Exam 11: Oligopoly: Markets With Few Competitors

Consider two oligopolistic industries selling the same product in different locations.In the first industry, firms always match price changes by any other firm in the industry.In the second industry, firms always ignore price changes by any other firm.Which of the following statements is true about these two industries, holding everything else constant?

Which of the following is not an example of an oligopolistic market?

What is the difference between explicit collusion and implicit collusion? __________________________________________________________________________________________________________________________________________________________________________________________

Suppose two firms in a duopoly implicitly collude and charge a high price.How might each firm benefit from advertising that it will match the lowest price offered by its competitor?

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

What is the dominant strategy in a second-price auction?

Figure 11.1 Assume that Lexus (L)is the first automobile company to produce a luxury class hybrid automobile and is the only such company for the past four years.BMW is now considering producing its own luxury hybrid automobile and Lexus must decide whether or not to lower the price of its luxury hybrid to counter BMW's entry into the luxury hybrid niche. -Refer to Figure 11.1.If Lexus lowers its price, will this deter BMW from entering the market?

Table 11.3 Firm A(Alistair's)and Firm B (Baine's)are the only firms selling luggage in the upscale town of Adelaide.Each firm must decide on whether to increase its advertising spending to compete for customers.If one firm increases its advertising budget but the other does not, then the firm with the higher advertising budget will increase its profit.Table 11.3 shows the payoff matrix for this advertising game. -Refer to Table 11.3.If Alistair assumes that Baine would increase its advertising budget, what should it do?

When does collusion between two firms occur?

In a subgame perfect equilibrium,

Prices of PlayStation 4 game systems are similar at almost every large retailer and little price competition occurs among these retailers.An explanation for this is

Discuss how traditional models of oligopoly may be able to be explained using game theory. __________________________________________________________________________________________________________________________________________________________________________________________

If one firm raises its price in an industry characterised by firms' facing kinked demand curves, it is likely that other firms in the industry will

A reason why there is more competition among restaurants than among large discount department stores is that restaurants

Explain why OPEC is caught in a prisoner's dilemma? __________________________________________________________________________________________________________________________________________________________________________________________

When does collusion occur?

Which of the following is not one of the five competitive forces?

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

Prisoner's dilemma games imply that cooperative behaviour between two people or two firms always breaks down.But reality teaches us that people and firms often cooperate successfully to achieve their goals.Why do the results from prisoner's dilemma games fail to predict real world results?

An equilibrium in a game in which players pursue their own self-interest is called