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