You and your friend engage in the following game. You simultaneously hold up either one finger or two. If the sum of your fingers is even, you and your friend each get $2. If the sum of your fingers is odd, you and your friend each get $1. How many (pure strategy) Nash equilibria are there?

a.4

b.2

c.0

d.1

Monopolistically competitive firms are similar to monopolists in that they...

a.Dominate their market.

b.Must break even in the long run.

c.Have some level of pricing power.

d.Have the ability to price discriminate.

A market dominated by a small number of firms is called an...

a.Cartel.

b.Monopsony.

c.Oligopoly.

d.Oligopsony.

Which of the following does not describe an externality?

a.A person who pays to get a seasonal flu shot.

b.A firm that pollutes the local river system.

c.A person who rides a loud motorcycle through a neighbourhood.

d.A couple that has a romantic picnic at Mount Royal Park.

Imperfectly competitive firms sell differentiated products to differing degrees. For that reason, they often...

a.Advertise.

b.Merge.

c.Discriminate.

d.Collude.