15. In order to maximize profit, a firm that produces its output in two plants will produce the level of total output at which the last unit of output produced adds the same amount to total revenue as to the first plant's total cost. second plant's total cost. firm's total cost a. b. c. both a and b d. all of the above e. 16. What is the most important characteristic of oligopoly? firms have market power product differentiation barriers to entry interdependence of profits none of the above a. b. C. d. e. 17. In a repeated prisoners' dilemma game like the egg pricing game, both managers can make credible threats to punish cheating because a. if either manager cheats, the other manager can increase its profit by also cheating. b. both of the cheating cells in the payoff table are strategically stable cells. c. when both firms cheat, they both avoid the Nash equilibrium cell. d. both a and c. 18. A first-mover advantage a. exists when a firm can earn greater profit by reacting to earlier decisions made by rivals. b. always arises when there is not a second-mover advantage in a sequential decision. c. arises because rivals have imperfect information about payoffs. d. none of the above 19. If the demand for potatoes is price inelastic, changes in price do not affect the number of potatoes demanded. if more potatoes are sold as the result of a price decrease, total expenditures by consumers on potatoes will decrease. a. b. the percentage change in price is less than the percentage change in quantity demanded. c. the percentage change in quantity demanded is greater than the percentage d. change in price. none of the above e. 15. In order to maximize profit, a firm that produces its output in two plants will produce the level of total output at which the last unit of output produced adds the same amount to total revenue as to the first plant's total cost. second plant's total cost. firm's total cost a. b. c. both a and b d. all of the above e. 16. What is the most important characteristic of oligopoly? firms have market power product differentiation barriers to entry interdependence of profits none of the above a. b. C. d. e. 17. In a repeated prisoners' dilemma game like the egg pricing game, both managers can make credible threats to punish cheating because a. if either manager cheats, the other manager can increase its profit by also cheating. b. both of the cheating cells in the payoff table are strategically stable cells. c. when both firms cheat, they both avoid the Nash equilibrium cell. d. both a and c. 18. A first-mover advantage a. exists when a firm can earn greater profit by reacting to earlier decisions made by rivals. b. always arises when there is not a second-mover advantage in a sequential decision. c. arises because rivals have imperfect information about payoffs. d. none of the above 19. If the demand for potatoes is price inelastic, changes in price do not affect the number of potatoes demanded. if more potatoes are sold as the result of a price decrease, total expenditures by consumers on potatoes will decrease. a. b. the percentage change in price is less than the percentage change in quantity demanded. c. the percentage change in quantity demanded is greater than the percentage d. change in price. none of the above e
