ECON Final Exam
A firm will break even when A) P=ATC B) P=AVC C) P<AVC D) P>ATC
A
Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly. Which of the following statements comparing the conditions in the industry under both market structures is true? A) A monopoly will produce less and charge a higher price than would a perfectly competitive industry producing the same good B) A monopoly will produce less and charge a lower price than would a perfectly competitive industry producing the same good C) A monopoly will produce more and charge a higher price than would a perfectly competitive industry producing the same good D) A monopoly will produce more and advertise more than would a perfectly competitive industry producing the same good
A
Barrier to Entry
Anything that keeps new firms from entering an industry to which firms are earning economic profits.
Assume that an industry that began as a perfectly competitive industry becomes a monopoly. Which of the following describes a change in the market as a result of becoming a monopoly? Compared to when the industry was perfectly competitive, the monopolist will A) charge a higher price and produce less output. B) charge a higher price and increase consumer surplus. C) produce less output and decrease producer surplus. D) produce more output and increase producer surplus.
A
Economies of scale will create a barrier to entry in an oligopoly industry when: A) the typical firm's long-run average total cost curve reaches a minimum at a level of output that is a large fraction of total industry sales B) the industry's four-firm concentration ratio is less than 40 percent C) the typical firm's long-run average total cost curve reaches a minimum at a level of output that is a small fraction of total industry sales D) a firm's minimum efficient scale occurs where long-run average total costs are constant
A
How do you find the profit maximizing quantity for perfectly competitive firm? A) For all firm types, it is the same process. Go to the point where MR = MC. Then find the quantity on the x-axis below MR=MC. B) Make a robust guess. C) Spin the bottle. D) Use a magic eight ball.
A
If automobile companies have significant bargaining power when buying tires, you would expect that A) tire prices will be low. B) tire prices will be high. C) the profitability of tire manufacturers is unlimited. D) tire suppliers also have significant bargaining power.
A
If individual countries that are members of OPEC exceed their production quotas, the amount of oil supplied to the world____, and the price of oil_____. A) increases; decreases B) increases; increases C) decreases; increases D) decreases; decreases
A
If marginal revenue slopes downward, which of the following is true? A) The firm must decrease its price to sell a larger quantity. B) The firm must increase its price to sell a larger quantity. C) The firm must decrease its price if it wants to continue selling the same quantity. D) The firm is unable to adjust price when the quantity sold changes.
A
If market demand shifts to the right, how will a competitive firm's level of output change? A) The firm will increase its output, and its profits will increase. B) The firm will need to decrease its output and suffer losses. C) The firm will keep its output constant, but its profits will increase. D) The firm will decrease its output, which will increase its profit.
A
Long-run competitive equilibrium is A) the situation in which the entry and exit of firms have resulted in the typical firm just breaking even B) a situation in which market price is at a level equal to the minimum point on the typical firm's marginal cost curve C) the end of a process during which firms are prevented from adjusting their production methods D) All of the above
A
Some markets have many buyers and sellers but fall into the category of monopolistic competition rather than perfect competition. The most common reason for this is: A) firms in these markets do not sell identical products B) firms in these markets make high profits C) firms in these markets sell identical products D) there are high barriers to entering these markets.
A
Suppose you invest $200,000 in a business. The return you could earn each year on a similar investment using that money is 10 percent, or $20,000. In an economic sense, the $20,000 is A) an economic cost. B) economic profit. C) an accounting cost. D) both economic profit and accounting profit.
A
Using the broader definition of monopoly, in which of the following cases could we argue that Microsoft has a monopoly in computer operating systems? A) if Macintosh and Linux were not considered close substitutes for Windows B) if Microsoft charged prices similar to those that Macintosh and Linux charge for their operating systems in order to compete C) if Macintosh and Linux started to produce operating systems similar to Windows D) if there are no barriers to entry in the market for computer operating systems
A
What is a merger between firms in the same industry called? A) a horizontal merger B) a vertical merger C) a conglomerate D) a divestiture
A
When a firm faces a downward-sloping demand curve, marginal revenue: A) its less than price because a firm must lower its price to sell more B) must exceed price because the output effect outweighs the price effect C) equals price because the firm sells a standardized product D) must exceed price because the price effect outweighs the output effect
A
When a monopolistically competitive firm decreases price, good and bad things happen. Which of the following is considered a bad thing for the firm? A) the price effect B) the output effect C) the revenue effect D) all of the above
A
When the government wants to give an exchange right to one firm to produce a product it: A) grants a patent or copyright to an individual or firm B) imposes a tariff on imports of the product C) uses antitrust laws to keep other firms from entering the market D) imposes a quota on imports of the product
A
Which of the following conditions must exist in order to have a perfectly competitive market? A) There must be many buyers and many sellers, all of whom are small relatives to the market B) The products sold by firms in the market must be different from each other C) There must be some barriers to entry in order to protect perfect competition D) All of the above
A
Which of the following is most likely to increase market power? A) horizontal mergers B) vertical mergers C) stricter enforcement of antitrust laws D) divestitures
A
Which of the following rights is given to the holder of a patent? A) the exclusive right to a new product B) control over a key resource used in production of a good or service C) the right to earn profits from creation of the product indefinitely D) a public franchise
A
Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry? A) A high concentration ratio B) The monopoly firm has control of a key resource necessary to produce a good C) Large economies of scale that result in a natural monopoly D) There are important network externalities in supplying a good or service
A
Which type of barrier to entry is the granting of a patent or copyright to an individual or firm considered? A) entry blocked by government action B) entry blocked by externalities C) entry blocked by economies of scale D) entry blocked by natural or technical constraints
A
Monopoly
A firm that is the only seller of a good or service that does not have a close substitute.
Price Leadership
A form of implicit collusion in which one firm in an oligopoly announces a price change and the other firms in the industry match the change.
Prisoner's Dilemma
A game in which pursuing dominant strategies results in noncooperation that leaves everyone worse off.
Public Franchise
A government designation that a firm is the only legal provider of a good or service.
Copyright
A government-granted exclusive right to produce and sell a creation.
Cartel
A group of firms that collude by agreeing to restrict output to increase prices and profits.
Oligopoly
A market structure in which a small number of interdependent firms compete.
Monopolistic Competition
A market structure in which barriers to entry are low and many firms compete by selling similar, but not identical, products.
Vertical Merger
A merger between firms at different stages of production of a good.
Horizontal Merger
A merger between firms in the same industry.
Two-Part Tariff
A situation in which consumers pay one price (or tariff) for the right to buy as much of a related good as they want at a second price.
Nash Equilibrium
A situation in which each firm chooses the best strategy, given the strategies chosen by other firms.
Natural Monopoly
A situation in which economics of scale are so large that one firm can supply the entire market at a lower average total cost than can two or more firms.
Network Externalities
A situation in which the usefulness of a product increases with the number of consumers who use it.
Dominant Strategy
A strategy that is the best for a firm, no matter what strategies other firms use.
Payoff Matrix
A table that shows the payoffs that each firm earns from every combination of strategies by the firms.
Economies of scale exist when a firm's_____average costs fall as it_____output.
A) short-run; increases B) short-run; decreases C) long-run; increases D) long-run; decreases
Business Strategy
Actions taken by a firm to achieve a goal, such as maximizing profits.
Marketing
All the activities necessary for a firm to sell a product to a consumer.
Collusion
An agreement among firms to charge the same price or otherwise not to compete.
Cooperative Equilibrium
An equilibrium in a game in which players cooperate to increase their mutual payoff.
Noncooperative Equilibrium
An equilibrium in a game in which players do not cooperate but pursue their own self-interest.
A buyer or seller that is unable to affect the market price is called? A) a price maker B) a price taker C) an independent producer D) a monopoly
B
A monopolistically competitive firm that earns an accounting profit in the short run: A) could earn an economic profit or break even, but could not suffer an economic loss in the short run B) could earn an economic profit, break even or suffer an economic loss in the short run C) must also earn an economic profit in the short run D) does not earn enough to earn an economic profit in the short run
B
A patent typically gives the holder exclusive rights to a product for a period of A) 10 years. B) 20 years. C) 30 years. D) 40 years.
B
A perfectly competitive firm has to charge the same price as every other firm in the market. Therefore, the firm: A) is not able to make a profit in the short run. B) is a price taker C) faces a perfectly elastic supply curve D) faces a perfectly inelastic demand curve
B
An agreement among firms to charge the same price or to otherwise not compete is A) a payoff matrix. B) collusion. C) a dominant strategy. D) a Nash equilibrium.
B
Economies of scale help determine the extent of A) market failure in an industry. B) competition in an industry. C) product differentiation in an industry. D) product innovation in an industry.
B
For a perfectly competitive firm average revenue is equal to: A) marginal cost B) the market price C) average fixed cost D) total revenue
B
For what type of market structure is demand curve the same as marginal revenue? A) monopolistic competition B) perfect competition C) both monopolistic and perfect competition D) neither monopolistic nor perfect competition
B
How do you find the profit maximizing quantity for a monopolistically competitive firm? A) Ask Siri. B) For all firm types it is the same process. Go to the point where MR = MC. Then find the quantity on the x-axis below MR = MC. C) Ask the Google Assistant. D) Ask Alexa.
B
If a firm has the ability to affect the price of the good or service it sells, what is the relationship between its marginal revenue curve and its demand curve? A) The firm will have a marginal revenue curve that is above its demand curve. B) The firm will have a marginal revenue curve that is below its demand curve. C) The firm will have a marginal revenue curve that is the same as its demand curve. D) The firm will have an upward-sloping marginal revenue curve and a downward-sloping demand curve.
B
If firms in a perfectly competitive industry are earning positive profits, what would you expect to see in the long run? A) The market demand curve will shift to the left as firms exit the market, prices will rise, and profits will rise. B) The market supply curve will shift to the right as firms enter the market, prices will fall, and profits will fall. C) The market supply curve will shift to the left as firms exit the market, prices will rise, and profits will rise. D) The market demand curve will shift to the right as firms enter the market, prices will rise, and profits will rise.
B
In the broadest sense, game theory studies the decisions of firms in industries where the profits of each firm depend on A) the ability of a firm to set up barriers to entry. B) the firm's interactions with other firms. C) agreements among firms to charge the same price. D) the ability to achieve a dominant position in the industry.
B
In which of the following situations can a firm be considered a monopoly? A) when a firm is surrounded by other firms that produce close substitutes B) when a firm can ignore the actions of all other firms C) when a firm uses other firms' prices in order to price its products D) when barriers to entry are eliminated
B
The more cell phones in use, the more valuable they become to consumers. This is an example of A) what happens when a firm is granted a patent. B) network externalities. C) what happens when a firm has control of a key resource. D) natural monopoly.
B
To maximize profit a monopolist will produce where: A) average total cost is equal to average revenue B) marginal revenue is equal to marginal cost C) revenue per unit is maximized D) demand for the product is unit-elastic
B
Using a broad definition, a firm would have a monopoly if: A) it can make decisions regarding price and output without violating antitrust laws B) there is no other firm selling a substitute for its product close enough that its economic profits are competed away in the long run C) it produced a product that has no close complements D) it does not have to collude with any other producer to earn an economic profit
B
What are laws aimed at promoting competition among firms called? A) collusion B) antitrust laws C) laws of comparative advantage D) merger legislation
B
What is marginal cost? A) the cost per unit of output produced B) the increase in total cost resulting from producing one more unit of output C) the impact of additional output on total fixed cost D) the cost of production that is independent of the level of output produced
B
What is the dominant strategy of eBay auction participants? A) to place a bid well below the subjective value you place on the item B) to place a bid equal to the maximum value you place on the item C) to place a bid well above the subjective value you place on the item D) There is no dominant strategy on eBay auctions.
B
What trade-offs do consumers face when buying a product from a monopolistically competitive firm? A) Consumers pay a lower price but also have fewer choices. B) Consumers pay a price greater than marginal cost but also have choices more suited to their tastes. C) Consumers pay a higher price but are happy knowing that the industry is highly efficient. D) Consumers pay a price as low as the competitive price but have difficulty finding and buying the product.
B
When a firm's demand curve slopes downward and the firm decides to cut price, which of the following happens? A) It sells more units and receives higher revenue per unit. B) It sells more units but receives lower revenue per unit. C) It sells fewer units and receives lower revenue per unit. D) It sells fewer units but receives higher revenue per unit.
B
When a monopolistically competitive firm decreases price, good and bad things happen. Which of the following is considered a good thing for the firm? A) the price effect B) the output effect C) the revenue effect D) all of the above
B
Which of the following is the definition of business strategy? A) A business strategy refers to the rules that determine what actions are allowable. B) A business strategy refers to actions taken by firms to attain their objectives. C) A business strategy is a study of how people make decisions. D) A business strategy is an agreement among firms to charge the same price.
B
Which of the following terms best describes how the result of the forces of competition drives the market price to the minimum average cost of the typical firm? A) allocative efficiency B) productive efficiency C) decreasing-cost industry D) competitive markdown
B
Which of the terms below is defined as "Anything that keeps new firms from entering an industry in which firms are earning economic profits?" A)game theory B) barriers to entry C) oligopoly D) economies of scale
B
Why does a monopolistically competitive firm have a downward-sloping demand curve? A) because its customers only buy goods that are being discounted from their original prices B) because changing the price will affect the quantity sold C) because the firm is a price taker, like a wheat farmer D) because the firm's level of output produced depends on its cost structure
B
A group of firms that colludes by agreeing to restrict output to increase prices and profits is called A) a duopoly. B) an oligopoly. C) a cartel. D) a conglomerate.
C
A strategy that is the best for a firm, no matter what strategies other firms use is A) a payoff matrix. B) collusion. C) a dominant strategy. D) a Nash equilibrium.
C
Assume that firms in a perfectly competitive market are earning economic profits. Which of the following statements describes the change in market price and output as a result of the entry of new firms into this market? A) The short-run market supply curve shifts to the left, causing price to rise and total market output to decrease. B) The market demand curve shifts to the right, causing price to rise and market output to increase. C) The short-run market supply curve shifts to the right, causing price to fall and total market output to increase. D) The market demand curve shifts to the left, causing price to fall and market output to decrease.
C
At the profit-maximizing level of output for a perfectly competitive firm: A) price equals average revenue and marginal cost equals average variable cost B) marginal revenue equals marginal cost and average total cost equals average fixed cost C) price equals marginal cost D) average revenue equals average variable cost and price equals marginal cost
C
Economic loss refers to a situation in which a firm's total revenue is less than its total cost. To calculate the amount of a loss, which of the following costs should be included? A) explicit costs only B) implicit costs only C) both explicit costs and implicit costs D) fixed costs
C
Every game has these characteristics: A) winners, losers, and payoffs. B) rules, an intermediary, and payouts. C) rules, strategies, and payoffs. D) strategies and defeats.
C
Fill in the blanks. Suppliers have more bargaining power when____firms can supply the input and the input____specialized. A) many; is B) many; is not C) few; is D) few; is not
C
How do you find the profit maximizing quantity for a firm under monopoly? A) Use a trained canine to sniff out the profits. B) Stop at the nearest service station and ask. C) For all firm types it is the same process. Go to the point where MR = MC. Then find the quantity on the x-axis below MR = MC. D) Follow the instructions given to you from the back seat driver. E) It depends on whether you have Boardwalk by itself or Boardwalk and Park Place
C
How does the entry of new coffeehouses affect the profits of existing coffeehouses? A) Entry will increase the profits of existing coffeehouses by shifting the market demand curve for coffee to the right. B) Entry will increase the profits of existing coffeehouses by shifting each of their individual demand curves to the right. C) Entry will decrease the profits of existing coffeehouses by shifting each of their individual demand curves to the left and making the demand curves more elastic. D) Entry will not affect the profits of existing coffeehouses.
C
If firms in a monopolistically competitive industry are making profits in the short run A) some firms will ultimately exit the industry B) barriers to entry will be erected to keep out rivals C) new firms will enter the market D) they will resort to advertising wars to help sustain these profits
C
Is zero economic profit inevitable in the long run for a monopolistically competitive firm? A) Yes; there is nothing the firm can do to avoid zero economic profit in the long run. B) No; a firm could try to continue making a profit in the long run by producing a product identical to those of competing firms. C) No; a firm could try to continue making a profit in the long run by reducing production costs and improving its products. D) No; a firm could try to continue making a profit in the long run by simply offering goods that are cheaper to produce, even if they have less value than those offered by competing firms.
C
To maximize profit, which of the following should a firm attempt to do? A) maximize revenue B) minimize cost C) find the largest difference between total revenue and total cost D) all of the above
C
What is the name given to the situation where economies of scale are so large that one firm can supply the entire market at a lower average total cost than two or more firms? A) network externalities B) productive efficiency C) natural monopoly D) market power
C
What is the relationship between price, average revenue, and marginal revenue for a firm in a perfectly competitive market? A) Price is equal to average revenue and greater than marginal revenue. B) Price is greater than average revenue and equal to marginal revenue. C) Price is equal to both average revenue and marginal revenue. D) Price, average revenue, and marginal revenue usually all have different values.
C
What is the term given to a cost that has already been paid and cannot be recovered? A) unrecoverable cost B) variable cost C) sunk cost D) implicit cost
C
Which of the following are characteristics of monopolistic competition? A) high barriers to entry B) few firms compete C) firms sell similar, but not identical, products D) all of the above
C
Which of the following is true for a monopolist? A) Being the only seller in the market, the monopolist faces a downward sloping demand curve that lies below the marginal revenue curve B) Being the only seller in the market, the monopolist faces a perfectly elastic demand curve C) Being the only seller in the market, the monopolist faces the market demand curve D) Being the only seller in the market, the monopolist faces a perfectly inelastic demand curve
C
Which of the following measures is conceptually the same as price? A) marginal revenue B) total revenue C) average revenue D) none of the above
C
Which of the following terms best describes the additional revenue associated with selling an additional unit of output? A) price B) average revenue C) marginal revenue D) total revenue
C
Which of the following types of firms use the marginal revenue equals marginal cost approach to maximize profits? A) perfectly competitive firms B) monopolistically competitive firms C) both perfectly competitive and monopolistically competitive firms D) neither perfectly competitive nor monopolistically competitive firms
C
Which of the terms below is defined as "A market structure in which a small number of interdependent firms compete?" A) game theory B) barriers to entry C) oligopoly D) economies of scale
C
Police Discrimination
Charging different prices to different customers for the same product when the price differences are not due to differences in cost.
A supplier of an input is unlikely to have bargaining power if: A) it has a patent on the input B) the input supplied is specialized C) it is the sole supplier of the input D) many firms can supply the input
D
Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly. As a result of this change A) Price will be higher, output will be lower and the deadweight loss will be eliminated B) Price will be higher, consumer surplus will be greater and output will be greater C) Consumer surplus will be smaller and producer surplus will be greater. There will be a net increase in economic surplus D) Consumer surplus will be smaller, producer surplus will be greater and there will be a reduction in economic efficiency
D
If a perfectly competitive firm achieves productive efficiency then: A) the price of the good it sells is equal to the benefit consumers receive from consuming the last unit of the good sold. B) it will raise its price in order to earn an economic profit C) it is producing at minimum efficient scale. D) It is producing the good it sells at the lowest possible cost.
D
If an individual firm in a perfectly competitive market increases its price, the firm will experience A) higher revenue. B) lower average total cost. C) increased sales. D) none of the above
D
If price equals marginal cost at the output produced by a perfectly competitive firm, and the firm is earning an economic profit then: A) average total cost is at a minimum B) total revenue equals total cost C) marginal revenue is less than price D) price exceeds average total cost
D
In the United States, government policies with respect to monopolies and collusion are embodied in A) common law, which the U.S. adopted from English law B) the Supreme Court C) the U.S. Constitution D) antitrust laws
D
Match the following definition with one of the terms below: "A situation where each firm chooses the best strategy, given the strategies chosen by other firms." A) payoff matrix B) collusion C) dominant strategy D) Nash equilibrium
D
Monopolistic competition is a market structure in which: A) firms produce and sell products for which there are no close substitutes B) firms cannot influence the market price C) the demand curve for a typical firm is horizontal D) barriers to entry are low
D
Network externalities: A) can only exist when there are economies of scale B) prevent the dominance of a market by one firm C) are created when celebrity endorsements of products lead to a surge in the demand for those products D) exist when the usefulness of a product increases with the number of consumers who use it
D
Ted's Pancake Kitchen suffers a short-run loss. When should Ted decide to shut down rather than continue to produce? A) if his Kitchen's revenue is less than its explicit costs B) if his Kitchen's revenue is less than its fixed costs C) if his Kitchen's revenue is less than its total costs D) if his Kitchen's revenue is less than its variable costs
D
The fraction of an industry's sales that are accounted for by the largest firms is called: A) the four-firm oligopoly ratio B) the four-firm competition ratio C) the four-firm industry ratio D) the four-firm concentration ratio
D
To be a natural monopoly a firm must: A) control a key resource input B) be very large relative to the total market C) have significant network externalities D) have economies of scale that are so large that it can supply the entire market at a lower cost than two or more firms
D
What is the definition of market power? A) Market power is the same as inefficiency as measured by the amount of deadweight loss from a monopoly. B) Market power is the ability of a firm to eliminate competition. C) Market power is the ability of one firm to control other firms in the market. D) Market power is the ability of a firm to charge a price greater than marginal cost.
D
Which of the following are characteristics of a perfectly competitive industry? A) firms are unable to control the prices of the products they sell B) firms are unable to earn an economic profit in the long run C) firms sell identical products D) all of the above
D
Which of the following are effects of monopoly? A) Monopoly causes a reduction in consumer surplus. B) Monopoly causes an increase in producer surplus. C) Monopoly causes a reduction in economic efficiency. D) all of the above
D
Which of the following is a barrier to entry? A) economies of scale B) ownership of a key input C) patents D) all of the above
D
Which of the following statements regarding natural monopoly is true? A) One firm can supply twice as much output as two smaller firms at the same average total cost. B) One firm can supply the entire market at a lower fixed cost than two or more firms. C) The source of monopoly power is the control of a key natural resource. D) Natural monopoly is most likely to occur in markets where fixed costs are very large relative to variable costs.
D
Which of the following types of firms use the marginal revenue equals marginal cost approach to maximize profits? A) perfectly competitive firms B) monopolistically competitive firms C) monopolies D) all of the above
D
Compensating Differentials
Higher wages that compensate workers for unpleasant aspects of a job.
Transactions Costs
The costs in time and other resources that parties incur in the process of agreeing to and carrying out an exchange of goods or services.
Factors of Production
Labor, capital, natural resources, and other inputs used to produce goods and services.
Antitrust Laws
Laws aimed at eliminating collusion and promoting competition among firms.
Derived Demand
The demand for a factor of production; it depends on the demand for the good the factor produces.
Fill in the blanks with the word and phrase that best describe the history of OPEC: Sustaining high prices has been_______because members often________their output quotas. A) easy; produce less than B) easy; produce more than C) difficult; produce less than D) difficult; produce more than
Not A or C
Which term best describes the minimum amount that a firm needs to earn on a $100,000 investment to be willing to remain in a perfectly competitive industry in the long run? A) explicit cost B) opportunity cost C) economic profit D) economic loss
Not A or C
If increased competition leads to higher costs and higher prices in an industry, how should that market be characterized? A) as a perfectly competitive market B) as a monopolistically competitive market C) as an oligopoly D) as a natural monopoly
Not B or C
Which type of efficiency is achieved by a monopolistically competitive firm in the long run? A) allocative efficiency B) productive efficiency C) both allocative and productive efficiency D) neither allocative nor productive efficiency
Not B or C
Which firms face a downward-sloping demand curve and a downward-sloping marginal revenue curve? A) all price takers B) all price makers C) monopolies only D) monopolistically competitive firms only
Not C or A
In which of the following market structures is the firm's demand curve the same as the market demand for the product? A) perfect competition B) monopolistic competition C) monopoly D) all of the above
Not D or
Economic Discrimination
Paying a person a lower wage or excluding a person from an occupation on the basis of an irrelevant characteristics such as race or gender.
Patent
The exclusive right to a product for a period of 20 years from the date the product is invented.
Patent (Second Definition)
The exclusive right to a product for a period of 20 years from the date the product is invented.
Market Power
The ability of a firm to charge a price greater than marginal cost.
Human Capital
The accumulated training and skills that workers possess.
Brand Management
The actions of a firm intended to maintain the differentiation of a product over time.
Marginal Product of Labor
The additional output a firm produces as a result of hiring one more worker.
Marginal Revenue Product of Labor
The change in a firm's revenue as a result of hiring one more worker.
Economies of Sale
The situation when a firm's long-run average costs fall as it increases output.
Game Theory
The study of how people make decisions in situations in which attaining their goals depends on their interactions with others in economics, the study of the decisions of firms in industries where the profits of each firm depend on its interactions with other firms.
