Exam 14: Oligopoly: Firms in Less Competitive Markets

Which of the following best explains why airlines often cut their ticket prices at the last-minute in order to fill the remaining empty seats on their flights?

A characteristic found only in oligopolies is

What do Sony, Microsoft, and Nintendo have in common?

When Wal-Mart decides to build a new retail store in a town, it will decide to build a large store rather than a small store if the large store is expected to earn a greater economic profit. What other motive would Wal-Mart have for choosing to build a large store?

A dominant strategy

Which of the following is not a shortcoming of the concentration ratio as a measure of the extent of competition in an industry?

Occupational licensing is an example of an entry barrier that improves a country's standard of living.

Table 14-3 Suppose OPEC has only two producers, Saudi Arabia and Nigeria. Saudi Arabia has far more oil reserves and is the lower cost producer compared to Nigeria. The payoff matrix in Table 14-3 shows the profits earned per day by each country. "Low output" corresponds to producing the OPEC assigned quota and "high output" corresponds to producing the maximum capacity beyond the assigned quota. -Refer to Table 14-3. Which of the following statements is true?

Suppose two firms in a duopoly implicitly collude and charge a high price. How might each firm benefit from advertising that it will match the lowest price offered by its competitor?

In Porter's Five Competitive Forces model, "competition from substitute goods or services" refers to

By the 21st century few people purchased printed encyclopedias. Which of the following competitive forces best explains this?

The "Discount Department Stores" industry is highly concentrated. What does this mean?

Table 14-9 -Refer to Table 14-9. Saudi Arabia and Yemen must decide how much oil to produce. Since the demand for oil is inelastic, relatively low production rates drive up prices and profits. Saudi Arabia, the world's largest and lowest cost producer, is able to influence market price; it has an incentive to keep output low. Yemen, on the other hand, is a relatively high cost producer with much smaller reserves. Use the payoff matrix in Table 14-9 to answer the following questions. a. What is the dominant strategy for Saudi Arabia? b. What is the dominant strategy for Yemen? c. What is the Nash equilibrium?

A Nash equilibrium is

Of all barriers to entry, the most important are those that are due to

A supplier of an input is unlikely to have bargaining power if

The value of the four-firm concentration ratio that many economists consider indicative of the existence of an oligopoly in a particular industry is

eBay is an online auction site where more than 200 million items are auctioned annually. What type of auctions are run on eBay?

Which government agency publishes four-firm concentration ratios?

Table 14-2 Table 14-2 shows the payoff matrix for Wal-Mart and Target from every combination of pricing strategies for the popular PlayStation 3. At the start of the game each firm charges a low price and each earns a profit of $7,000. -Refer to Table 14-2. Suppose pricing PlayStations is a repeated game in which Wal-Mart and Target will be selling the game system in competition over a long period of time. In this case, what is the most likely outcome?