Exam 14: Oligopoly: Firms in Less Competitive Markets

We can draw demand curves for firms in perfectly competitive and monopolistically competitive industries,but not for oligopoly firms.The reason for this is

A dominant strategy is

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?

In economics,the study of the decisions of firms in industries where the profits of each firm depend on its interactions with other firms is called

Table 14-1 Alistair Luggage and Baine Baggage are the only firms selling luggage in the upscale town of Montecito.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 14-1 shows the payoff matrix for this advertising game. -Refer to Table 14-1.If Alistair assumes that Baine would increase its advertising budget,what should it do?

Table 14-2 Ming and Henri each run one of the two dry cleaning facilities in the town of Scaraby.Both consider offering free pickup and delivery services.Table 14-2 shows the payoff matrix containing the expected quarterly profits for each firm. -Refer to Table 14-2.What is the Nash equilibrium in this game?

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

Which of the following is not an example of a government-imposed entry barrier?

Firms are more likely to find themselves in a prisoner's dilemma in sequential games as opposed to simultaneous games.

A cooperative equilibrium results when firms

A sequential game can be used to analyze whether a retail firm should build a large store or a small store in a city,when the correct choice depends on whether a competing firm will build a new store in the same city.Which of the following is used to analyze this type of decision?

Table 14-5 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 14-5 shows the payoff matrix with the profits that each firm can expect to earn depending on the pricing strategy it adopts. -Refer to Table 14-5.If Brawny Juice selects a high price,what is Power Fuel's best strategy and what will Power Fuel earn as a result of this strategy?

The four-firm concentration ratio of the aircraft industry is over 80 percent.Most economists would consider this industry an oligopoly.

Sequential games are used to analyze

The justification for occupational licensing laws is that they protect the public from incompetent practitioners (for example,lawyers and medical doctors),but the laws also result in

Assume that the four-firm concentration ratio in an industry is 85 percent.Which of the following statements uses one of the five competitive forces to argue that this industry may be more competitive than its concentration ratio suggests?

A large majority of the personal computers (PCs)in the United States use an operating system purchased from Microsoft.Microsoft's relationship with PC manufacturers is an example of which of Porter's competitive forces?

Which government agency publishes four-firm concentration ratios?

Figure 14-1 A few years ago Netflix (N)pioneered an online DVD rental service.Blockbuster (B),a brick and mortar DVD/video rental company,waited until Netflix had been in business for over a year before deciding whether to establish its own online rental service.At this point,Netflix had to decide whether or not to lower its subscription price in order to deter Blockbuster's entry into the market.Figure 14-1 shows the decision tree for the Netflix-Blockbuster entry game. -Refer to Figure 14-1.Does it make sense for Netflix to lower its price in order to deter Blockbuster's entry into the online DVD rental market?

Table 14-5 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 14-5 shows the payoff matrix with the profits that each firm can expect to earn depending on the pricing strategy it adopts. -Refer to Table 14-5.Which of the following is true?