7/4/26, 12:51 PM Assignment Print View

Score: 47/47 Points 100 %

1. Award: 1 out of 1.00 point

The Cournot theory of oligopoly assumes rivals will

✓  keep their output constant.

 increase their output whenever a firm increases its output.

 decrease output whenever a firm increases its output.

 follow the learning curve.

References

Multiple Choice Difficulty: 01 Easy Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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2. Award: 1 out of 1.00 point

In a Sweezy oligopoly, a decrease in a firm's marginal cost generally leads to

 reduced output and a higher price.

 increased output and a lower price.

 higher output and a higher price.

✓  none of the provided answers.

References

Multiple Choice Difficulty: 01 Easy Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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3. Award: 1 out of 1.00 point

Which of the following are quantity-setting oligopoly models?

 Stackelberg only

 Cournot only

 Bertrand

✓  Stackelberg and Cournot

References

Multiple Choice Difficulty: 01 Easy Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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4. Award: 1 out of 1.00 point

Both firms in a Cournot duopoly would enjoy higher profits if

✓  the firms simultaneously reduced output below the Nash equilibrium level.

 each firm simultaneously increased output above the Nash equilibrium level.

 one firm reduced output below the Cournot Nash equilibrium level, while the other firm
continued to produce its Cournot Nash equilibrium output.

 the firms simultaneously reduced output below the Nash equilibrium level and one firm
reduced output below the Cournot Nash equilibrium level, while the other firm continued to
produce its Cournot Nash equilibrium output.

References

Multiple Choice Difficulty: 03 Hard Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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5. Award: 1 out of 1.00 point

Which of the following is a profit-maximizing condition for a Cournot oligopolist?

✓  MR = MC.

 Q1 = Q2 = ˙˙˙ = Qn .

 P = MR.

 All of the statements associated with this question are correct.

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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6. Award: 1 out of 1.00 point

"An oligopoly is an oligopoly. Firms behave the same no matter what type of oligopoly it is." This
statement is

 true.

✓  false.

 true of homogeneous product industries.

 true of heterogeneous product industries.

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

7. Award: 1 out of 1.00 point

A market is not contestable if

 all producers have access to the same technology.

 consumers respond quickly to a price change.

 existing firms cannot respond quickly to entry by lowering their price.

✓  there are sunk costs.

References

Multiple Choice Difficulty: 01 Easy Learning Objective: 09-04 Identify the

conditions for a contestable market; and
explain the ramifications for market power
and the sustainability of long-run profits.

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8. Award: 1 out of 1.00 point

If firms compete in a Cournot fashion, then each firm views the

✓  output of rivals as given.

 prices of rivals as given.

 profits of rivals as given.

 output, prices, and profits of rivals as given.

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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9. Award: 1 out of 1.00 point

With linear demand and constant marginal cost, a Stackelberg leader's profits are __________ the
follower.

 less than

 equal to

✓  greater than

 either less than or greater than

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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10. Award: 1 out of 1.00 point

When firm 1 enjoys a first-mover advantage in a Stackelberg duopoly, it will produce

 more output and charge a lower price than firm 2.

✓  more output and charge the same price as firm 2.

 less output and charge the same price as firm 2.

 less output and charge a higher price than firm 2.

References

Multiple Choice Difficulty: 03 Hard Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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11. Award: 1 out of 1.00 point

The market demand in a Bertrand duopoly is P = 10 − 3Q, and the marginal costs are $1. Fixed costs are
zero for both firms. Which of the following statements is/are true?

 P = $1.

 Profits of firm 1 = profits of firm 2.

 Producer's surplus of firm 1 = producer's surplus of firm 2.

✓  All of the statements associated with this question are correct.

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

12. Award: 1 out of 1.00 point

A firm's isoprofit curve is defined as the combinations of outputs produced by

 a firm that earns it the same level of profits.

✓  all firms that yield the firm the same level of profit.

 all firms that make total industry profits constant.

 none of the provided answers.

References

Multiple Choice Difficulty: 01 Easy Learning Objective: 09-03 Apply reaction

(or best-response) functions to identify
optimal decisions and likely competitor
responses in oligopoly settings.

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13. Award: 1 out of 1.00 point

Two identical firms compete as a Cournot duopoly. The demand they face is P = 100 − 2Q. The cost
function for each firm is C(Q) = 4Q. Each firm earns equilibrium profits of

 $1,024.

 $2,048.

 $4,096.

✓  $512.

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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14. Award: 1 out of 1.00 point

With a linear inverse demand function and the same constant marginal costs for both firms in a
homogeneous product Stackelberg duopoly, which of the following will result?

 Profits of leader > Profits of follower

 QL = 2QF
 PL > PF
✓  Profits of leader > Profits of follower and QL = 2QF

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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15. Award: 1 out of 1.00 point

Two firms compete as a Stackelberg duopoly. The demand they face is P = 100 − 3Q. The cost function
for each firm is C(Q) = 4Q. The outputs of the two firms are

✓  Q1 = 16 and Q2 = 8 .
 Q1 = 24 and Q2 = 12 .
 Q1 = 12 and Q2 = 8 .
 Q1 = 20 and Q2 = 15 .

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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16. Award: 1 out of 1.00 point

Two firms compete as a Stackelberg duopoly. The demand they face is P = 402 − Q. The cost function
for firm 1 (the leader) is C1 (Q1 ) = 2Q1 , and the cost function for firm 2 (the follower) is C2 (Q2 ) = 6Q2 .
The profits earned by the firms are

✓  π1 = $20, 402 and π2 = $9, 409.

 π1 = $20, 806 and π2 = $9, 991.
 π1 = $18, 856 and π2 = $10, 091.
 π1 = $19, 254 and π2 = $10, 554.

References

Multiple Choice Difficulty: 03 Hard Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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17. Award: 1 out of 1.00 point

Collusion in oligopoly is difficult to achieve because

 it is prohibited by law.

 every firm has an incentive to cheat given that others follow the agreement.

 firms usually take care of consumers' interests as a decision priority.

✓  it is prohibited by law and every firm has an incentive to cheat given that others follow the
agreement.

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-03 Apply reaction

(or best-response) functions to identify
optimal decisions and likely competitor
responses in oligopoly settings.

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18. Award: 1 out of 1.00 point

MCI announced a price discount plan for small firms. Their stock immediately fell in price. This shows
that

✓  MCI is probably competing in a Bertrand oligopolistic industry.

 stockholders are sometimes not rational.

 there is increased demand for MCI's stock.

 AT&T sold out its stock of MCI just after the announcement.

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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19. Award: 1 out of 1.00 point

There are many different models of oligopoly because

 beliefs play an important role in oligopolistic competition.

 firms do not maximize profits in oligopolistic competition.

 oligopoly is the most complicated type of market structure.

✓  beliefs play an important role in oligopolistic competition and oligopoly is the most
complicated type of market structure.

References

Multiple Choice Difficulty: 01 Easy Learning Objective: 09-01 Explain how

beliefs and strategic interaction shape
optimal decisions in oligopoly
environments.

20. Award: 1 out of 1.00 point

Which firm would you expect to make the lowest profits, other things being equal?

✓  Bertrand oligopolist

 Cournot oligopolist

 Sweezy oligopolist

 Stackelberg leader

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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21. Award: 1 out of 1.00 point

When firm 1 acts as a Stackelberg leader,

 firm 2 produces the monopoly output.

 firm 1's profit is less than its profit if it competed in a Cournot fashion.

 firm 2 will earn more than if it competed in a Cournot fashion.

✓  then neither does firm 2 produce a monopoly output, firm 1 have lower profit than it would if it
competed in a Cournot fashion, nor firm 2 earn more if it competed in a Cournot fashion .

References

Multiple Choice Difficulty: 03 Hard Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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22. Award: 1 out of 1.00 point

Two firms produce different goods. Firm 1 has a positive-sloped reaction function. This can be explained
best by

 homogeneous product Cournot oligopoly.

 homogeneous product Bertrand oligopoly.

✓  heterogeneous product Bertrand oligopoly.

 none of the provided answers.

References

Multiple Choice Difficulty: 03 Hard Learning Objective: 09-03 Apply reaction

(or best-response) functions to identify
optimal decisions and likely competitor
responses in oligopoly settings.

23. Award: 1 out of 1.00 point

The inverse demand in a Cournot duopoly is P = a − b (Q1 + Q2 ), and costs are C1 (Q1 ) = c1 Q1 and
C2 (Q2 ) = c2 Q2 . The government has imposed a per-unit tax of $t on each unit sold by each firm. The
equilibrium output of each firm is the same as a situation where each firm's

 demand increases by t.

 demand decreases by t.

✓  marginal cost increases by t.

 marginal cost decreases by t.

References

Multiple Choice Difficulty: 03 Hard Learning Objective: 09-03 Apply reaction

(or best-response) functions to identify
optimal decisions and likely competitor
responses in oligopoly settings.

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24. Award: 1 out of 1.00 point

The producer's surplus of all firms in an oligopoly is usually the least in the case of a

 Sweezy oligopoly.

 Cournot oligopoly.

 Stackelberg oligopoly.

✓  Bertrand oligopoly.

References

Multiple Choice Difficulty: 01 Easy Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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25. Award: 1 out of 1.00 point

Which of the following is true?

 In a Bertrand oligopoly, each firm reacts optimally to price changes.

 In a Cournot oligopoly, firms engage in quantity competition.

 In a Sweezy oligopoly, a change in marginal cost may not have an effect on output or price.

✓  All of the statements associated with this question are correct.

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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26. Award: 1 out of 1.00 point

The Sweezy model of oligopoly reveals that

 capacity constraints are not important in determining market performance.

 perfectly competitive prices can arise in markets with only a few firms.

✓  changes in marginal cost may not affect prices.

 all of the provided answers are correct.

References

Multiple Choice Difficulty: 01 Easy Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

27. Award: 1 out of 1.00 point

In the presence of large sunk costs, which of the following market structures generally leads to the
highest price?

 Stackelberg

 Cournot

 Bertrand

✓  Monopoly

References

Multiple Choice Difficulty: 01 Easy Learning Objective: 09-04 Identify the

conditions for a contestable market; and
explain the ramifications for market power
and the sustainability of long-run profits.

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28. Award: 1 out of 1.00 point

Which of the following is a feature of a contestable market?

 There are several firms in the market serving many consumers.

 There is a single firm in the market serving many consumers.

 The market price is equal to marginal cost.

✓  There is a single firm in the market serving many consumers, and the market price is equal to
marginal cost.

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-04 Identify the

conditions for a contestable market; and
explain the ramifications for market power
and the sustainability of long-run profits.

29. Award: 1 out of 1.00 point

A new firm enters a market that is initially serviced by a Cournot duopoly charging a price of $20. What
will the new market price be should the three firms coexist after the entry?

 $20

✓  below $20

 above $20

 none of the provided answers

References

Multiple Choice Difficulty: 03 Hard Learning Objective: 09-03 Apply reaction

(or best-response) functions to identify
optimal decisions and likely competitor
responses in oligopoly settings.

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30. Award: 1 out of 1.00 point

Sue and Janine own two local gas stations. They have identical constant marginal costs but earn zero
economic profits. Sue and Janine constitute

 a Sweezy oligopoly.

 a Cournot oligopoly.

✓  a Bertrand oligopoly.

 a Stackelberg oligopoly.

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

31. Award: 1 out of 1.00 point

An important condition for a contestable market is that

 all producers have different technologies.

 there are high transaction costs.

✓  existing firms cannot respond quickly to entry by lowering their price.

 there are sunk costs.

References

Multiple Choice Difficulty: 01 Easy Learning Objective: 09-04 Identify the

conditions for a contestable market; and
explain the ramifications for market power
and the sustainability of long-run profits.

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32. Award: 1 out of 1.00 point

Which of the following is true?

 In Bertrand oligopoly markets, each firm believes that its rivals will hold their output constant if
it changes its output.

 In Cournot oligopoly markets, firms produce an identical product at a constant marginal cost
and engage in price competition.

✓  In Sweezy oligopoly markets, each firm believes rivals will cut their prices in response to a
price reduction but will not raise prices in response to price increases.

 In oligopoly markets, a change in marginal cost never has an effect on output or price.

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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33. Award: 1 out of 1.00 point

A new firm enters a market that is initially serviced by a Bertrand duopoly charging a price of $30.
Assuming that the new firm is equally as efficient as the incumbent firms, what will the new price be
should the three firms coexist after the entry?

 above $30

 below $30

✓  $30

 indeterminable given the information provided

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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34. Award: 1 out of 1.00 point

Firm A has a higher marginal cost than firm B. They compete in a homogeneous product Cournot
duopoly. Which of the following results will not occur?

✓  QA > QB
 Profit A < Profit B
 Revenue of firm A < Revenue of firm B

 PriceA = PriceB

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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35. Award: 1 out of 1.00 point

Two identical firms compete as a Cournot duopoly. The inverse market demand they face is P = 80 −
4Q. The cost function for each firm is C(Q) = 8Q. The price charged in this market will be

 $12.

✓  $32.

 $48.

 $56.

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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36. Award: 1 out of 1.00 point

Which of the following is not a feature of a Sweezy oligopoly?

 There are a few firms in the market serving many consumers.

 The firms produce differentiated products.

 Each firm believes that rivals will cut their prices in response to a price reduction but will not
raise their prices in response to a price increase.

✓  Free entry and exit occurs in the market.

References

Multiple Choice Difficulty: 01 Easy Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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37. Award: 1 out of 1.00 point

Consider a Cournot duopoly with the following inverse demand function: P = 100 − 2Q1 − 2Q2 . The
firms' marginal costs are identical and are given by MCi (Qi ) = 2Qi . Based on this information, firm 1
and 2's marginal revenue functions are

 MR1 (Q1 , Q2 ) = 100 − 2Q1 − Q2 and MR2 (Q1 , Q2 ) = 100 − Q1 − 2Q2 .

✓  MR1 (Q1 , Q2 ) = 100 − 4Q1 − 2Q2 and MR2 (Q1 , Q2 ) = 100 − 2Q1 − 4Q2 .

 MR1 (Q1 , Q2 ) = 100 − 2Q1 − 4Q2 and MR2 (Q1 , Q2 ) = 100 − 4Q1 − 2Q2 .

 MR1 (Q1 , Q2 ) = 24.5 − 0.5Q2 and MR2 (Q1 , Q2 ) = 24.5 − 0.5Q1 .

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-03 Apply reaction

(or best-response) functions to identify
optimal decisions and likely competitor
responses in oligopoly settings.

38. Award: 1 out of 1.00 point

Consider a Cournot duopoly with the following inverse demand function: P = 100 − 2Q1 − 2Q2 . The
firms' marginal costs are identical and are given by MCi = 2 . Based on this information, consumer
surplus in this market is

 $16.33.

 $32.67.

✓  $1,067.11.

 $2,134.22.

References

Multiple Choice Difficulty: 03 Hard Learning Objective: 09-03 Apply reaction

(or best-response) functions to identify
optimal decisions and likely competitor
responses in oligopoly settings.

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39. Award: 1 out of 1.00 point

Consider a Stackelberg duopoly with the following inverse demand function: P = 100 − 2Q1 − 2Q2 .
The firms' marginal costs are identical and are given by MCi = 2 . Based on this information, the
Stackelberg follower's marginal revenue function is

✓  MR2 (Q1 , Q2 ) = 100 − 2Q1 − 4Q2 .

 MR2 (Q1 , Q2 ) = 100 − 4Q1 − 2Q2 .
 MR2 (Q1 , Q2 ) = 100 − 2Q1 − Q2 .
 MR2 (Q1 , Q2 ) = 100 − Q1 − 2Q2 .

References

Multiple Choice Difficulty: 03 Hard Learning Objective: 09-03 Apply reaction

(or best-response) functions to identify
optimal decisions and likely competitor
responses in oligopoly settings.

40. Award: 1 out of 1.00 point

Consider a Stackelberg duopoly with the following inverse demand function: P = 100 − 2Q1 − 2Q2 .
The firms' marginal costs are identical and are given by MCi = 2 . Based on this information, the
Stackelberg leader's reaction function is

 Q1 = 24.5 − 0.5Q2 .
 Q1 = 50 − 0.5Q2 .
 Q1 = 49 − 0.5Q2 .
✓  none of the provided answers.

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-03 Apply reaction

(or best-response) functions to identify
optimal decisions and likely competitor
responses in oligopoly settings.

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41. Award: 1 out of 1.00 point

Consider two firms competing to sell a homogeneous product by setting price. The inverse demand
curve is given by P = 6 − Q. If each firm's cost function is Ci (Qi ) = 2Qi , then consumer surplus in this
market is

 $2.

 $4.

✓  $8.

 indeterminable as there is insufficient information.

References

Multiple Choice Difficulty: 03 Hard Learning Objective: 09-03 Apply reaction

(or best-response) functions to identify
optimal decisions and likely competitor
responses in oligopoly settings.

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42. Award: 1 out of 1.00 point

An increase in firm 2's marginal cost will cause

 a downward shift in firm 1's reaction function, resulting in a new Cournot equilibrium where
firm 1 is producing a lower quantity and firm 2 is producing a higher quantity.

 an upward shift in firm 1's reaction function, resulting in a new Cournot equilibrium where firm 1
is producing a higher quantity and firm 2 is producing a lower quantity.

✓  a downward shift in firm 2's reaction function, resulting in a new Cournot equilibrium where
firm 1 is producing a higher quantity and firm 2 is producing a lower quantity.

 an upward shift in firm 2's reaction function, resulting in a new Cournot equilibrium where firm
1 is producing a lower quantity and firm 2 is producing a higher quantity.

References

Multiple Choice Difficulty: 03 Hard Learning Objective: 09-03 Apply reaction

(or best-response) functions to identify
optimal decisions and likely competitor
responses in oligopoly settings.

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43. Award: 1 out of 1.00 point

Consider a market consisting of two firms where the inverse demand curve is given by
P = 500 − 2Q1 − 2Q2 . Each firm has a marginal cost of $50. Based on this information, we can
conclude that consumer surplus in the different equilibrium oligopoly models will follow which of the
following orderings?

 CSCollusion > CSStackelberg > CSCournot > CSBertrand

✓  CSBertrand > CSStackelberg > CSCournot > CSCollusion
 CSBertrand > CSCournot > CSStackleberg > CSCollusion
 CSStackelberg > CSBertrand > CSCournot > CSCollusion

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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44. Award: 1 out of 1.00 point

Consider a market consisting of two firms where the inverse demand curve is given by
P = 500 − 2Q1 − 2Q2 . Each firm has a marginal cost of $50. Based on this information, we can
conclude that equilibrium price in the different oligopoly models will follow which of the following
orderings?

✓  PBertrand < PStackelberg < PCournot < PCollusion

 PStackelberg < PCollusion < PCournot < PBertrand
 PCollusion < PCournot < PStackelberg < PBertrand
 PBertrand < PCournot < PStackelberg < PCollusion

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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45. Award: 1 out of 1.00 point

Industry profits are maximized in the accompanying figure (QM1 = QM2 )

 only at point QM 1 .

 only at point QM 2 .

✓  on the line segment joining points QM 1 and QM 2 .

 at the point where r1 = r2 .

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-03 Apply reaction

(or best-response) functions to identify
optimal decisions and likely competitor
responses in oligopoly settings.

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46. Award: 1 out of 1.00 point

Firm A has a strictly higher marginal cost than firm B. They compete in a homogeneous product
Bertrand duopoly. Which of the following results will not occur?

 QA < QB
 Profit A = 0 < Profit B
 Revenue of firm A < Revenue of firm B

✓  PriceA < PriceB

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-02 Identify the

conditions under which a firm operates in a
Sweezy, Cournot, Stackelberg, or Bertrand
oligopoly, and the ramifications of each
type of oligopoly for optimal pricing
decisions, output decisions, and firm
profits.

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7/4/26, 12:51 PM Assignment Print View

47. Award: 1 out of 1.00 point

Consider a Stackelberg duopoly with the following inverse demand function: P = 100 − 2Q1 − 2Q2 .
The firms' marginal costs are identical and are given by MCi (Qi ) = 2. Based on this information, the
leader's reaction function is

 r1 (Q2 ) = 24.5 − 0.5Q1 and r2 (Q1 ) = 24.5 − 0.5Q2 .

 r1 (Q2 ) = 24.5 − 0.5Q2 and r1 (Q2 ) = 24.5 − 0.5Q1 .

 Q1 = 49 − 0.5Q2 and Q2 = 49 − 0.5Q1 .

✓  indeterminable as the Stackelberg leader does not react to the output decision of its rival.

References

Multiple Choice Difficulty: 02 Medium Learning Objective: 09-03 Apply reaction

(or best-response) functions to identify
optimal decisions and likely competitor
responses in oligopoly settings.

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