ECO 2023 Test 3 Chapter 10

Which of the following characteristics do monopolistically competitive markets and perfectly competitive markets NOT share?

differentiated products

Which of the following characteristics does monopolistic competition NOT have in common with the model of perfect competition?

Products of individual firms are different.

If Rosco's Tacos competes with eight other fast-food restaurants in the same neighborhood, and two of those rival firms exit the market, then:

Rosco's demand curve will shift to the right.

Which of the following games does NOT describe a Prisoner's Dilemma outcome?

a chicken game where one player backs down while the other player does not

A Nash equilibrium:

assumes that each player chooses his or her best strategy.

The industrial structure of cartels is an example of a(n):

cooperative game.

If firms in a monopolistically competitive industry are experiencing economic losses in the short run, some firms will ________ the industry, ______________ the demand to each firm in the market until each firm earns a normal profit.

exit; increasing

Which of the following products would be the MOST differentiated?

garments sold to a retail customer

Nintendo lowers the price of its product by $10, and Sony responds by lowering the price of its own product by $10 forever. This is an example of what type of game strategy?

grim trigger

If a cartel member is considering cheating in order to earn profits, it should:

increase the quantity it sells at the quota price.

Which of the following actions can help increase the stability of a cartel?

increasing government protection

In oligopoly, all the firms:

take their competitors into account when they make pricing decisions.

The notion that individuals and firms are compelled to retaliate or punish others for engaging in noncooperative actions, but leaving the door open for future reconciliation, is BEST referred to as a(n):

tit-for-tat strategy.

Nintendo lowers the price of its product by $10, and Sony waits to see whether Nintendo's price cut was a temporary mistake. This is an example of what type of game strategy?

trembling hand trigger

Before deciding on a pricing strategy, Worldwide Widgets consults with its market intelligence team to understand what discounts the Gargantuan Gizmo Company is offering. The model that BEST fits this industry is:

oligopoly.