Question

An illegal monopoly must have (10)________________that protect him from competition entering his market. He cannot be selling a product that has many close (11)                                                           .

His demand curve is very steep because demand for his product is very (12)_________

The monopolist will restrict his ____________to get the highest price.

Long run market demand must be (14)______for a Cartel to survive and do well.

Long run market supply must be (15)________for a Cartel to survive and do well.

According to Hotellings Paradox, an industry with a small number of sellers with large market shares will often end up offering products that are highly (16)_______

and are aimed at the (17)_______of the market.

When firms in an oligopoly have a tacit agreement to "follow the leader" in raising prices, iit is called (18) _

Oligopolies often have a demand curve that is (19)__________above the present price because if they (20)______their prices, their rivals will NOT match them.

Their demand curve is (21)_________         below the present price because if they

(22)____      their prices the rival firms WILL do the same thing.

23) Under Monopolistic Competition, firms will produce with _______capacity in the long run.

24) Firms in an Oligopoly usually have very ________start up costs for advertising and marketing.

25) The type of industry where firms produce “differentiated” products is an ________________

Answer 1

10. Predatory Pricing. This occurs when an incumbent firm responds to a new firm entering the market by starting a price war and trying to push the rival firm out of business. It is illegal so it may be difficult to implement in practice.

11. Substitutes: close substitutes will lead to a monopolistic competition.

12. Inelastic: change in prices is more than change in quantity demanded.

13. Supply: a restricted supply will ensure that prices do not fall due to increase in supply.