Exam 12: Oligopoly: Firms in Less Competitive Markets

Table 12.1 Godrickporter and Star Connections are the only two airport shuttle and limousine rental service companies in the mid-sized town of Godrick Hollow. Each firm must decide on whether to increase its advertising spending to compete for customers. Table 12.1 shows the payoff matrix for this advertising game. -Refer to Table 12.1.Let's suppose the game starts with each firm adhering to its original budget so that Godrickporter earns a profit of $6,000 and Star Connections earns a profit of $12,000.Is there an incentive for any one firm to increase its advertising budget?

Table 12.2 Table 12.2 shows the payoff matrix for London Drugs and FutureShop from every combination of pricing strategies for the popular PlayStation 3. At the start of the game, each firm charges a low price and each earns a profit of $7,000. -Refer to Table 12.2.Suppose Target and Walmart both advertise that they will match the lowest price offered by any competitor.What is the purpose of such a strategy?

In a decision tree, the difference between a decision node and a terminal node is that

A subgame is a simultaneous game embedded in a sequential game.

What is a prisoner's dilemma?

The value of the four-firm concentration ratio that many economists consider indicative of the existence of an oligopoly in a particular industry is

Which of the following is most likely to exert the bargaining power of a buyer?

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

Occupational licensing is an example of an entry barrier that improves a country's standard of living.

All of the following are examples of oligopolistic markets except

OPEC periodically meets to agree to restrict the cartel's oil output, and yet almost every member of OPEC produces more than its own output quota.This suggests that OPEC has

Collusion between two firms occurs when

A set of actions that a firm takes to achieve a goal, such as maximizing profits, is called

As word processing on personal computers expanded, sales of typewriters began to disappear.Which of Porter's competitive forces does this event demonstrate?

Figure 12.2 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 12.2 shows the decision tree for this game. -Refer to Figure 12.2.If the government delays Gigacom's entry and Xenophone moves first, what is the likely outcome in the market?

What is the dominant strategy in the prisoner's dilemma?

Table 12.1 Godrickporter and Star Connections are the only two airport shuttle and limousine rental service companies in the mid-sized town of Godrick Hollow. Each firm must decide on whether to increase its advertising spending to compete for customers. Table 12.1 shows the payoff matrix for this advertising game. -Refer to Table 12.1.What is the Nash equilibrium in this game?

A key part of Apple's business strategy in the electronics market has been

A Nash equilibrium is

What is a second-price auction?