#4 !!!!!

Soapy Inc. and Suddies​ Inc., the only laundry detergent​ producers, collude and agree to share the market equally.
If neither firm​ cheats, each makes​ $1 million profit.
If one firm​ cheats, it makes​ $1.5 million, while the complier incurs a loss of​ $0.5 million.
If both​ cheat, they break even. Neither firm can monitor the​ other's actions.
If the game is played only once what is the​ equilibrium? Is it a​ dominant-strategy equilibrium?

If the game is played only​ once, the equilibrium of the game is that Soapy​ _____ and Suddies​ _____.

The equilibrium​ _____ a dominant strategy equilibrium because the best strategy in this game is for a firm​ _____.

Why does a collusive agreement to restrict output and raise the price create a game like the​ prisoners' dilemma?

In a duopoly with a collusive agreement to restrict output and raise the​ price, a​ firm's best strategy is to​ ______ if the other firm​ complies, and to​ ______ if the other firm cheats.

A collusive agreement creates a game like the​ prisoners' dilemma because​ _______.

The following statements give some information about seven markets.
1.​ Coca-Cola cuts its price below that of​ Pepsi-Cola in an attempt to increase its market share.
2. A single​ firm, protected by a barrier to​ entry, produces a personal service that has no close substitutes.
3. A barrier to entry​ exists, but the good has some close substitutes.
4. A firm offers discounts to students and seniors.
5. A firm can sell any quantity it chooses at the going price.
6. The government issues Nike an exclusive licence to produce golf balls.
7. A firm experiences economies of scale even when it produces the quantity that meets the entire market demand.

In which of the seven cases might monopoly​ arise?

Which of the following is an example of derived
demand​?

Sam's Surfboards is the sole renter of surfboards on Big Wave Island.
Complete the sentence.

If marginal revenue is positive at the actual number of surfboard rentals made each​ hour, then ​ _______.

Roots Jackets is a firm in monopolistic competition. Its marginal cost of a jacket is a constant ​$100.00 and its total fixed cost is ​$1,500 a day.
This store sells 15 jackets a​ day, which is its​ profit-maximizing number of jackets.
Now the Roots store starts spending ​$1,000 a day advertising its​ jackets, and its​ profit-maximizing number of jackets sold jumps to 45 a day.

What is this​ store's average total cost of a jacket sold before the advertising begins and after the advertising begins.

The dry cleaning industry is in monopolistic competition.
In the short​ run, the​ profit-maximizing price is​ $10 per item and the average total cost is​ $6 per item. In the long​ run, the​ profit-maximizing price is​ $8 per item.

In the long​ run, what is the economic profit of a firm in the dry cleaning​ industry?

Sam's Surfboards is the sole renter of surfboards on Big Wave Island.
Complete the sentence.
For​ Sam's Surfboards, the change in total revenue for each additional surfboard rented is always​ _______.

Suppose a perfectly competive industry is taken over by a perfect price discriminating single firm. Answer true or false

1. Monopoly output will be less than the competitive equilibrium output.
2. A deadweight loss will arise in the market.
3. Producer surplus will increase.

What creates an incentive for firms in a collusive agreement to cheat and increase​ output?

Firms in a collusive agreement have an incentive to cheat and increase production because​ _______.