Chapter 14Oligopoly: Firms in LessCompetitive Markets 1. What is an oligopoly? Give three examples of oligopolisticindustries in the United States. (10 points) 2. Airlines often find themselves in price wars. Consider the following game: Delta and United are the only two airlines flying the route from Houston to Omaha. Each firm has two strategies: charge a high price or charge a low price. a) What (if any) is the dominant strategy for each firm? (10 points) b) Is this game a prisoner’s dilemma? (10 points) 3. The following table shows the market shares during the first three months of 2013 for companies in the U.S. personal computer (PC) market, which includes desk-based PCs and mobile PCs, such as mini-notebooks, but not tablet computers, such as the iPad: Company Market Share Hewlett-Packard 25% Dell 22 Apple 10 Toshiba 9 Lenovo 9 Others 25 Read the following passage from pages 496 – 498, and predict whether the Department of Justice and the Federal Trade Commission would be likely to oppose a merger between any of the five firms listed in the table. Assume that “Others” in the table consists of five firms, each of which has a 5% share of the market. (20 points)
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