econ test 3

one of the problems with the _____ ratio as a tool to measure market power is that many small producers can band together and impact the quantity supplied in the market

concentration

the ___ ratio is the proportion of total industry output produced by the largest firms

concentration

an imperfectly competitive industry subject to potential entry if prices or profits increase is known as a

contestable market

______of a key input is a barrier to entry into an industry

control

which of the following is a barrier to entry into an industry

control over a key input

when firms in an oligopoly ________ production decisions, their profits will be greater than if they did not

coordinate

in an oligopolistic market, the two types of retaliation include

cutting prices and improving marketing efforts

firms in an oligopoly may produce

either a homogeneous product or a differentiated product

price ____ means to explicitly cooperate with rivals to set a market price

fixing

the study of decision making in situations where strategic interaction between rivals occurs is

game theory

the study of how one firm reacts to the actions taken by another firm or individual when implementing a price strategy is called

game theory

in the kinked-demand curve model, we expect rival oligopolists to not match any price

increases

the benefits to oligopolists from coordinating their production decisions are:

it increases profits and maintains prices at profit-maximizing levels

an oligopolist can increase sales by _____ price

lowering

a group of firms with an explicit, formal agreement to fix prices and output shares in a particular market is best known as a

cartel

oligopolistic firms do which of the following when they change their pricing strategies?

affect market share and influence the market share of rival firms

if a particular firm can persuade their distributors not to sell any other firms competitive products, then that firm has created a _______ in the form of distribution control

barrier to entry

in the kinked-demand curve model, we expect rival oligopolists to ______ any price reductions

match

in order to achieve greater economies of scale and market share, firms in the same industry may consider the ______of two or more companies together

merging

barriers to entry into an oligopoly most resemble those of a:

monopoly

one of the dominant firms in an oligopoly is

oligopolist

an __________ is present when the largest four firms in an industry control ore than 60% or more of the market

oligopoly

the barrier to entry that involves giving inventors the exclusive right to market and sell their creation is:

patents

barriers to entry exist for monopolies as well as oligopolies in the form of

patents, mergers and acquisitions, distribution control, government regulations

market share is the ____ of total market output produced by a single firm

percentage

temporary price reductions designed to alter market shares or drive out competition is known as

predatory pricing

a type of implicit understanding used by oligopolists to coordinate prices without entering in explicit agreements is known as

price leadership

when members of an oligopoly react to price changes by a lead firm, the _______ model is most applicable

price leadership

a situation where firms explicitly agree to charge a certain price, divide markets, or restrict competition is called

price-fixing

when members of an oligopoly agree to set prices to maximize profits this applies mainly to the _______ model

price-fixing

when members of an oligopoly maintain output and price at profit-maximizing levels and each oligopolistic firm is content with its market share, this is best represented by the ______ model

price-fixing

oligopolists tend to avoid _____ competition and instead pursue ______ competition

price; nonprice

by controlling _____ through coordination of their production, oligopolists may be able to ______ profits

prices; increase

If RC cola conducts a marketing campaign to make their soda appealing to youth, this is an example of

product differentiation

competition from multinational corporations ______ the market power of monopolies in the US

reduce

in an oligopolistic market, the two types of _____ include improving marketing efforts and cutting prices

retaliation

what are determinants of market power?

size of each firm, barriers to entry, number of producers, availability of substitute goods

when quantifying the risk of a rival's actions, you need two pieces of information:

the probability of the payoff's occurrence and the size of each payoff

firms in oligopolistic industries have market power because

they are few in number

true or false: oligopolistic firms take into account the reactions of others

true