Firms in monopolistic competition can acquire some market power by: a. offering a better quality product. b. acquiring rival firms. c. producing where P > MC. O d. producing at an output level equivalent to that of a monopoly. (Table: Nike and Reebok Advertising Game) Use Table: Nike and Reebok Advertising Game. The sneaker industry is dominated by Nike and Reebok, and each firm spends a lot of money on advertising. Suppose each firm is considering a costly television commercial during the World Series. The table shows the payoff matrix of profits that each firm would receive from its advertising decision, given the advertising decision of its rival. Profits in each cell of the payoff matrix are given as (Nike, Reebok). The dominant strategy for Reebok would be: Table: Nike and Reebok Advertising Game Reebok World Series Ad No World Series Ad Nike World Series Ad No World Series Ad $800, $700 $650, $900 $1,500, $600 $1,000, $800 a. advertise b. do not advertise. O c. advertise only if Nike does not advertise. d. Reebok does not have a dominant strategy. (Table: Oil Production and Demand) Use Table: Oil Production and Demand. Assume that the oil industry is a duopoly and that the marginal cost of producing oil is zero. Suppose that the two firms are maximizing industry profit and splitting the profit evenly. If firm 1 decides to cheat and increase production by 10 more barrels, the price of oil will be: Table: Oil Production and Demand Quantity Price ($/barrel) Total Revenue ($) 09892822 8 = = = = = = = $160 $0 150 1,500 140 2,800 130 3,900 120 4,800 60 110 5,500 100 6,000 90 6,300 90 80 6,400 100 70 6,300 110 60 5,500 120 50 4,800 130 401 3,900 140 30 2,800 150 20 1,500 160 10 0 a. $0. b. $70. c. $80. O d. $160