Exam 18: Oligopoly

Game theory is the tool that economists use to analyze strategic behavior,which is behavior that takes into account the ________ behavior of others and the mutual recognition of ________.

Boeing and Airbus have entered into a cartel agreement that will enable them to boost their profits.What occurs if Boeing decides to cheat on the agreement? i.Boeing lowers the price of its airplanes. ii.The total industry output increases. iii.The total profits in the airplane industry will decrease.

For a duopoly,the smallest total quantity is produced when the duopoly achieves

Resale price maintenance

-Two competing firms in a duopoly must decide whether or not to offer consumers a coupon for their good.The payoff matrix above represents the daily profit available to the firms under the different coupon strategies. a.What strategies and payoffs are represented by quadrant A? b.What strategy will Firm 1 pursue if it believes that Firm 2 is offering a coupon? c.What quadrant represents the equilibrium that will result if the firms act independently (compete)? d.What quadrant represents the equilibrium that will result if the firms successfully collude?

For a duopoly,the highest price is charged when the duopoly achieves

A cartel is a collusive agreement among a number of firms that is designed to

Sally's Mom is pretty sure her twins,Tim and John,together cut the hair off Sally's Barbie doll.She talks to them separately and gives them the following options.If they both confess they will have to pay Sally $10 each.If Tim confesses and John does not confess,Tim pays $15 and John pays $8.If Tim does not confess and John confesses,Tim has to pay $8 and John $15.If both do not confess,they both pay her $14.Sally's Mom has them in separate rooms and they cannot talk to each other. a.Complete the payoff matrix below. b.If they reach the Nash equilibrium,what will Tim and John do?

For a duopoly,the maximum total profit is reached when the duopoly produces

-The figure above shows a market that a cartel controls.If the firms in the cartel produce ________ units,they will ________.

What is the legal status of a cartel among firms in the United States?

What is the dilemma faced by firms in oligopoly?

Tying arrangements

If both firms in a duopoly increase their production by one unit beyond the monopoly output,each firm's profit ________ and the total profit of the duopoly ________.

What is the conclusion in the prisoners' dilemma?

What is game theory and what light does it shed on the duopolists' dilemma?

The manufacturer of perfume enters into an agreement with several distributors about the price at which the distributors can resell the perfume.The distributors who do not agree to the pricing suggestion are not able to sell the perfume.The agreement between manufacturers and distributors is

If firms in an oligopolistic industry consistently cut their price to sell more output,what price and output will result?

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,the efficient scale for one firm is ________ units per hour.

In an oligopoly in which the firms have entered into a cartel agreement,the Nash equilibrium exhibits which of the following?