Do the firms in an oligopoly act independently or interdependently

1. Do the firms in an oligopoly act independently or interdependently? Explain your answer.

2. A monopolistically competitive firm has the following demand and cost structure in the short run:

                Output         Price            FC               VC            TC               TR           Profit/Loss

                     0                $90             $90          $    0            ____           ____           ________

                     1                  80            ____             40            ____           ____           ________

                     2                  70            ____             80            ____           ____           ________

                     3                  60            ____           140            ____           ____           ________

                     4                  50            ____           220            ____           ____           ________

                     5                  40            ____           320            ____           ____           ________

                     6                  30            ____           440            ____           ____           ________

                     7                  20            ____           580            ____           ____           ________

        a.   Complete the table.

        b.   What level of output maximizes profit or minimizes loss?

        c.   Should this firm operate or shut down in the short run? Why?

3.  Suppose that Wal-World and Tarbo are independently deciding whether to implement a new bar code technology.  It is less costly for their suppliers to use one system and the following payoff matrix shows the profits per year for each company resulting from the interaction of their strategies.

a.    Briefly explain whether Wal-World has a dominant strategy.

b.    Briefly explain whether Tarbo has a dominant strategy.

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