1. Consider the Cournot model of quantity competition. Firms always end up producing more than a monopolist would produce. (TRUE/FALSE)
2. In theoretical models of cartel formation, less product differentiation always increases cartel stability. (TRUE/FLASE)
3. Collusion is impossible if cartel members are not able to observe each other's prices or quantities. (TRUE/FALSE)
4. A cartel never finds it profitable to reduce the cartel price below the monopoly price. (TRUE/FALSE)
5. Market transparency, that is, the availability of all price and quantity data for buyers and sellers, always fosters low prices and intensive competition in an industry. (TRUE/FASLE)

6.Consider a market with two differentiated goods. Demand for good 1 is given by

D₁= 100 - 3 p₁- 2 p₂

where p₁and p₂are the prices for good 1 and 2, respectively.

Which of the following statements is correct?

1. Product 1 is a substitute to product 2.
2. Product 1 is a complement to product 2.
3. The products are independent.
4. More information is needed to determine the demand relationship between product 1 and 2.

7.Consider an industry with six identical firms selling a homogenous product. The firms set prices with an infinite horizon. All firms have a discount factor of .

Which of the following statements is true?

1. Firms can sustain collusion if is greater or equal 1/5.
2. Firms can sustain collusion if is greater or equal 1/6.
3. Firms can sustain collusion if is greater or equal 5/6.
4. Firms can sustain collusion if is greater or equal 6/7.