ECON 1000 Chapter Notes - Chapter 17: Resale Price Maintenance, Market Power, Perfect Competition

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29 Jul 2015

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Oligopoly- a market structure in which only a few sellers offer similar or identical products. Game theory- the study of how people behave in strategic situations. Collusion- an agreement among firms in a market about quantities to produce or prices to charge. Cartel- a group of firms acting in unison. Nash equilibrium- a situation in which economic actors interacting with one another each chose their best strategy given the strategies that all the other actors have chosen. Prisoners" dilemma- a particular game between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial. Dominant strategy- a strategy that is best for a player in a game regardless of the strategies chosen by the other players. An oligopoly with only two members is called a duopoly. If jack and jill work together they can produce the optimal monopoly quantity.

Related Questions

1. Which of the following statements about oligopolies is not correct?

a.		Oligopolistic firms always charge the monopoly price.
b.		Oligopolistic firms are interdependent in a way that firms in perfect competition are not.
c.		An oligopolistic market has only a few sellers.
d.		The actions of any one seller can have a large impact on the profits of all other sellers.

2. Which is true of an oligopoly market that reaches a Nash equilibrium?

a.		The firms will not have behaved as profit maximizers.
b.		A firm will have chosen its best strategy, given the strategies chosen by other firms in the market.
c.		A firm will not take into account the strategies of competing firms.
d.		The market price will be different for each firm.

3. In game theory, what is a dominant strategy?

a.		the best strategy for a player to follow, regardless of the what strategies other players use
b.		a strategy that makes every player better off
c.		a strategy that must appear in every game
d.		the best strategy for a player to follow only if other players are cooperative

4. Which of the following situations produces the largest profits for oligopolists?

a.		The firms reach a Nash equilibrium.
b.		The firms combine to produce the monopoly output level.
c.		The firms set prices equal to marginal cost.
d.		The firms produce a quantity of output that lies between the competitive outcome and the monopoly outcome.

1. Which of the following statements about oligopolies is not correct?

a.		Oligopolistic firms always charge the monopoly price.
b.		Oligopolistic firms are interdependent in a way that firms in perfect competition are not.
c.		An oligopolistic market has only a few sellers.
d.		The actions of any one seller can have a large impact on the profits of all other sellers.

2. Which is true of an oligopoly market that reaches a Nash equilibrium?

a.		The firms will not have behaved as profit maximizers.
b.		A firm will have chosen its best strategy, given the strategies chosen by other firms in the market.
c.		A firm will not take into account the strategies of competing firms.
d.		The market price will be different for each firm.

3. In game theory, what is a dominant strategy?

a.		the best strategy for a player to follow, regardless of the what strategies other players use
b.		a strategy that makes every player better off
c.		a strategy that must appear in every game
d.		the best strategy for a player to follow only if other players are cooperative

4. Which of the following situations produces the largest profits for oligopolists?

a.		The firms reach a Nash equilibrium.
b.		The firms combine to produce the monopoly output level.
c.		The firms set prices equal to marginal cost.
d.		The firms produce a quantity of output that lies between the competitive outcome and the monopoly outcome.

1. When two or more large companies in the same industry set prices or quantities in unison, economists refer to them as:

a. Monopolist competitors

b. A cartel

c. Dominant firms

d. Perfect competitors

e. Jerks

2. According to our discussion, oligopoly markets will generally result in the same price and quantity as we would observe in a monopoly market

a. True

b. False

3. The example of the prisoner's dilemma is primarily meant to demonstrate

a. The difficulty of maintaining cooperation in decisions that involve strategic interdependence

b. The concept that each person looking out for his or her own best interests results in the best overall outcome for the group involved in the decision

c. The benefits of government regulation in a non-competitive market

d. What happens to snitches

4. A Nash equilibrium is

a. The outcome that maximizes the payoff of all players

b. Never achieved without cooperation between players

c. The outcome in which no player can improve their payoff by changing his or her strategy, (given the strategy of the other player)

d. All of the above

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ECON 1000 Chapter Notes - Chapter 17: Resale Price Maintenance, Market Power, Perfect Competition

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