Exam 14: Oligopoly and Strategic Behavior

Suppose that currently there are no airlines serving the city of South Podunk. Both Accommodating Airlines and Friendly Flyers are looking to enter that market. (They are the only two.)The figure shows in extensive form the possible outcomes of the two firms' decisions. The payoffs represent, in thousands per month, the profit (or loss)the firm will realize from its decision. Which of the following statements is true about this game?

Refer to the diagram, where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. With independent pricing, the outcome of this duopoly game will gravitate to cell

Which one of the following is not illustrated by the so-called Prisoner's Dilemma?

If firms E and F in this table merged into a single firm, the Herfindahl index would

Which market structure best characterizes the various Internet markets?

If the several oligopolistic firms that compose an industry behave collusively, the resulting price and output will most likely resemble those of

Refer to the diagram for a non-collusive oligopolist. Suppose that the firm is initially in equilibrium at point E, where the equilibrium price and quantity are P and Q. If the firm's rivals will ignore any price increase but match any price reduction, then the firm's demand curve will be (moving from left to right)

Refer to the payoff matrix. Which of the following statements is true regarding the outcome of this game?

The industry characterized by these data is

The diagram shows the extensive form version of a strategic game between the two nationally dominant coffee sellers, Corporate Coffee and Jumbo Java, both of whom are considering opening coffee shops in a new town. The payoffs represent, in thousands per month, the profit (or loss)the firm will realize from its decision. Which of the following statements is true about this game?

Repeated games may involve either simultaneous or sequential decision making.

A natural monopoly's preemption of entry by other firms by exploiting its economies of scale is an example of

Refer to the diagram, where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. If Alpha and Beta engage in collusion, the outcome of the game will be at cell

In the Internet search market,

Collusive agreements between two firms are most likely to be honored when the game

If the four-firm concentration ratio in an oligopolistic six-firm industry is 66.7 percent, and each firm has an equal percentage of sales, the Herfindahl index is

The adoption of a limit-pricing strategy by oligopolists would tend to make the price of the product closer to marginal cost.

Suppose that firms A and F in this table merged into a single firm. The four-firm concentration ratio and the Herfindahl index would

The diagram shows the extensive form version of a strategic game between the two nationally dominant coffee sellers, Corporate Coffee and Jumbo Java, both of whom are considering opening coffee shops in a new town. The payoffs represent, in thousands per month, the profit (or loss)the firm will realize from its decision. How would the extensive form figure appear in strategic form?

One characteristic of sequential games is that they all have first-mover advantages.