1.
Answer the next question(s) based on the following payoff matrix for a duopoly in which the numbers indicate the profit in millions of dollars for a high-price or a low-price strategy.

Firm A
High-priceLow-price
High-priceA = $250A = $325
B = $250B = $200
Firm B
Low-priceA = $200A = $175
B = $325B = $175
R-1 REF 25-118 (REF26033)

Refer to the above payoff matrix. If both firms collude to maximize joint profits, the total profits for the two firms will be:
A.$350 million.
B.$400 million.
C.$500 million.
D.$525 million.



2.
Answer the next question(s) based on the following payoff matrix for a duopoly in which the numbers indicate the profit in thousands of dollars for a high-price or a low-price strategy.

Firm X
High-priceLow-price
High-priceX = $625X = $725
Y = $625Y = $475
Firm Y
Low-priceX = $475X = $400
Y = $725Y = $400
R-2 REF 25-121 (REF26036)

Refer to the above payoff matrix. If both firms collude to maximize joint profits, the total profits for the two firms will be:
A.$1,200,000.
B.$1,250,000.
C.$1,400,000.
D.$1,500,000.



3.

R-3 REF 25-138

On the above graph, if the oligopolist's MC curve shifts from MC1 to MC2 , the firm will charge:
A.a higher price and total revenue will increase.
B.the same price and sell more output; total revenue will increase.
C.the same price and sell the same amount of output; total revenue will remain the same.
D.a higher price and sell less output; it can't be determined whether total revenue will increase.



4.
R-4 REF 25-139

Given the oligopolistic firm pictured above, what is the profit-maximizing price?
A.P1
B.P2
C.P3
D.P4



5.
R-5 REF 25-145

The above graph shows the demand and cost curves faced by an individual member of a cartel. The cartel sets a joint profit-maximizing price of P1 and assigns a production quota of Q1 for this firm. If the firm believes it could cheat without getting caught, what would be its profit-maximizing price and quantity? (Assume that the firm cannot practice price discrimination.)
A.P > P1, Q < Q1
B.P1, Q1
C.P2, Q2
D.P < P2, Q > Q2



6.

R-6 REF 25-167 (F25085)

Refer to the above graph. Proponents of advertising claim it will:
A.lower costs from a to b and increase the level of output.
B.increase costs from ATC1 to ATC2 and decrease output levels for producers and consumers.
C.lower costs from ATC2 to ATC1, but leave output unchanged (e.g., moving from point c to point a at output level Q1 ).
D.lower costs and increase output by moving a firm along its cost schedules, e.g., from point c to point b .



7.

R-7 REF 25-182

The diagram above could represent all of the following except a(n):
A.pure monopolist in short-run equilibrium.
B.monopolistic competitor with free entry in long-run equilibrium.
C.pure monopolist in long-run equilibrium.
D.oligopolist in short-run equilibrium.



8.

R-8 REF 25-185

Which type of firms above would be expected to engage in advertising?
A.1 and 2
B.1 and 4
C.2 and 3
D.3 and 4




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