Question 1

Game theory is distinctive in that its elements are

Accepted Answer

A)  costs, prices and profits. 
B)  revenues, elasticity and profits. 
C)  patents, copyrights and barriers to entry. 
D)  rules, strategies, payoffs and outcomes. 
A)  costs, prices and profits. 
B)  revenues, elasticity and profits. 
C)  patents, copyrights and barriers to entry. 
D)  rules, strategies, payoffs and outcomes.

Question 2

A cooperative equilibrium is most likely to arise in a

Accepted Answer

A)  single- play game without communication. 
B)  repeated game with a small number of players. 
C)  repeated game with a large number of players. 
D)  single- play game with a large number of players. 
A)  single- play game without communication. 
B)  repeated game with a small number of players. 
C)  repeated game with a large number of players. 
D)  single- play game with a large number of players.

Question 3

In an oligopoly price- fixing game, each player tries to

Accepted Answer

A)  minimise the profits of its opponents. 
B)  minimise the market shares of its opponents. 
C)  maximise its own market share. 
D)  maximise its own profit. 
A)  minimise the profits of its opponents. 
B)  minimise the market shares of its opponents. 
C)  maximise its own market share. 
D)  maximise its own profit.

Question 4

A group of firms that has entered into a collusive agreement to restrict output and increase prices and profits is called

Accepted Answer

A)  a compliance. 
B)  an oligopoly. 
C)  a cartel. 
D)  a duopoly. 
A)  a compliance. 
B)  an oligopoly. 
C)  a cartel. 
D)  a duopoly.

Question 5

A contestable market is similar to a perfectly competitive market in that there

Accepted Answer

A)  can be only one firm in the market. 
B)  will be no entry if the existing firm earns an economic profit. 
C)  are barriers to entry. 
D)  are no barriers to entry. 
A)  can be only one firm in the market. 
B)  will be no entry if the existing firm earns an economic profit. 
C)  are barriers to entry. 
D)  are no barriers to entry.

Question 6

If there is a collusive agreement in a duopoly to maximise profit, then the price will

Accepted Answer

A)  be the same as the price set by a monopoly. 
B)  be the same as the price set by a competitive industry. 
C)  equal the marginal cost of production. 
D)  equal the average total cost of production. 
A)  be the same as the price set by a monopoly. 
B)  be the same as the price set by a competitive industry. 
C)  equal the marginal cost of production. 
D)  equal the average total cost of production.

Question 7

Game theory is applicable to oligopoly behaviour because oligopolists

Accepted Answer

A)  use strategic behaviour. 
B)  ignore rival firms. 
C)  can only be profitable if they collude. 
D)  are price takers. 
A)  use strategic behaviour. 
B)  ignore rival firms. 
C)  can only be profitable if they collude. 
D)  are price takers.

Question 8

Suppose two firms, FastNet and SmartCast are the only fast Internet providers in a city. They have identical costs and one firm's service is a perfect substitute for the other's. The industry is a natural duopoly. Suppose that FastNet and SmartCast collude and agree to share the market equally. In this scenario, in Nash equilibrium,

Accepted Answer

A)  both firms cheat to produce less than the agreed amount. 
B)  one firm complies with the agreement while the other cheats to produce more than the agreed amount. 
C)  both firms cheat to produce more than the agreed amount. 
D)  both firms comply with the agreement. 
A)  both firms cheat to produce less than the agreed amount. 
B)  one firm complies with the agreement while the other cheats to produce more than the agreed amount. 
C)  both firms cheat to produce more than the agreed amount. 
D)  both firms comply with the agreement.

Question 9

Which of the following is a defining characteristic of oligopoly?

Accepted Answer

A)  Selling a differentiated good 
B)  Collusion 
C)  Barriers to entry 
D)  Selling a homogeneous good 
A)  Selling a differentiated good 
B)  Collusion 
C)  Barriers to entry 
D)  Selling a homogeneous good

Question 10

In a sequential contestable market game,

Accepted Answer

A)  the dominant firm always makes a monopoly profit, while other firms make zero economic profits. 
B)  the outcome is always a monopoly equilibrium. 
C)  a small number of firms can behave like firms in perfect competition. 
D)  a firm that enters the market first is protected from potential entrants by natural barriers. 
A)  the dominant firm always makes a monopoly profit, while other firms make zero economic profits. 
B)  the outcome is always a monopoly equilibrium. 
C)  a small number of firms can behave like firms in perfect competition. 
D)  a firm that enters the market first is protected from potential entrants by natural barriers.

Game theory is distinctive in that its elements are

A cooperative equilibrium is most likely to arise in a

In an oligopoly price- fixing game, each player tries to

A group of firms that has entered into a collusive agreement to restrict output and increase prices and profits is called

A contestable market is similar to a perfectly competitive market in that there

If there is a collusive agreement in a duopoly to maximise profit, then the price will

Game theory is applicable to oligopoly behaviour because oligopolists

Which of the following is a defining characteristic of oligopoly?

In a sequential contestable market game,

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Public Choices and Public Goods

Economics of the Environment

Monopoly and Its Regulation

Economic Inequality

Consumer Choices and Constraints

Producer Choices and Constraints

Perfect Competition

Monopolistic Competition

Decisions in Factor Markets

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Exam 16: Oligopoly Games and Strategy

Game theory is distinctive in that its elements are

A cooperative equilibrium is most likely to arise in a

In an oligopoly price- fixing game, each player tries to

A group of firms that has entered into a collusive agreement to restrict output and increase prices and profits is called

A contestable market is similar to a perfectly competitive market in that there

If there is a collusive agreement in a duopoly to maximise profit, then the price will

Game theory is applicable to oligopoly behaviour because oligopolists

Which of the following is a defining characteristic of oligopoly?

In a sequential contestable market game,

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Public Choices and Public Goods

Economics of the Environment

Monopoly and Its Regulation

Economic Inequality

Consumer Choices and Constraints

Producer Choices and Constraints

Perfect Competition

Monopolistic Competition

Decisions in Factor Markets

Filters