True or False:
1. By the year 2050 the moon travel business consists of three international firms that create the International Moon Cartel, which restricts output and raises prices. Because this industry is an oligopoly, the existing firms’ economic profits will be guaranteed for the long run.
2. Collusion tends to be quite durable in oligopoly markets.
3. In the kinked demand curve model, other firms are assumed to match price reductions because price reductions take business away from rivals, forcing them to cut price to protect their sales.
4. In the kinked demand curve model, an oligopoly firm’s marginal revenue is discontinuous (has a gap in it).
5. The kinked demand curve model illustrates how costs can change for some oligopolists without leading to a change in price, even without collusion.
6. Oligopolists are less likely to experience price rigidity when they have excess capacity than when they are near full capacity.
7. The Herfindahl-Hirshman Index (HHI) increases when the number of firms in an industry increases.