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A market consists of three firms of similar sizes, each selling a product that is similar but not identical. Which type of market is this? |
Oligopoly |
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Which of the following statements about oligopolies is NOT correct? |
Unlike monopolies and monopolistic ally competitive markets, oligopolies prices do not exceed their marginal revenues. |
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In the language of game theory, a situation in which each person must consider how others might respond to his or her own actions is called a |
Strategic situation |
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In general, game theory is the study of |
How people behave in strategic situations |
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Game theory is important for understandings which of the following market types? |
Oligopolistic but not perfectly competitive markets |
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A distinguishing feature of an oligopolistic industry is the tension between |
Cooperation and self interest |
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The simplest type of oligopoly is |
Duopoly |
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An agreement among firms in a market about quantities to produce or prices to charge is called |
Collusion |
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An agreement between two duopolists to functions as a monopolist usually breaks down because |
Each duopolist wants a larger share of the market in order to capture more profit. |
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As the number of firms in an oligopoly increases, the |
Price approaches marginal costs, and the quantity approaches the socially efficient level. |
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A situation in which firms choose their best strategy given the strategies chosen by the other firms in the market is called |
A Nash equilibrium |
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Which of these situations produces the largest profits for for oligopolists? |
The firms reach the monopoly outcome. |
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When firms have agreements among themselves on the quantity to produce and the price at which to sell output, we refer to their form of organization as a |
Cartel |
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The equilibrium quantity in markets characterized by oligopoly is |
Higher than in monopoly markets and lower than in perfectly competitive markets. |
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The equilibrium price in a market characterized by oligopoly is |
Lower than in monopoly markets and higher than in perfectly competitive markets. |
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A group of firms that act in unison to maximize collective profits is called a |
Cartel |
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Once a cartel is formed, the market is in effect served by |
A monopoly |
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An oligopolist will increase production if the output effect is |
Greater than the price effect. |
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Oligopolies can end up looking like competitive markets if the number of firms is |
Larger and they do not cooperate |
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The theory of oligopoly provides another reason that free trade can benefit all countries because: |
As the number of firms within a given market increases, the price of the good decreases. |
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Game theory is necessary for understanding |
Oligopoly, but it is not necessary for understanding monopoly or competition. |
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The prisoners’ Selena provides insights into the |
Difficulty of maintaining cooperation. |
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The likely outcome of the standard prisoners’ dilemma game is that |
Both prinsoners confress |
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In a game, a dominant strategy is |
The best strategy for a player to follow, regardless of the strategies followed by other players |
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