Exam 15: Oligopoly and Game Theory

The higher the profits for each firm in a cartel, the harder it is to maintain the cartel.

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?

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.

With price matching plus 10% of the difference, which of the following is TRUE? I. The consumer benefits. II. The seller benefits. III. The consumer pays a higher price.

Game theory studies:

If two professional athletes take steroids, they each earn a lifetime income (net of health costs) of $3 million. If the two athletes abstain from steroids, they each earn a lifetime income of $4 million. If one athlete takes steroids, but the other does not, the steroid user gains a competitive advantage and earns a lifetime income of $6 million and the nonsteroid user earns $1 million. a. Construct the payoff table for the two professional athletes. b. What is the dominant strategy for both athletes?

Tactic collusion occurs even without explicit agreement or communication.

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

In some cases cartels are successful because:

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

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

Prices in an oligopolistic market are likely to be:

Use the following to answer questions: Figure: Demand 1 -(Figure: Demand 1) A successful cartel facing the market in this diagram would cause the industry price to:

If your economics class was graded on a curve and everyone agrees to study only half as much, everyone would get the same grade that they otherwise would earn. You, however, will earn an A if you study more than the others, a C if you study the same amount as others, and an F if everyone else studies more than you. You don't like studying, but you'd rather study and get an A than get a C without studying, or study and get a C than get an F without studying. If everyone else cuts back their studying, what is it in your best interest to do?

Oligopolies tend to set prices:

Cartels are not always successful because:

An oligopoly is a market that is dominated by a small number of large firms.

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

OPEC stands for:

Consumers "win" when a firm offers to match any competitor's price plus 10%.