ECO316H1 Chapter 2.8,3.1,3.2: ECO316H1 Chapter 2.8,3.1,3.: ECO316H1 Chapter 2.8,3.1,3: ECO316H1 Chapter 2.8,3.1,: ECO316H1 Chapter 2.8,3.1: ECO316H1 Chapter 2.8,3.: ECO316H1 Chapter 2.8,3: ECO316H1 Chapter 2.8,: ECO316H1 Chapter 2.8: ECO316H1 Chapter 2.: Week 2 Ch 2.8, 3.1, 3.2Cournot and Bertrand Oligopoly—

6 views1 pages

lilacoyster158

17 Jan 2019

School

Department

Course

Professor

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Week 2: ch 2. 8, 3. 1, 3. 2cournot and bertrand. General model: n firms produce single good, ci(qi) is increasing cost function of producing qi goods, output is sold at a single price. P(q) is a decreasing function: players: the firms, actions: set of actions in set of possible outputs, preferences: preferences represented by profit. Properties of nash equilibrium: both firms could obtain higher profits through collusions. General model: each firm chooses price, produces enough output to meet demand it faces given the prices chosen by all firms. Assume firm produces to satisfy demand even if price is below unit cost: single good produced by n firms, produce qi units at cost ci(qi, total amount demanded is d(p, consumers purchase from firm with lowest price. If more than one firm sets lowest price, firms share demand equally. Firm whose price isn"t lowest has no demand and therefore no output.

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

goldbutterfly763

Document Summary

Get access

Related textbook solutions

Principles of Economics

Principles of Macroeconomics

Principles of Microeconomics

Related Documents

ECO316H1 Lecture 6: Lecture 6 Rationality

ECO316H1 Lecture Notes - Lecture 11: Nash Equilibrium, Sequential Equilibrium, Terminal And Nonterminal Symbols

ECO316H1 Lecture Notes - Lecture 8: Subgame Perfect Equilibrium, Game Players, Subgame

Related Questions