ECONOM 1014 Chapter Notes - Chapter 15: Price Discrimination, Lysine, Sherman Antitrust Act

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ceruleanwhale326

8 Apr 2016

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Cartel: a group of suppliers that try to act as if they were a monopoly. Opec, organization of the petroleum exporting countries is a cartel, a group of suppliers who try to act together to reduce supply, raise prices, and increase profits. Oligopoly: a market dominated by a small number of firms. Prices are likely to be higher in an industry with a small number of firms than in a highly competitive market. Game theory: the study of strategic decision making (decision making in situations that are interactive) With an oligopoly, due to the existence of rivals, each firm must consider how the other firms will react to their decisions. Very few cartels can move an industry from competition to pure monopoly, but figure 15. 2 shows the basic tendency of cartels to reduce output and raise price. Few cartels unless they have strong government support have much control over market price for very long.

Related Questions

1) When a utility charges homeowners less on a per-unit basis than corporate users it is practicing:

a) first-degree price discrimination

b) second-degree price discrimination

c) third-degree price discrimination

d) markup pricing

e) tying

2) when an electrical utility charges higher prices during the day than at night it is practicing:

a) peak-load pricing

b) first-degree price discrimination

c) second-degree price discrimination

d) third-degree price discrimination

e) fourth-degree price discrimination

3) Gliberace's Fashion Accessories of Las Vegas produces gemstone-encrusted formal wear for sale in Los Angeles and San Francisco subject to total cost TC = 100 + 5(Q_LA + Q_SF). Demand for Gliberace's stones in the two cities is given by Q_LA = 70 - 2P_LA and Q_SF = 55 - P_SF. If Gliberace price discriminates between the two cities, how many stones will it sell in L?

a) 30

b) 36

c) 38

d) 43

e) 48

4) Game theory is useful for understanding oligopoly behavior because:

a) there are so many firms in an oligopoly that all are price takers

b) firms must differentiate their products if they are to remain in business

c) firms recognize that because there are only a few firms mutual interdependence is important

d) without it firms would not be able to maintain cartel agreements

e) it allows firms to develop greater monopoly power

5) A feasible strategy set is:

a) all actions with a nonzero probability of occurring

b) only actions that have a 50 percent or greater probability of occurring

c) actions that result in positive profits for the firm

d) actions hat a decision-maker is willing to take

e) the outcome that the decision-maker chooses

6) In a two-player game in which each player has four options how many outcomes can there be:

a) 1

b) 4

c) 8

d) 16

e) 64

peachmosquito810

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

1)Which of the following is true about the Sherman Act?

A.It prohibited price discrimination.

B. It prohibited price-fixing and collusion.

C. It prohibited mergers if it led to weakened competition.

D. It made engaging in predatory activities illegal.

E. It encouraged firms to take advantage of the patent system.

2)
Which of the following is true of price discrimination?

A. Customers need to differ in their willingness to pay for price discrimination to occur.

B. Customers need to have a unit elastic demand curve for price discrimination to occur.

C. Price discriminators profit by charging a uniform price to all customers.

D. Price discriminators lack the incentive to reduce their average total cost of production.

E. Customers can easily resell a good to other customers if there exists price discrimination in the market for the good.

3) Which of the following types of firms do not practice price discrimination?

A. Airlines

B. Movie theaters

C. Soft drink companies

D. Colleges

E. Amusement parks

4) Oligopoly, like perfect competition, is a market structure in which firms can easily enter and leave the industry.

a. True
b. False

Monopolistic competition is characterized by:

A. A large number of firms selling differentiated products.

B. A perfectly elastic demand curve.

C. High barriers to entry.

D. large number of firms selling identical products.

E. A small number of firms selling differentiated products.

6) Which of the following is not a source of product differentiation?

A. Prestige considerations in products

B. Differences in the cost of production of products

C. Physical differences in products

D. Differences in the services provided by firms

E. Differences in the location of sales outlets

7) The restaurants in San Francisco can probably be categorized as examples of firms

A. operating in an oligopolistic market.

B. operating in a monopolistically competitive market

C. operating in a perfectly competitive market

D. forming a cartel.

E. Operating in a monopolistic market

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ECONOM 1014 Chapter Notes - Chapter 15: Price Discrimination, Lysine, Sherman Antitrust Act

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