FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 17: Business Strategy and Oligopoly

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

A tit-for-tat strategy starts out:

A) conciliatory and then encourages an optimal social outcome among the other players
B) unfriendly and then encourages friendly strategy among players
C) friendly and then penalises unfriendly players
D) aggressive and then compensates losing players

E) B) and C)
F) B) and D)

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

Firms in industries that have competitors but, at the same time, do not face so much competition that they are price takers, are operating in either a(n) :

A) oligopoly or perfectly competitive market
B) oligopoly or monopolistically competitive market
C) oligopoly or monopoly market
D) monopoly or monopolistically competitive market

E) A) and B)
F) None of the above

Correct Answer

verified

Show Answer

Question 23

Multiple Choice

Review LaterAdd Note

The paradoxical nature of the oligopoly game can be described by the fact that even though the monopoly outcome is best for all the oligopolists:

Table 16-5 Consider the following Duopoly game. $\begin{array}{|c|c|c|c|}\hline&&\text { Firm B }\\&&\text { U }&\text { D }\\\hline \text { Firm A }&\text { U }&\text { Firm A gets \$140 } & \text { Firm A get \$220 } \\&& \text { Firm B gets \$80 } & \text { Firm B gets \$160 } \\\hline &\text { D }&\text { Firm A gets \$160 } & \text { Firm A gets \$80 } \\&&\text { Firm B gets \$220 } & \text { Firm B gets \$100 } \\\hline\end{array}$ -Refer to Table 16-5.If both firms follow a dominant strategy, firm B's profits (losses) will be:

Table 16-8 Consider two countries, Eudora and the Inhabit, that are engaged in an arms race.The question each country must face is whether to build new weapons or to disarm existing weapons.Each country prefers to have more arms than the other because a large arsenal gives it more influence in world affairs.But each country also prefers to live in a world safe from the other country's weapons.The table shows the possible outcomes for each decision combination. -Refer to Table 16-8.For each country, arming is what type of strategy?

Dominant strategies in a two-person game often lead to:

Raising production will increase total units sold, which will decrease the per unit price of all units sold.This concept is known as the:

If an oligopolist is part of a cartel that is collectively producing at the monopoly level of output, then the oligopolist, being self-interested, will:

Table 16-2 In the following duopoly game, the two firms can either set the price of their product high or low.The game is represented in the table below. $\begin{array}{|c|c|c|c|}\hline&&\text { Firm B }\\&&\text { High Price }&\text { Low Price }\\\hline \text { Firm A }&\text { High Price }&\text { Firm A gets \$1000 } & \text { Firm A get \$1250 } \\&& \text { Firm B gets \$1000 } & \text { Firm B gets \$1100 } \\\hline &\text { Low Price }&\text { Firm A gets \$800 } & \text { Firm A gets \$900 } \\&&\text { Firm B gets \$800 } & \text { Firm B gets \$900 } \\\hline\end{array}$ -Refer to Table 16-2.What is the profit firm B will earn if it plays its dominant strategy:

During the 1990s, the members of OPEC operated independently from one another, causing the world market for crude oil to become close to a(n) :

If duopolists can enforce an agreement, to produce collectively the monopoly output and split the market between the two firms, then the sum of their output will be:

OPEC is an example of a:

Larger cartels have a greater probability of reaching the monopoly outcome than do smaller cartels.

Two suspected drug dealers are stopped by the highway patrol for speeding.The officer searches the car and finds a small bag of marijuana, and arrests the two.During the interrogation, each is separately made the following offer: 'If you confess to dealing drugs and testify against your partner, you will be given immunity and released while your partner will get 10 years in prison.If you both confess, you will each get five years'.If neither confesses, there is no evidence of drug dealing, and the most they could get is one year each for possession of marijuana.If each suspected drug dealer follows a dominant strategy, what should they do?

Table 16-3 Imagine a small town in which only two residents, Robert and John, own wells that produce water for safe drinking.Each Saturday, Robert and John work together to decide how many litres of water to pump, bring the water to town, and sell it at whatever price the market will bear.To keep things simple, suppose that Robert and John can pump as much water as they want without cost; therefore, the marginal cost of water equals zero.The weekly town demand schedule and total revenue schedule for water are shown in the table. $\begin{array}{|c|c|c|}\hline \text { Weekly quantity (in litres) } & \text { Price (\$) per litre } & \begin{array}{c}\text { Weekly total revenue (and } \\\text { total profit) (\$) }\end{array} \\\hline 0 & 12 & \$ 0 \\\hline 5 & 11 & 55 \\\hline 10 & 10 & 100 \\\hline 15 & 9 & 135 \\\hline 20 & 8 & 160 \\\hline 25 & 7 & 175 \\\hline 30 & 6 & 180 \\\hline 35 & 5 & 175 \\\hline 40 & 4 & 160 \\\hline 45 & 3 & 135 \\\hline 50 & 2 & 100 \\\hline 55 & 1 & 55 \\\hline 60 & 0 & 0 \\\hline\end{array}$ -Refer to Table 16-3.Suppose the town enacts new anti-trust laws that prohibit Robert and John from operating as a monopolist.What will the new price of water end up being once the Nash equilibrium is reached?

An important characteristic of a dominant strategy is that:

When oligopolists cooperate, they end up producing a total quantity that is closer to the social optimum.

An important characteristic of an oligopoly market structure is that:

When an oligopoly market is in Nash equilibrium, firms will not act as profit maximisers.

An agreement among firms over production and price is called: