A) A temporary storage facility for automobiles. B) A group of firms that enter into an informal agreement to fix prices to maximise joint profits. C) A group of firms that enter into a formal agreement to fix prices to maximise joint profits. D) An example of a group of firms that collectively regulate a competitive industry. A) A temporary storage facility for automobiles. B) A group of firms that enter into an informal agreement to fix prices to maximise joint profits. C) A group of firms that enter into a formal agreement to fix prices to maximise joint profits. D) An example of a group of firms that collectively regulate a competitive industry.

A) is rampant in perfect competition, as all firms charge the same price. B) reduces market concentration in an industry. C) among firms is difficult to maintain because it eliminates long-run economic profit. D) is more difficult when there are many firms producing differentiated products in an industry. A) is rampant in perfect competition, as all firms charge the same price. B) reduces market concentration in an industry. C) among firms is difficult to maintain because it eliminates long-run economic profit. D) is more difficult when there are many firms producing differentiated products in an industry.

Exam 11: Oligopoly: Markets With Few Competitors

What is a sequential game? How are decision trees used to analyse sequential games? __________________________________________________________________________________________________________________________________________________________________________________________

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Question 1

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In a sequential game one player (firm)acts first, and then other players respond.A decision tree allows players to map out how the other player(s)will respond to their actions, finding the action that yields the highest payoff.

Table 11.2 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 11.2 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 11.2.Which of the following statements is true?

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Explain the difference between a cooperative equilibrium and a non-cooperative equilibrium in game theory. __________________________________________________________________________________________________________________________________________________________________________________________

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Question 3

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A cooperative equilibrium is one in which players in a game cooperate to increase their mutual payoff.A non-cooperative equilibrium is one in which players don't cooperate but pursue their own self-interest.

Most economists are concerned about entry barriers.Why is this so important to them? __________________________________________________________________________________________________________________________________________________________________________________________

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Question 4

What is a dominant strategy?

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Question 5

A subgame-perfect equilibrium is a Nash equilibrium in which no player can make himself better off by changing his decision at any decision node.

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Question 6

What is a cartel?

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Question 7

Why do economists refer to the pricing strategies of oligopoly firms as a prisoner's dilemma game? __________________________________________________________________________________________________________________________________________________________________________________________

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Question 8

Explain why member firms of a cartel like OPEC have incentives to agree to a low cartel production level and then produce more than its quota. __________________________________________________________________________________________________________________________________________________________________________________________

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Question 9

Economists use game theory to analyse oligopolies because

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Question 10

Assume that two interior design companies, Alistair and Baine, are competing for customers, and if they both advertise, they would each earn $30 million in profits.If neither advertises, they each earn $50 million in profits.If one advertises and the other doesn't, the firm that advertises earns $40 million in profit while the other earns $20 million in profit. a. Present the information above in the form of a payoff matrix.Let Baine be the row player and Alistair the column player. b. Does each firm have a dominant strategy and if so what is it? c. What is the Nash equilibrium? __________________________________________________________________________________________________________________________________________________________________________________________

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Question 11

The incentive for a firm to join a cartel is

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Question 12

Collusion

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Question 13

An oligopolistic industry is characterised by all of the following except

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Question 14

What are the three characteristics of a game in game theory?

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Question 15

In a sequential game, one firm will act first and then other firms will respond.

(True/False)

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Question 16

In an oligopoly, minimum efficient scale is likely to occur at a level of output that is a large fraction of industry sales.

(True/False)

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Question 17

The best example of an oligopolistic industry is

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Question 18

Table 11.1 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 11.1 shows the payoff matrix for this advertising game. -Refer to Table 11.1.Let's suppose the game starts with each firm adhering to its original budget so that Godrickporter earns a profit of $60 00 and Star Connections earns a profit of $12 000.Is there an incentive for any one firm to increase its advertising budget?

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Question 19

Which of the following is not part of an oligopolist's business strategy?

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Question 20

Showing 1 - 20 of 186

What is a sequential game? How are decision trees used to analyse sequential games? __________________________________________________________________________________________________________________________________________________________________________________________

Explain the difference between a cooperative equilibrium and a non-cooperative equilibrium in game theory. __________________________________________________________________________________________________________________________________________________________________________________________

Most economists are concerned about entry barriers.Why is this so important to them? __________________________________________________________________________________________________________________________________________________________________________________________

What is a dominant strategy?

A subgame-perfect equilibrium is a Nash equilibrium in which no player can make himself better off by changing his decision at any decision node.

What is a cartel?

Why do economists refer to the pricing strategies of oligopoly firms as a prisoner's dilemma game? __________________________________________________________________________________________________________________________________________________________________________________________

Economists use game theory to analyse oligopolies because

The incentive for a firm to join a cartel is

Collusion

An oligopolistic industry is characterised by all of the following except

What are the three characteristics of a game in game theory?

In a sequential game, one firm will act first and then other firms will respond.

In an oligopoly, minimum efficient scale is likely to occur at a level of output that is a large fraction of industry sales.

The best example of an oligopolistic industry is

Which of the following is not part of an oligopolist's business strategy?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition: The Competitive Model in a More Realistic

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

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