Which of the following accurately describes the societal effects of oligopoly?
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Correct Answer:
It can encourage technological developments.
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Which of the following best characterizes the arms race that occurred between the United States and the former Soviet Union during the Cold War?
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It involved mutual lack of trust.
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In the oligopolists’ dilemma, when each firm is doing as well as it can (given the actions of its competitor), the firms are said to have reached a ______ equilibrium.
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Nash
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A conglomerate can result from the merger of two firms ______.
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In different industries
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The prisoners’ dilemma is a game in which pursuing dominant strategies results in ______ and makes everyone ______.
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Non-cooperation; worse off
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A conglomerate can result from the merger of two firms ______.
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Correct Answer:
In different industries
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What is the proper equation for the Herfindahl-Hirshman Index (HHI) for an industry containing four firms with market shares of 40 percent, 25 percent, 20 percent, and 15 percent, respectively.
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HHI = 402+252+202+152
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How is a price leader most likely to communicate pricing decisions to competitors?
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Through an announcement to the press
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Which of the following has been true of the banking industry in the United States?
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Correct Answer:
The dominant firm has changed over time as various firms announced changes to the prime interest rate.
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A collusive oligopoly achieves joint profit maximization by producing at a point where marginal revenue is ______ the marginal cost for the industry.
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Equal to
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A collection of firms that agree on sales, pricing, and other decisions is called a ______.
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Cartel
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Which two factors are reduced when sellers collude with each other?
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Uncertainty; the level of competition
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Four-firm concentration ratios of ______ are common in oligopolies.
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Correct Answer:
70–100%
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For many products, a firm in an oligopoly must produce a ______ fraction of the market output in order to obtain a reasonably ______ cost of production.
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Large; low
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Oligopoly markets tend to have substantial ______.
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Economies of scale
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Which of the following best describes an oligopolistic industry?
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Correct Answer:
It has a small number of large sellers.
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The tit-for -tat strategy is used in repeated games and leads to _____cooperation.
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Correct Answer:
Greater
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The ________ costs involved in changing from one product to another brand
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Switching
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A game in which pursuing dominant strategies results in non-cooperation is called
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Prisoners’ dilemma
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Price leadership is when a dominant firm that produces a large portion _______ its Profit
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Maximize
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A large firm in an oligopoly is Known as
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Price leader
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A competitor in an oligopoly is called
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Price Follower
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Predatory pricing is Setting a price deliberately ____ to drive out competitors
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Low
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______ network externality is an increase in a consumer’s quantity demanded for a good
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Positive
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Payoff matrix is a summary of the _______outcomes of various strategies.
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Possible
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Non-cooperative games are like where one pursues _____.
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Self interest
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Network externalities is when more people own some goods ,the more _____ that good is.
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Valuable
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An increase in a consumer’s demand for a good because _____ consumers are purchasing the same good negative network externality.
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Fewer
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When a firm shapes its policy with an eye to the policies of competing firms is called mutual interdependence.
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True
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The study of strategic interactions among economic agents is called _____.
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Game theory
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A dominant strategy is one which is ______ regardless of the opponent's actions.
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Optimal
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Cooperative game is one in which firms cooperate to increase their _____ payoff.
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Mutual
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Collusion is to ______ competition.
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Restrict
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A collection of firms that agree on sales, pricing, and other decisions is called _____.
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Correct Answer:
Cartel
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A positive network externality in which a consumer’s demand for a product increases because other consumers own it is called _____.
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Correct Answer:
Bandwagon effect
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