Exam 15: Oligopoly and Game Theory

Which of the following statements is TRUE? I. It is easier to form a cartel for a product with few substitutes. II. Cartels that are backed and supported by the government tend to have less power. III. Cartels are more likely to collapse the more firms there are in an industry.

Game theory studies:

A cartel is a group of suppliers who act together in order to:

Which of the following explains why the NBA cartel is sustainable?

Reference: Ref 15-6 (Table: Ozzie, Manny's Payoff Table) Refer to the table. The equilibrium outcome is:

Reference: Ref 15-4 (Table: Payoff Matrix) Refer to the table. What is Player 1's strategy in this game?

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

Cartel agreements tend to fail: I. if they produce manufactured rather than natural goods. II. if they produce natural rather than manufactured goods. III. in the long run as demand curves become more elastic.

The Sherman Antitrust Act prevents Microsoft from becoming too large.

Suppose that an industry consists of a two-firm cartel: Firm A and Firm B. Each firm agrees to produce and sell only 100 units of output per week. This level of output maximizes total industry profit. Which of the following is true?

Consumers benefit from advertising:

From the chapter on cartels: how does the market output under a cartel differ from the market output in a monopoly market? Explain.

Figure: Monopolistic Competition Reference: Ref 15-9 (Figure: Monopolistic Competition) Refer to the figure. Suppose the figure represents a firm that operates in a monopolistically competitive market. In the long run you would expect:

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.

A cartel is characterized by firms that act together in order to: I. increase competition. II. raise prices. III. raise profit.

Which of the following is NOT subsidized through advertising?

It is easier to maintain a cartel in a market for a(n) ________ than in a market for a(n) ________.

Cheating pays when other firms ________ their promise.

One reason cartels have limited power is that demand curves become:

What are some reasons why cartels could fail?