Micro ch 18
The concepts of mutual interdependence and game theory illustrates the fact that firms competing in oligopoly
Consider the actions of the rivals before changing the price of their product
When oligopolies seek to operate as a single-price monopoly, the firms produce at a point where
MR=MC
Consider travel trains and the trolley-the only 2 firms that provide tourist transportation. These 2 firms know that
Their actions affect each others' profits
a cartel is
a group of firms acting together to raise price, decrease output and increase economic profit
Duopoly is
a two-firm oligopoly
A firm faces a small number of competitors. This firm is competing in
an oligopoly
In the prisoner's dilemma, each player is _______ regardless of the other players actions
better off confessing
The tool that economists use to analyze the mutual interdependence of oligopolies is
game theory
When a city licenses only 3 taxi firms to serve the market, the city has created a
legal oligopoly
A cartel is most likely to occur in
oligopoly as firms act together to raise prices and increase profits
If an oligopolistic game is repeatedly played, which of the following can occur?
players can learn ways to cooperate and earn an economic profit
All games have which features
rules, strategies and payoffs
In an oligopoly, output is
somewhere between the output in monopoly and that in perfect competition outcomes
A nash equilibrium is defined as
each player taking the best possible action given the action of the other player
When duopoly games are repeated and a "tit for tat" strategy is used
the monopoly outcome is more likely to be reached than when the game is played once