Question 1

-Refer to the above figure. The figure gives the payoff matrix for two individuals who are being accused of robbing a bank together. If Bob confesses, what is the best strategy for Harry?

Accepted Answer

A)  Confess.
B)  Don't confess.
C)  Flip a coin to decide what to do.
D)  There is no best strategy.

Question 2

The manner in which one oligopolist reacts to a change in price, output, or quality made by another oligopolist in the industry is

Accepted Answer

A)  a cooperative game.
B)  the reaction function.
C)  a zero-sum game.
D)  the concentration ratio.

Question 3

A given industry, Z, is such that the 1-firm, 2-firm, 4-firm and 8-firm concentration ratios are the same. Based on this, we can conclude that Industry Z is

Accepted Answer

A)  pure competition.
B)  monopolistic competition.
C)  oligopoly.
D)  pure monopoly.

Question 4

A game in which the players neither negotiate nor coordinate in any way is a

Accepted Answer

A)  cooperative game.
B)  noncooperative game.
C)  zero-sum game.
D)  negative-sum game.

Question 5

A radio station is best described as

Accepted Answer

A)  an end user in a transaction-based market.
B)  a platform in an audience-making market.
C)  an end user in a matchmaking market.
D)  a platform in a shared-input market.

Question 6

Negative market feedback refers to a tendency for

Accepted Answer

A)  one or two firms in an oligopolistic industry to respond to price decreases by initiating efforts to engage in price leadership.
B)  a particular product to fall out of favor with additional consumers because other consumers have stopped purchasing the product.
C)  the dominant firm in an oligopolistic industry to react to competing firms' price increases by decreasing the price of its own product.
D)  price wars to break out in oligopolistic industries in which firms produce products possessing characteristics that make them prone to network effects.

Question 7

The market structure of monopoly exists when

Accepted Answer

A)  there are a small number of interdependent firms that constitute the entire market.
B)  there is a single producer of a product.
C)  there are many producers of differentiated products.
D)  there are many producers of a homogeneous product.

Question 8

Suppose a ten firm industry has total sales of $35 million per year. The largest firm have sales of $10 million, the third largest firm has sales of $4 million, and the fourth largest firm has sales of $2 million. If fifth through tenth largest firms combined have annual sales of $12 million, the four-firm concentration ratio for this industry is

Accepted Answer

A)  45.7 percent.
B)  80 percent.
C)  65.7 percent.
D)  none of the above.

Question 9

In game theory, behavior that results in cooperation as long as the other players continue to cooperate, is referred to as

Accepted Answer

A)  nice behavior.
B)  tit-for-tat strategic behavior.
C)  simple behavior.
D)  opportunistic behavior.

Question 10

Suppose a firm can charge a relatively low price to try to compete actively with its rivals, or it can charge a relatively high, collusive price. If its strategy is to charge the low price regardless of the other firms' decisions, this low-price is the firm's

Accepted Answer

A)  dependent strategy.
B)  independent strategy.
C)  dominant strategy.
D)  positive sum strategy.

Question 11

When decisions are guided strictly by short-run gains, this is known as

Accepted Answer

A)  opportunistic behavior.
B)  the prisoners' dilemma.
C)  tit-for-tat strategy.
D)  a positive-sum game.

Question 12

How do economies of scale contribute to the development of an oligopoly?

Accepted Answer

A)  Economies of scale make it legally difficult for new firms to enter.
B)  Economies of scale make small-scale producers inefficient.
C)  Economies of scale are based on control of a key resource, without which other firms cannot enter an industry.
D)  Economies of scale are guaranteed when a patent is granted.

Question 13

Why would a member of a cartel cheat?

Accepted Answer

After setting a common price or producti...

Question 14

Which of the following is likely among the most concentrated industries in the United States?

Accepted Answer

A)  printing and publishing
B)  breakfast cereals
C)  primary aluminum
D)  computers

Question 15

Which of the following is NOT a necessary condition for oligopoly?

Accepted Answer

A)  Barriers to entry
B)  Strategic dependence of firms
C)  Differentiated products
D)  Either a small number of firms or market dominance by a small number of firms

Question 16

The merger of two pizza restaurant chains would be an example of

Accepted Answer

A)  a horizontal merger.
B)  a vertical merger.
C)  a conglomerate merger.
D)  an independent merger.

Question 17

Stephanie listens to punk rock because her friends do. This is

Accepted Answer

A)  a positive sum game.
B)  collusion.
C)  positive market feedback.
D)  negative market feedback.

Question 18

Within a game theory model, if a change in decision-making raises corporation A's profits by $50 and lowers corporation B's profits by $50, the game is a

Accepted Answer

A)  negative-sum game.
B)  zero-sum game.
C)  positive-sum game.
D)  cooperative game.

Question 19

In a two-sided market, an intermediary firm that links groups of producers and consumers is called

Accepted Answer

A)  an operator.
B)  an oligopoly.
C)  a platform.
D)  an end user.

Question 20

Managers in oligopoly firms must

Accepted Answer

A)  eliminate any barriers to entry if they hope to make short-run profits.
B)  advertise heavily in order to differentiate their product.
C)  anticipate the reaction of rival firms.
D)  establish many varieties of their products to cover the spectrum of consumer tastes.

Exam 26: Oligopoly and Strategic Behavior

Which of the following is likely among the most concentrated industries in the United States?

Correct Answer
verified

Which of the following is NOT a necessary condition for oligopoly?

Correct Answer
verified

The merger of two pizza restaurant chains would be an example of

Correct Answer
verified

Negative market feedback refers to a tendency for

Correct Answer
verified

Stephanie listens to punk rock because her friends do. This is

Correct Answer
verified

Managers in oligopoly firms must

Correct Answer
verified

When decisions are guided strictly by short-run gains, this is known as

Correct Answer
verified

A given industry, Z, is such that the 1-firm, 2-firm, 4-firm and 8-firm concentration ratios are the same. Based on this, we can conclude that Industry Z is

Correct Answer
verified

A game in which the players neither negotiate nor coordinate in any way is a

Correct Answer
verified

How do economies of scale contribute to the development of an oligopoly?

Correct Answer
verified

The manner in which one oligopolist reacts to a change in price, output, or quality made by another oligopolist in the industry is

Correct Answer
verified

In game theory, behavior that results in cooperation as long as the other players continue to cooperate, is referred to as

Correct Answer
verified

A radio station is best described as

Correct Answer
verified

Why would a member of a cartel cheat?

Correct Answer
verified
After setting a common price or producti...
View Answer

-Refer to the above figure. The figure gives the payoff matrix for two individuals who are being accused of robbing a bank together. If Bob confesses, what is the best strategy for Harry?

Correct Answer
verified

Correct Answer
verified

Suppose a firm can charge a relatively low price to try to compete actively with its rivals, or it can charge a relatively high, collusive price. If its strategy is to charge the low price regardless of the other firms' decisions, this low-price is the firm's

Correct Answer
verified

Within a game theory model, if a change in decision-making raises corporation A's profits by $50 and lowers corporation B's profits by $50, the game is a

Correct Answer
verified

The market structure of monopoly exists when

Correct Answer
verified

In a two-sided market, an intermediary firm that links groups of producers and consumers is called

Correct Answer
verified

Exam 26: Oligopoly and Strategic Behavior

Which of the following is likely among the most concentrated industries in the United States?

Correct AnswerverifiedShow Answer

Which of the following is NOT a necessary condition for oligopoly?

Correct AnswerverifiedShow Answer

The merger of two pizza restaurant chains would be an example of

Correct AnswerverifiedShow Answer

Negative market feedback refers to a tendency for

Correct AnswerverifiedShow Answer

Stephanie listens to punk rock because her friends do. This is

Correct AnswerverifiedShow Answer

Managers in oligopoly firms must

Correct AnswerverifiedShow Answer

When decisions are guided strictly by short-run gains, this is known as

Correct AnswerverifiedShow Answer

A given industry, Z, is such that the 1-firm, 2-firm, 4-firm and 8-firm concentration ratios are the same. Based on this, we can conclude that Industry Z is

Correct AnswerverifiedShow Answer

A game in which the players neither negotiate nor coordinate in any way is a

Correct AnswerverifiedShow Answer

How do economies of scale contribute to the development of an oligopoly?

Correct AnswerverifiedShow Answer

The manner in which one oligopolist reacts to a change in price, output, or quality made by another oligopolist in the industry is

Correct AnswerverifiedShow Answer

In game theory, behavior that results in cooperation as long as the other players continue to cooperate, is referred to as

Correct AnswerverifiedShow Answer

A radio station is best described as

Correct AnswerverifiedShow Answer

Why would a member of a cartel cheat?

Correct AnswerverifiedAfter setting a common price or producti...View AnswerShow Answer

-Refer to the above figure. The figure gives the payoff matrix for two individuals who are being accused of robbing a bank together. If Bob confesses, what is the best strategy for Harry?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose a firm can charge a relatively low price to try to compete actively with its rivals, or it can charge a relatively high, collusive price. If its strategy is to charge the low price regardless of the other firms' decisions, this low-price is the firm's

Correct AnswerverifiedShow Answer

Within a game theory model, if a change in decision-making raises corporation A's profits by $50 and lowers corporation B's profits by $50, the game is a

Correct AnswerverifiedShow Answer

The market structure of monopoly exists when

Correct AnswerverifiedShow Answer

In a two-sided market, an intermediary firm that links groups of producers and consumers is called

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
After setting a common price or producti...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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