Exam 15: Oligopoly

Two firms, Alpha and Beta, produce identical computer hard drives. They have identical costs, and the hard drives they produce are identical. The industry is a natural duopoly. Alpha and Beta enter into a collusive agreement, according to which they split the market equally. If both firms comply with the agreement,

Dr. Smith -Libertyville has two optometrists, Dr. Smith and Dr. Jones. Each optometrist can choose to advertise his service or not. The incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. Which of the following statements correctly describes Dr. Smith's strategy given what Dr. Jones may do?

Under current guidelines, the Federal Trade Commission will likely challenge

Does section 2 of the Sherman Act make it a felony to "attempt" to monopolize an industry or must the attempt succeed before it is a felony?

If both firms in a duopoly cheat on a collusive agreement, the price ________ and both firms are ________.

American -There are two can companies, American and National, which have entered into a collusive agreement. The payoff matrix of economic profits is above. If both firms cheat on the collusive agreement, what amount of economic profit is made by American?

Firm A -The above payoff matrix shows the economic profits (in millions of dollars) of two firms in a duopoly that have agreed to a cartel agreement to restrict their output and set their prices equal to the monopoly price. Assuming the game is played once, the equilibrium outcome is where

Which of the following is a distinguishing characteristic of oligopoly?

M&M -M&M and Dove are both considering issuing themed holiday candy. The profits for each strategy, Regular Candy or Holiday Candy, are summarized in the payoff matrix above. The Nash Equilibrium in this game is that Dove produces ________ and M&M produces ________.

Once a cartel determines the profit-maximizing price,

A contestable market is a market in which there are one or a few firms and entry into the market is not costly.

Game theory is most useful for determining the outcome when ________.

There are twenty five dealers in the local market for new cars. The largest dealership has a market share of 12 percent; the second and third largest have 10 percent and 9 percent, respectively; the fourth and fifth largest have 5 percent and 4 percent, respectively; and the remaining twenty dealerships each have a 2 percent market share. What is value of the Herfindahl-Hirschman index (HHI) for this market?

A law that prohibits certain kinds of market behavior such as monopoly and monopolistic practices is ________.

If Sony required all its retailers not to sell televisions from other companies, Sony would be engaging in what kind of activity? Is Sony's requirement legal or does it violate the Clayton Act?

Which of the following is a defining characteristic of oligopoly?

The prisoners' dilemma has an equilibrium in which

The simplest prisoners' dilemma is a game that, in part, requires

In a sequential contestable market game:

The EU's antitrust chief in November 2008 fined car glass producers Asahi, Pilkington, Saint-Gobain and Soliver more than 1.3 billion euros ($1.66 billion) for price-fixing, the largest sum ever levied by the EU for a cartel. What is the reason why Asahi, Pilkington, Saint-Gobain and Soliver would price fix?