Exam 15: Oligopoly and Game Theory

Use the following to answer questions: Figure: Competitive Market -(Figure: Competitive Market) Refer to the figure. If all firms in the market form a successful cartel, price and output in the market would be:

Do oligopolies price at competitive prices, monopoly prices, or at a different price? Explain.

In an oligopolistic market, prices will tend to be closer to the competitive price:

What does it mean when an OPEC member cheats?

When producers engage in cartel-like behavior, they attempt to mimic the behavior of:

A group of suppliers who tries to act as if they are a monopoly is called a(n):

The prisoner's dilemma refers to a situation in which:

Game theory is the study of:

If every member of OPEC produces beyond quota, then cartel members:

A 2006 paper by Margeret Levenstein and Valerie Suslow ("What Determines Cartel Success?") found that although cheating is a common cause of why cartels broke down, the following causes are even more common: entering firms, the nature of the demand curve, growth of the industry, and difficulty of bargaining between conspirators. What other cause is also associated with bargaining difficulties?

Tactic collusion occurs when firms limit competition with one another.

Loyalty programs, such as frequent flyer programs: I. are a form of price discrimination. II. save money for the consumer. III. sometimes encourage customers to pay higher prices.

Which of the following is NOT an example of a government-supported cartel?

If a television factory wanted to conspire with its competitors to raise the price of televisions, which of the following would help stabilize the long-term viability of such a cartel?

Which of the following is the best example of a firm operating in an oligopoly market?

Without knowing the specifics of an industry, it is difficult to know the correct oligopoly model to apply.

Use the following to answer questions: Table: Oil Output Iran National Oil (profit in millions) Restrict Oil Output Expand Oil Output Iraq National Oil Restrict Oil Output \ 78,\ 78 \ 60,\ 89 (profit in millions) Expand Oil Output \ 89,\ 60 \ 65,\ 65 -(Table: Oil Output) Refer to the table. The equilibrium outcome is:

Cheaters in cartels make ________ profit when the other cartel members ________ their promise.

In the prisoner's dilemma, both players have an incentive to cheat, even though they would both be better off if they both cooperated.

A cartel member has _____ incentive to increase quantity than a standard monopolist.