Exam 3 Econ 1014H Mizzou Final Test
Questions and All Correct Answers
2025-2026 Updated.
Number of Firms in Oligopoly? - Answer A Few Sellers
How do Oligopolies pick best price-output combo? - Answer Game Theory
Are Oligopolies Price takers or makers? - Answer Price Makers
Profit Max of Oligopoly? - Answer MR=MC
Do Oligopolies have no, small, or large barriers to entry? - Answer Large, so few firms
5 barriers to entry - Answer Scale Economies, Switching Costs, Product Differentiation,
Absolute Cost Advantage, Government Regulations
Two Types of Oligopoly Models - Answer Cournot and Bertrand
Cournot Competition - Answer -Homogeneous Goods
-Competition based on quantity
-Equilibrium price is lower than the monopoly equilibrium
-Equilibrium quantity is higher than monopoly equilibrium quantity
-Firms that make price/quantity decisions independently
Bertrand Competition - Answer -Based on price
-results in pricing at MC
-heterogenous goods
-equilibrium price likely to be higher than homogenous goods
Bertrand Paradox - Answer Without product differentiation, any competition drives profits to
, Solution: Product differentiation
Cartel - Answer a formal organization of producers that agree to coordinate prices and
production
Problems with Colluding? - Answer -Illegal
-Incentives to Cheat
Public Policy? - Answer When there is a proposed acquisition of substantial scale, the
government reviews it and decides whether to challenge it
Network Effects? - Answer -increases in the value of a product to each user, including
existing users, as the total number of users rises
- can counteract the law of demand
Network Good? - Answer a good whose value to one consumer increases the more that
other consumers use the good
Market? - Answer a group of buyers and sellers of a particular good or service
Platform? - Answer market where digital tech facilitate interaction
Two-Sided Market? - Answer Network markets comprised of two distinct categories of
participant, both of which that are needed to deliver value for the network to work (e.g., video
game console owners and developers of video games).
Cross-side network effect? - Answer -positive
- buyers prefer large number of sellers and sellers prefer large number of buyers
same-same network effect - Answer -negative
-large number of sellers means severe competition among sellers
"Subsidy side" of two sided network? - Answer -group of users who when attracted in
Questions and All Correct Answers
2025-2026 Updated.
Number of Firms in Oligopoly? - Answer A Few Sellers
How do Oligopolies pick best price-output combo? - Answer Game Theory
Are Oligopolies Price takers or makers? - Answer Price Makers
Profit Max of Oligopoly? - Answer MR=MC
Do Oligopolies have no, small, or large barriers to entry? - Answer Large, so few firms
5 barriers to entry - Answer Scale Economies, Switching Costs, Product Differentiation,
Absolute Cost Advantage, Government Regulations
Two Types of Oligopoly Models - Answer Cournot and Bertrand
Cournot Competition - Answer -Homogeneous Goods
-Competition based on quantity
-Equilibrium price is lower than the monopoly equilibrium
-Equilibrium quantity is higher than monopoly equilibrium quantity
-Firms that make price/quantity decisions independently
Bertrand Competition - Answer -Based on price
-results in pricing at MC
-heterogenous goods
-equilibrium price likely to be higher than homogenous goods
Bertrand Paradox - Answer Without product differentiation, any competition drives profits to
, Solution: Product differentiation
Cartel - Answer a formal organization of producers that agree to coordinate prices and
production
Problems with Colluding? - Answer -Illegal
-Incentives to Cheat
Public Policy? - Answer When there is a proposed acquisition of substantial scale, the
government reviews it and decides whether to challenge it
Network Effects? - Answer -increases in the value of a product to each user, including
existing users, as the total number of users rises
- can counteract the law of demand
Network Good? - Answer a good whose value to one consumer increases the more that
other consumers use the good
Market? - Answer a group of buyers and sellers of a particular good or service
Platform? - Answer market where digital tech facilitate interaction
Two-Sided Market? - Answer Network markets comprised of two distinct categories of
participant, both of which that are needed to deliver value for the network to work (e.g., video
game console owners and developers of video games).
Cross-side network effect? - Answer -positive
- buyers prefer large number of sellers and sellers prefer large number of buyers
same-same network effect - Answer -negative
-large number of sellers means severe competition among sellers
"Subsidy side" of two sided network? - Answer -group of users who when attracted in
