Exam 12: Between Competition and Monopoly

In an economist's view, a cartel usually offers to society

Game theory can be used to investigate

The key difference between monopolistic competition and perfect competition is that in monopolistic competition the tangency of

Define the following terms and explain their importance to the study of economics. a.maximin criterion b.Nash equilibrium c.Dominant Strategy d.Zero-sum game e.Credible threat

____ is one in which exactly the amount one competitor gains must be lost by other competitors.

Oligopolists almost always cooperate in making price and output decisions.

Oligopolistic firms never collude because they have almost no incentive to do so.

Game theory applies to problems that arise in

Monopolistic competition is characterized by

Briefly and concisely define the following terms and explain their importance in the study of economics. a.excess capacity theorem b.price leadership c.kinked demand curve d.perfectly contestable market

An oligopolist who sets the price for the industry is a price leader.

In John Rawls' A Theory of Justice, people choose the rules for distributing income from behind a veil of ignorance.People understand that ability determines income, but they do not know their abilities or the abilities of others.Rawls argues that people are risk averse and will choose the distribution rule that maximizes their income in the worst case scenario (they have relatively little ability).An economist would call this strategy

In the cigarette industry either R.J.Reynolds or Phillip Morris, for a time, raised prices twice a year by about 50 cents per carton.The other firms in the industry raised their prices by the same amount.Economists call this

Displayed below is the payoff matrix of firm B for four different strategies, B1, B2, B3, and B4, and the potential retaliatory responses of firm A (A1, A2, A3, A4). Table 12-2 1 100 50 25 200 2 10 60 150 150 3 50 75 200 75 4 70 90 250 15 If firm B uses the maximin criterion, which strategy will it choose?

Which of the following is an example of tacit collusion?

In the long run, a monopolistically competitive firm's demand curve must be tangent to its average cost curve.

For collusion to make sense, the payoff matrix must be a

Monopolistic competition in long-run equilibrium is characterized by

There is statistical evidence that managers' salaries are tied most closely to

The excess capacity theorem states that society would clearly benefit from a reduction in the number of monopolistic competitors.