15. Competitive firms differ from monopolies in which of the following ways? (i) Competitive firms do not have to worry about the price effect lowering their total revenue. (ii) Marginal revenue for a competitive firm equals price, while marginal revenue for a monopoly is less than the price it is able to charge. (iii) Monopolies must lower their price in order to sell more of their product, while competitive firms do not. (A) (i) and (ii) only (B) (ii) and (iii) only (C) (i) and (iii) only (D) (i), (ii), and (iii) Figure 3

17. Suppose a market is initially perfectly competitive with many firms selling an identical product. Over time, however, suppose the merging of firms results in the market being served by only three or four firms selling this same product. As a result, we would expect (A) an increase in market output and an increase in the price of the product. (B) an increase in market output and an decrease in the price of the product. (C) a decrease in market output and an increase in the price of the product. (D) a decrease in market output and a decrease in the price of the product. Table 2. The Chicken Game is named for a contest in which drivers test their courage by driving straight at each other. John and Paul have a common interest to avoid crashing into each other, but they also have a personal, competing interest to not turn first to demonstrate their courage to those observing the contest. The payoff table for this situation is provided below. The payoffs are shown as (John, Paul). | | Paul | | | | | | | | | | | Turn | Drive Straight | | John | Turn | (10, 10) | (5, 20) | | | Drive Straight | (20, 5) | (0, 0) |

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