Exam 15: Oligopoly and Game Theory

In a cartel, the most profitable outcome is achieved by:

Game theory studies:

It is easier to prosecute collusion when the colluding firms never meet.

Cartels are not always successful because:

Figure: Demand 2 Two firms in an industry act as a cartel, with each firm agreeing to charge a price of $16 and sell two units of output. If one of them cheats and produces two more units of output, the cheating firm's total revenue increases by ______ and the other firm's total revenue decreases by ______.

Which of the following statements is TRUE? I. A cartel is a single firm with competitive market power. II. A cartel is a group of firms that practice price discrimination in competitive markets. III. A cartel is a group of firms that attempt to reduce market output. IV. A cartel acts as if it were a monopolist in that market.

Cartels tend to lose their power due to the cheating by the cartel members.

Major league basketball, the NBA, is cartelized to:

Cartels do not last because their members find them difficult to maintain since:

The basic tendency of cartels is to increase output and reduce prices.

Cartels are more successful when:

Game theory is the study of:

Use the following to answer questions: Table: Ozzie's, Manny's Payoff Table Ozzie's Cement (profit in 1,000s) Low Price High Price Manny's Cement Low Price \ 60,\ 60 \ 130,\ 20 (profit in 1,000s) High Price \ 20,\ 130 \ 80,\ 80 -(Table: Ozzie's, Manny's Payoff Table) Refer to the table. The equilibrium outcome is:

If your economics class was graded on a curve and everyone agrees to study only half as much, everyone would get the same grade that they otherwise would earn. You, however, will earn an A if you study more than the others, a C if you study the same amount as others, and an F if everyone else studies more than you. You don't like studying, but you'd rather study and get an A than get a C without studying, or study and get a C than get an F without studying. If everyone else cuts back their studying, what is it in your best interest to do?

All cartels and cartel-like behavior are illegal in the United States.

OPEC is a:

If women conspired together and demanded that any man wishing to take them on a date must take them to a nice restaurant, why would this be unsustainable?

OPEC is a cartel that:

Oligopolies are large dominant firms that can influence the industry output but not the industry price.

Use the following to answer questions: Table: Russia, Saudi Payoff Table Suppose that the oil market is dominated by two large firms, Saudi Arabia and Russia. Both Saudi Arabia and Russia have two choices or strategies: cooperate by cutting back production or cheat by increasing production. The payoff table below shows the potential revenues associated with each firm's strategies. For instance, if Saudi Arabia cheats and Russia cooperates, the payoff to Saudi Arabia is $1,000 and the payoff to Russia is $400. Russia's Strategies Cheat Cooperate (\ 400,\ 1,000) Saudi Arabia's Cooperate (\ 800,\ 800) (\ 600,\ 600) Strategies Cheat (\ 1,000,\ 400) (\ 5) -(Table: Russia, Saudi Payoff Table) Refer to the table. What is Saudi Arabia's best strategy and associated payoff if Russia cheats?