, a monopoly finds that its marginal cost and average total cost have decreased. The monopoly ________ its price and ________ its quantity.
 
  A) raises; increases
  B) raises; decreases
  C) lowers; increases
  D) lowers; decreases



jackie

  • Sr. Member
  • ****
  • Posts: 324
Answer to Question 1

The statement is false. In the Nash equilibrium, both firms cheat and output is the same as in perfect competition. If the firms operate as a monopoly, the industry's profit-maximizing level of output is below the competitive level.

Answer to Question 2

C



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Historic treatments for rheumatoid arthritis have included gold salts, acupuncture, a diet consisting of apples or rhubarb, nutmeg, nettles, bee venom, bracelets made of copper, prayer, rest, tooth extractions, fasting, honey, vitamins, insulin, snow collected on Christmas, magnets, and electric convulsion therapy.

Did you know?

Before a vaccine is licensed in the USA, the Food and Drug Administration (FDA) reviews it for safety and effectiveness. The CDC then reviews all studies again, as well as the American Academy of Pediatrics and the American Academy of Family Physicians. Every lot of vaccine is tested before administration to the public, and the FDA regularly inspects vaccine manufacturers' facilities.

Did you know?

The most dangerous mercury compound, dimethyl mercury, is so toxic that even a few microliters spilled on the skin can cause death. Mercury has been shown to accumulate in higher amounts in the following types of fish than other types: swordfish, shark, mackerel, tilefish, crab, and tuna.

Did you know?

Vampire bats have a natural anticoagulant in their saliva that permits continuous bleeding after they painlessly open a wound with their incisors. This capillary blood does not cause any significant blood loss to their victims.

Did you know?

Pregnant women usually experience a heightened sense of smell beginning late in the first trimester. Some experts call this the body's way of protecting a pregnant woman from foods that are unsafe for the fetus.

For a complete list of videos, visit our video library