Exam 14: Oligopoly: Firms in Less Competitive Markets

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 is considering entering the video streaming business.At this point, Netflix has to decide whether or not to lower its subscription price in order to deter Spotify's entry into the market.Figure 14-5 shows the decision tree for the Netflix-Spotify entry game. -Refer to Figure 14-5.Does it make sense for Netflix to lower its price in order to deter Spotify's entry into the streaming video market?

Which government agency publishes four-firm concentration ratios?

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

Marginal revenue for an oligopolist is

Natural resource cartels such as OPEC are inherently unstable because their members operate with excess capacity and have an incentive to cheat on their output quotas.

The five competitive forces model was developed by

Interdependence of firms is most common in

Which of the following is an example of a way in which an oligopolistic firm can escape the prisoner's dilemma?

Economies of scale will create a barrier to entry in an oligopoly industry when

An oligopolist's demand curve is

Sequential games are used to analyze

A Nash equilibrium is

A prisoner's dilemma leads to a noncooperative equilibrium.

A patent is an example of

Table 14-8 Two rival oligopolists in the athletic supplements industry, the Power Fuel Company and the Brawny Juice Company, have to decide on their pricing strategy.Each can choose either a high price or a low price.Table 14-8 shows the payoff matrix with the profits that each firm can expect to earn depending on the pricing strategy it adopts. -Refer to Table 14-8.If the firms act out of individual self-interest, which prices will they select?

The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called

Which of the following is not a barrier to entry?

Table 14-3 Suppose OPEC has only two producers, Saudi Arabia and Nigeria.Saudi Arabia has far more oil reserves and is the lower-cost producer compared to Nigeria.The payoff matrix in Table 14-3 shows the profits earned per day by each country."Low output" corresponds to producing the OPEC assigned quota and "high output" corresponds to producing the maximum capacity beyond the assigned quota. -Refer to Table 14-3.Is there a dominant strategy for Nigeria and, if so, what is it?

All games share three characteristics.Two of these characteristics are rule and strategies.What is the third characteristic called?

Competition from substitute goods is more of a threat when switching costs are high.