Exam 14: Oligopoly

Use the following to answer questions: Figure: Payoff Matrix for Ajinomoto and ADM -(Figure: Payoff Matrix for Ajinomoto and ADM) Look at the figure Payoff Matrix for Ajinomoto and ADM. The Nash equilibrium combination occurs when ADM produces _____ million pounds and Ajinomoto produces _____ million pounds.

_____ occurs if Coke hires Michael Jordan to make a commercial and Pepsi follows by hiring Peyton Manning for its commercial.

Oligopoly first became an issue in the United States when:

The sum of the squared market shares of each firm in an industry is the:

The Orlando, Florida, theme park industry tends to follow a price leadership model. This means that:

Oligopoly is a market structure characterized by:

Use the following to answer questions: Figure: Payoff Matrix II for Blue Spring and Purple Rain -(Figure: Payoff Matrix II for Blue Spring and Purple Rain) Payoff Matrix II for Blue Spring and Purple Rain describes two producers of bottled water. If both firms follow a tit-for-tat strategy, equilibrium will be reached when:

Suppose that each of two prisoners has the independent choice of confessing to a crime or not confessing to a crime they were both alleged to commit. If neither confesses, both spend two years in prison; if both confess, both spend three years in prison. If one confesses and the other does not, the confessor gets off with one year but the other gets six years. According to game theory, the likely strategy of the prisoners is that:

The government agency in the United States that reviews proposed mergers of firms in the same industry and prohibits mergers that it believes will reduce competition is the Justice Department.

The pattern of behavior in which one company tacitly sets prices for the industry as a whole is known as price leadership.

Which of the following would make it difficult for Georgia peach suppliers to collude?

OPEC is:

Use the following to answer questions: Figure: Pricing Strategy in Cable TV Market I -(Figure: Pricing Strategy in Cable TV Market I) Look at the figure Pricing Strategy in Cable TV Market I. If both CableNorth and CableSouth advertise, then without any collusion:

Use the following to answer questions: -(Table: Demand for Crude Oil) Look at the table Demand for Crude Oil. Assume that the crude oil industry is a duopoly and the marginal cost of producing crude oil equals zero. Suppose that the two firms are maximizing industry profit and splitting the profit evenly. If the industry is operating in perfect competition, the industry output will be _____ barrels, and the price of crude oil will be _____.

Oligopoly first became an issue in the United States in the second half of the nineteenth century, when the growth of railroads allowed for a national market for goods.

Use the following to answer questions: Figure: Monopoly Profits in Duopoly -(Figure: Monopoly Profits in Duopoly) The figure Monopoly Profits in Duopoly shows how an industry consisting of two firms that face identical demand curves (D₁) can collude to increase profits. Which of the following assumptions is NOT a part of the analysis illustrated by the model?

Use the following to answer questions: Figure: Payoff Matrix II for Blue Spring and Purple Rain -(Figure: Payoff Matrix II for Blue Spring and Purple Rain) Payoff Matrix II for Blue Spring and Purple Rain describes two producers of bottled water. Each has two strategies available to it: a high price and a low price. The dominant strategy for Purple Rain is to:

Use the following to answer questions: -(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets. The market for gadgets consists of two producers, Margaret and Ray. Each firm can produce gadgets with no marginal cost or fixed cost. If industry output is 350 gadgets produced by Margaret and 250 gadgets produced by Ray and if Ray decides to increase output by 100, Margaret's profit will be _____ and Ray's profit will be _____.

A cartel is an example of:

Use the following to answer question: Figure: Payoff Matrix I for Blue Spring and Purple Rain -(Figure: Payoff Matrix I for Blue Spring and Purple Rain) The figure Payoff Matrix I for Blue Spring and Purple Rain refers to two producers of bottled water. Each has two strategies available to it: a high price and a low price. The dominant strategy for Purple Rain is to: