Chapter 17

An oligopoly is a market in which

there are only a few sellers, each offering a product similar or identical to the products offered by other firms in the market.

This table shows the demand schedule for a particular product. Suppose the market for this product is served by two duopolists who have formed a cartel and are colluding to set the price and quantity in this market. If the marginal cost to produce this product is $2, what price will the cartel set in this market?

$6

table shows the demand schedule for a particular product. Suppose the market for this product is served by two firm who collude and form a cartel. What price will the cartel charge in this market if the marginal cost of production is $0?

$8

This table shows a game played between two players, A and B. The payoffs are given in the table as (Payoff to A, Payoff to B). Which of the following statements is true regarding this game?

B has a dominant strategy, but A does not have a dominant strategy.

Refer to Table 16-14. This table shows a game played between two firms, A and B. The firms must choose how much output to produce. The profit for each firm is shown in the table as (Profit for A, Profit for B). Which of the following outcomes represent the Nash equilibrium in this game?

Both a and b are correct.

Once a cartel is formed, the market is in effect served by

a monopoly.

Refer to Table 16-13. This table shows a game played between two players, A and B. The payoffs in the table are shown as (Payoff to A, Payoff to B). Which of the following outcomes represents a Nash equilibrium in the game?

Middle-Center

This table shows a game played between two players, A and B. The payoffs in the table are shown as (Payoff to A, Payoff to B). Which of the following outcomes represents a Nash equilibrium in the game?

Middle-Right

Refer to Table 16-12. This table shows a game played between two players, A and B. The payoffs in the table are shown as (Payoff to A, Payoff to B). Which of the following statements regarding this game is true?

Neither player has a dominant strategy.

In which of the following markets is economic profit driven to zero in the long run?

Perfect competition

This table shows a game played between two firms, A and B. Each firm must decide how much output to produce. The profits for each firm are shown in the table as (Profit for A, Profit for B). The Nash equilibrium in this game is

Q=6 for A and Q=6 for B.

This table shows a game played between two players, A and B. The payoffs in the table are shown as (Payoff to A, Payoff to B). Which of the following statements about this game is true?

Up is a dominant strategy for A and Right is a dominant strategy for B.

Refer to Table 16-11. This table shows a game played between two players, A and B. The payoffs in the table are shown as (Payoff to A, Payoff to B). Which outcome is the Nash equilibrium in this game?

Up-Right

A special kind of imperfectly competitive market that has only two firms is called

a duopoly.

When strategic interactions are important to pricing and production decisions, a typical firm will

consider how competing firms might respond to its actions

The prisoners' dilemma provides insights into the

difficulty of maintaining cooperation.

One characteristic of an oligopoly market structure is:

firms in the industry have some degree of market power.

In the prisoners dilemma game with Bonnie and Clyde as the players, the likely outcome is one

in which both Bonnie and Clyde confess

A dominant strategy is one that

is best for the player, regardless of what strategies other players follow

A dominant strategy is one that

is best for the player, regardless of what strategy other players follow.

Monopolistically competitive firms are typically characterized by

many firms selling products that are similar, but not identical.

This table shows a game played between two firms, A and B. In this game each firm must decide how much output to produce. The profit for each firm is given in the table as (Profit for A, Profit for B). In this game

neither player has a dominant strategy.

In the prisoners' dilemma,

when each player chooses his dominant strategy the players reach a Nash equilibrium.