ECON 10223 Study Guide - Quiz Guide: Oligopoly

At 9.00 am on Thursday 13 Aug, Mary, a car dealer sends a telex to Austin offering to sell him a rare vintage car for $50,000. Austin receives the telex at 9.15 am and telexes his acceptance at 1.00 pm.

Austin is aware that Mary's office is closed for lunch between 1.00 and 2.00 pm.

On her return to the office, Mary does not bother to check if she received a telex from Austin and at 2.30 pm receives an offer for the car from Ford, which she accepts.

At 4.00 pm Austin hears from another car dealer that Mary has sold the car to Ford.

he is advised that it will cost him an additional $2,000 to buy a similar car and he immediately sends Mary another telex demanding that the original car be sold to him. Mary receives this telex at 5.00 pm, at the same time as she read the acceptance telex.

Advise Austin of his legal position and what remedies, if any are open for him.

12. Although both perfectly competitive and monopolistically competitive firms earn only normal profits in the long run, monopolistically competitive firms will not operate where price equals marginal cost--which would be the case under perfect competition.

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Question 132.5 pts

13. In an oligopoly, a minimum efficient scale is large relative to the market.

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Question 142.5 pts

14. Ceteris paribus: if Ford raises the price of its automobiles, the demand curve for GM automobiles shifts to the right.

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Question 152.5 pts

15. It is harder to explain the behavior of firms in oligopoly than in other market structures because in oligopoly firms base their decisions on what their rivals do or might be expected to do in reaction to their decisions.

Require 100 word answer to the question below relevant to the article.

Question:

Explain how you would expect the upgrade to larger vessels to help shipping companies achieve economies of scale. Is this the only way for these companies to achieve such economies?

Article: Container Firms order new ships to gain economies of scale

http://www.reuters.com/article/2013/12/03/us-containershipping-fleet-idUSBRE9B20JB20131203