Exam 11: Oligopoly: Markets With Few Competitors

For years economists believed that market structure explained the ability of some firms to earn economic profits.For example, firms in industries with little competition and high barriers to entry would earn higher profits than firms in competitive industries with low entry barriers.Which of the following has caused economists to question this explanation and seek other explanations for why firms are profitable?

eBay is an online auction site where more than 200 million items are auctioned annually.What type of auctions are run on eBay?

What is a set of actions that a firm takes to achieve a goal?

A prisoner's dilemma leads to a non-cooperative equilibrium.

The equilibrium in the prisoner's dilemma is a dominant strategy Nash equilibrium.

Because many business situations are repeated games, firms may be able to avoid the prisoner's dilemma and implicitly collude to keep prices high.

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

A form of implicit collusion where one firm in an oligopoly announces a price change which is matched by other firms in the same industry is

An example of a government-imposed barrier to entry gives a firm the exclusive right to a new product for a period of 20 years from the date the product is invented.This entry barrier is known as

Which of the following is true in the typical firm if economies of scale are relatively important in an industry?

An oligopolistic industry is characterised by a few large firms acting independently.

When will economies of scale create a barrier to entry in an oligopoly industry?

What is a subgame?

Which of the following best explains why airlines often cut their ticket prices at the last minute in order to fill the remaining empty seats on their flights?

A situation in which each firm chooses the best strategy given the strategies chosen by other firms is called a

The larger the number of firms in an industry,

Figure 11.3 -Refer to Figure 11.3 Use the decision tree to determine whether Microsoft should deter Toshiba from entering the market for electronic book readers (e-readers).Assume that each firm must earn a 20% return on investment to break even.Explain Microsoft's decision process. __________________________________________________________________________________________________________________________________________________________________________________________

By the 21st century few people purchased printed encyclopaedias.Which of the following competitive forces best explains this?

What is an agreement among firms to charge the same price or otherwise not to compete?

A patent is an example of