Exam 14: Oligopoly: Firms in Less Competitive Markets

Table 14-6 There are two custom carport manufacturers in Louisiana, Under Cover (U) and Made for Shade (M). Under Cover has been in the market for a long time and must now compete with newcomer, Made for Shade. Suppose that Under Cover believes that Made for Shade will match any price it sets. Use Table 14-6 to answer the following question and assume throughout that Under Cover believes that Made for Shade will match any price it sets. -Refer to Table 14-6. What price will Under Cover charge and what profit does Under Cover expect to make?

An oligopoly firm is similar to a monopolistically competitive firm in that

A market comprised of only two firms is called a

Figure 14-2 The government of a developing country plans to award two firms, Gigacom and Xenophone, the exclusive rights to share the market for high speed internet service. Gigacom and Xenophone can both provide the service either via television cable lines or via direct subscriber line (DSL). Suppose the government is considering a proposal to delay one firm's entry into the market on the grounds that it wants to prevent "harmful" competition. Figure 14-2 shows the decision tree for this game. -Refer to Figure 14-2. If the government delays Gigacom's entry and Xenophone moves first, what is the likely outcome in the market?

A game in which pursuing dominant strategies results in noncooperation that leaves all parties worse off is a

A dominant strategy is

A set of actions that a firm takes to achieve a goal is the definition of a

Game theory was developed in the 1940s by John von Neuman, a mathematician, and an economist named

Which of the following is not a shortcoming of the concentration ratio as a measure of the extent of competition in an industry?

Consider a U-shaped long-run average cost curve that has a minimum efficient scale at 6,000 units of output. In this case, this industry would be

Producing a homogeneous product occurs in which of the following industries?

All of the following are examples of oligopolistic markets except

List the competitive forces in the five competitive forces model.

Explain why selling output at a price below that at which marginal revenue equals marginal cost (MR = MC) might serve to deter entry of a potential competitor.

Decision trees are commonly used to illustrate how firms make business decisions that depend on the actions of rival firms. A decision tree has boxes that contain points that represent when firms must make the decisions contained in the boxes. What are these points called?

Figure 14-5 Netflix (N) was one of the first companies to offer streaming video services and is still considered a leader in the industry. Spotify (S) offers a music streaming service and in 2015 considered entering the video streaming business. At that point, Netflix had to decide whether or not to lower its subscription price in order to deter Spotify's entry into the market. Figure 14-5 shows a hypothetical decision tree for the Netflix-Spotify entry game. -Refer to Figure 14-5. If Netflix lowers its price, will this deter Spotify from setting up a streaming video service?

A patent is an example of

An oligopoly between two firms is called

Table 14-5 Martin and Lewis each run one of the two bingo parlors in Schenectady. Both consider offering free rides to and from the parlors. Table 14-5 shows the payoff matrix containing the expected weekly profits for each bingo parlor. -Refer to Table 14-5. Does Martin have a dominant strategy? If yes, what is it?

Monopolistic competition differs from oligopoly in that in monopolistic competition firms act independently while in oligopoly firms act interdependently.