Exam 14: Oligopoly

Refer to the information provided in Table 14.4 below to answer the question that follows. Table 14.4 B's Strategy Raise Price Don't Raise Price Raise A's profit \ 6,000 A's profit \ 20,000 Price B's profit \ 6,000 B's profit \ 30,000 A's Strategy Don't A's profit \ 30,000 A's profit \ 10,000 Raise s profit \ 20,000 B's profit \ 10,000 -Refer to Table 14.4. The Nash equilibrium in the game is

When there are economies of scale, larger and fewer firms bring cost efficiencies even as they reduce price competition.

A form of oligopoly in which a dominant firm sets the price and all smaller firms in the industry follow the dominant firm's pricing policy is called

A price-and-quantity-fixing agreement is known as

________ occurs when a large, powerful firm drives smaller firms out of the market by temporarily selling at an artificially low price.

According to the Five Forces Model, ________ are the five competitive forces that determine the level of competition and profitability in an industry.

In an oligopolistic industry where the oligopolists collude, the price firms charge would be ________, and the quantity they produce would be ________, if the industry was a monopoly.

________ is calculated by summing the squared market share percentages of all firms in an industry.

The government uses the four firm concentration ratio as a guideline to determine which proposed mergers are acceptable.

The fact that the behavior of one firm depends on the behavior of other firms is what differentiates oligopoly markets from the other three market structure types (perfect competition, monopoly, and monopolistic competition).

Refer to the information provided in Table 14.6 below to answer the question that follows. Table 14.6 B's Strategy Advertise Don't Advertise A's profit \ 150 A's profit \ 400 million million B's profit \ 150 B's profit \ 100 Advertise million million A's Strategy A's profit \ 100 A's profit \ 200 Don't million million B'sprofit \ 400 B's profit \ 200 Advertise million million -Refer to Table 14.6. Firm A?s dominant strategy is

If the Herfindahl-Hirschman Index of an industry is less than 1,000, then the Antitrust Division of the Justice Department

________ is a repeated game strategy in which a player responds in kind to an opponent's play.

Game theory enables economists to fully understand and predict the behavior of oligopolistic industries with more than two firms.

A form of industry structure characterized by a few firms each large enough to influence market price is

The demand curve facing a dominant firm in the price leadership model is derived by subtracting the

The strategy to respond in kind to a competitor is called a tit-for-tat strategy.

Assume that firms in an oligopoly are currently colluding to set price and output to maximize total industry profit. If the government forces the oligopolists to stop colluding, the price charged by the oligopolies will ________ and the total output produced will ________.

Refer to the information provided in Table 14.3 below to answer the question that follows. Table 14.3 B's Strategy Advertise Don't Advertise A's profit \ 200 A's profit \ 75 million million Advertise B's profit \ 75 million B's profit \ 50 million A's Strategy A's profit \ 50 A's profit \ 100 Don't million million B's profit \ 200 B'sprofit \ 100 Advertise million million -Refer to Table 14.3. The result of this game is a prisoners' dilemma. In which of the following cases is it most likely that the firms will be able to overcome the prisoners' dilemma?

The availability of substitute products outside the industry will limit the ability of oligopolistic firms to earn high profits.