Question 1

In game theory, behavior that results in cooperation as long as the other players continue to cooperate, is referred to as

Accepted Answer

A)  nice behavior. 
B)  tit-for-tat strategic behavior. 
C)  simple behavior. 
D)  opportunistic behavior. 
A)  nice behavior. 
B)  tit-for-tat strategic behavior. 
C)  simple behavior. 
D)  opportunistic behavior.

Question 2

A game in which the players explicitly coordinate their decisions to make themselves better off is a

Accepted Answer

A)  cooperative game. 
B)  noncooperative game. 
C)  zero-sum game. 
D)  negative-sum game. 
A)  cooperative game. 
B)  noncooperative game. 
C)  zero-sum game. 
D)  negative-sum game.

Question 3

The situation of oligopoly suggests

Accepted Answer

A)  many firms compete in an industry. 
B)  mergers have not occurred. 
C)  interdependence among firms. 
D)  no barriers to entry exist. 
A)  many firms compete in an industry. 
B)  mergers have not occurred. 
C)  interdependence among firms. 
D)  no barriers to entry exist.

Question 4

A network effect arises whenever

Accepted Answer

A)  firms in an oligopolistic industry engage in limit pricing. 
B)  firms in an oligopolistic industry engage in a zero-sum game. 
C)  a consumer's willingness to purchase a good or service is influenced by how many others also buy or have bought the item. 
D)  a producer's willingness to produce a good or service is influenced by how many other firms also produce or have produced the item. 
A)  firms in an oligopolistic industry engage in limit pricing. 
B)  firms in an oligopolistic industry engage in a zero-sum game. 
C)  a consumer's willingness to purchase a good or service is influenced by how many others also buy or have bought the item. 
D)  a producer's willingness to produce a good or service is influenced by how many other firms also produce or have produced the item.

Question 5

A game in which the players neither negotiate nor coordinate in any way is a

Accepted Answer

A)  cooperative game. 
B)  noncooperative game. 
C)  zero-sum game. 
D)  negative-sum game. 
A)  cooperative game. 
B)  noncooperative game. 
C)  zero-sum game. 
D)  negative-sum game.

Question 6

If a firm is an oligopolist, which is NOT true?

Accepted Answer

A)  It must pay attention to other firms' prices. 
B)  It is one of a relatively small number of firms dominating its industry. 
C)  It can sell all the units it wants at the going market price. 
D)  It is engaged in a strategic game. 
A)  It must pay attention to other firms' prices. 
B)  It is one of a relatively small number of firms dominating its industry. 
C)  It can sell all the units it wants at the going market price. 
D)  It is engaged in a strategic game.

Question 7

In the cable TV service industry, end users are

Accepted Answer

A)  advertisers only. 
B)  cable TV subscribers only. 
C)  both advertisers and cable TV subscribers. 
D)  no one. 
A)  advertisers only. 
B)  cable TV subscribers only. 
C)  both advertisers and cable TV subscribers. 
D)  no one.

Question 8

Four-Firm Concentration Ratios
  
-The most competitive industry of those presented in the above table is likely to be industry

Accepted Answer

A)  W. 
B)  X. 
C)  Y. 
D)  Z. 
A)  W. 
B)  X. 
C)  Y. 
D)  Z.

Question 9

A cartel is

Accepted Answer

A)  a group of producers that agree to set common prices and output quotas. 
B)  a group of consumers that bid against each other for the same product. 
C)  a government agency that regulates markets. 
D)  an arbitrator to settle disputes between consumers and producers. 
A)  a group of producers that agree to set common prices and output quotas. 
B)  a group of consumers that bid against each other for the same product. 
C)  a government agency that regulates markets. 
D)  an arbitrator to settle disputes between consumers and producers.

Question 10

Your teacher decides to play a game where every student must contribute a dollar. All money collected is distributed at the end of the game among the students. This is an example of a

Accepted Answer

A)  positive-sum game. 
B)  zero-sum game. 
C)  strategy. 
D)  negative-sum game. 
A)  positive-sum game. 
B)  zero-sum game. 
C)  strategy. 
D)  negative-sum game.

Question 11

Positive market feedback refers to a tendency for

Accepted Answer

A)  potential entrants to an oligopolistic industry to respond to entry deterrence strategies by contemplating setting their prices above prices established by firms already in the industry. 
B)  potential entrants to an oligopolistic industry to respond to entry deterrence strategies by contemplating producing more output than the quantities produced by firms already in the industry. 
C)  a particular product to come into favor with additional consumers because other consumers have chosen to purchase the product. 
D)  price leaders to respond to an increase in market demand by increasing the prices of their products. 
A)  potential entrants to an oligopolistic industry to respond to entry deterrence strategies by contemplating setting their prices above prices established by firms already in the industry. 
B)  potential entrants to an oligopolistic industry to respond to entry deterrence strategies by contemplating producing more output than the quantities produced by firms already in the industry. 
C)  a particular product to come into favor with additional consumers because other consumers have chosen to purchase the product. 
D)  price leaders to respond to an increase in market demand by increasing the prices of their products.

Question 12

A market with many sellers, no influence over price, no barriers to entry, a homogeneous product, and an absence of non-price competition is known as

Accepted Answer

A)  perfect competition. 
B)  monopolistic competition. 
C)  oligopoly. 
D)  monopoly. 
A)  perfect competition. 
B)  monopolistic competition. 
C)  oligopoly. 
D)  monopoly.

Question 13

The manner in which one oligopolist reacts to a change in price, output, or quantity on the part of another oligopolist in the industry is known as

Accepted Answer

A)  a positive-sum game. 
B)  the reaction function. 
C)  a noncooperative game. 
D)  a zero-sum game. 
A)  a positive-sum game. 
B)  the reaction function. 
C)  a noncooperative game. 
D)  a zero-sum game.

Question 14

In a two-sided market with network effects, the platform will likely

Accepted Answer

A)  charge a lower price for end users that are more affected by a positive market feedback. 
B)  charge a higher price for end users that are more affected by a positive market feedback. 
C)  charge a zero price for all end users regardless of the market feedback effects. 
D)  randomly charge end users. 
A)  charge a lower price for end users that are more affected by a positive market feedback. 
B)  charge a higher price for end users that are more affected by a positive market feedback. 
C)  charge a zero price for all end users regardless of the market feedback effects. 
D)  randomly charge end users.

Question 15

A game in which any gains one player makes are offset by equal losses by another player is known as a

Accepted Answer

A)  zero-sum game. 
B)  positive-sum game. 
C)  negative-sum game. 
D)  cooperative game. 
A)  zero-sum game. 
B)  positive-sum game. 
C)  negative-sum game. 
D)  cooperative game.

Question 16

When network effects are important, then an industry can experience

Accepted Answer

A)  positive market feedback. 
B)  prince-leadership. 
C)  a zero-sum game. 
D)  a vertical merger. 
A)  positive market feedback. 
B)  prince-leadership. 
C)  a zero-sum game. 
D)  a vertical merger.

Question 17

The analytical framework in which two or more individuals, companies, or nations compete for certain payoffs that depend on the strategy that others employ is

Accepted Answer

A)  game theory. 
B)  opportunistic behavior. 
C)  the dominant equilibrium. 
D)  the tit-for-tat equilibrium. 
A)  game theory. 
B)  opportunistic behavior. 
C)  the dominant equilibrium. 
D)  the tit-for-tat equilibrium.

Question 18

For years, your neighbor insisted she had no desire to own a computer. Recently, however, she purchased one and says she did so because all her relatives have computers and she wants to exchange e-mail with them. Your neighbor's behavior is an example of

Accepted Answer

A)  a switching cost. 
B)  the impact of negative market feedback. 
C)  limited-pricing behavior. 
D)  a network effect. 
A)  a switching cost. 
B)  the impact of negative market feedback. 
C)  limited-pricing behavior. 
D)  a network effect.

Question 19

The college textbooks market is an example of

Accepted Answer

A)  perfect competition. 
B)  oligopoly. 
C)  monopoly. 
D)  monopolistic competition. 
A)  perfect competition. 
B)  oligopoly. 
C)  monopoly. 
D)  monopolistic competition.

Question 20

Within a game theory model, if a change in decision-making raises corporation A's profits by $50 and lowers corporation B's profits by $50, the game is a

Accepted Answer

A)  negative-sum game. 
B)  zero-sum game. 
C)  positive-sum game. 
D)  cooperative game. 
A)  negative-sum game. 
B)  zero-sum game. 
C)  positive-sum game. 
D)  cooperative game.

Exam 26: Oligopoly and Strategic Behavior

In game theory, behavior that results in cooperation as long as the other players continue to cooperate, is referred to as

A game in which the players explicitly coordinate their decisions to make themselves better off is a

The situation of oligopoly suggests

A network effect arises whenever

A game in which the players neither negotiate nor coordinate in any way is a

If a firm is an oligopolist, which is NOT true?

In the cable TV service industry, end users are

Four-Firm Concentration Ratios -The most competitive industry of those presented in the above table is likely to be industry

A cartel is

Your teacher decides to play a game where every student must contribute a dollar. All money collected is distributed at the end of the game among the students. This is an example of a

Positive market feedback refers to a tendency for

A market with many sellers, no influence over price, no barriers to entry, a homogeneous product, and an absence of non-price competition is known as

The manner in which one oligopolist reacts to a change in price, output, or quantity on the part of another oligopolist in the industry is known as

In a two-sided market with network effects, the platform will likely

A game in which any gains one player makes are offset by equal losses by another player is known as a

When network effects are important, then an industry can experience

The analytical framework in which two or more individuals, companies, or nations compete for certain payoffs that depend on the strategy that others employ is

For years, your neighbor insisted she had no desire to own a computer. Recently, however, she purchased one and says she did so because all her relatives have computers and she wants to exchange e-mail with them. Your neighbor's behavior is an example of

The college textbooks market is an example of

Within a game theory model, if a change in decision-making raises corporation A's profits by $50 and lowers corporation B's profits by $50, the game is a

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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