econ test 3
one of the problems with the _____ ratio as a tool to measure market power is that many small producers can band together and impact the quantity supplied in the market
concentration
the ___ ratio is the proportion of total industry output produced by the largest firms
concentration
an imperfectly competitive industry subject to potential entry if prices or profits increase is known as a
contestable market
______of a key input is a barrier to entry into an industry
control
which of the following is a barrier to entry into an industry
control over a key input
when firms in an oligopoly ________ production decisions, their profits will be greater than if they did not
coordinate
in an oligopolistic market, the two types of retaliation include
cutting prices and improving marketing efforts
firms in an oligopoly may produce
either a homogeneous product or a differentiated product
price ____ means to explicitly cooperate with rivals to set a market price
fixing
the study of decision making in situations where strategic interaction between rivals occurs is
game theory
the study of how one firm reacts to the actions taken by another firm or individual when implementing a price strategy is called
game theory
in the kinked-demand curve model, we expect rival oligopolists to not match any price
increases
the benefits to oligopolists from coordinating their production decisions are:
it increases profits and maintains prices at profit-maximizing levels
an oligopolist can increase sales by _____ price
lowering
a group of firms with an explicit, formal agreement to fix prices and output shares in a particular market is best known as a
cartel
oligopolistic firms do which of the following when they change their pricing strategies?
affect market share and influence the market share of rival firms
if a particular firm can persuade their distributors not to sell any other firms competitive products, then that firm has created a _______ in the form of distribution control
barrier to entry
in the kinked-demand curve model, we expect rival oligopolists to ______ any price reductions
match
in order to achieve greater economies of scale and market share, firms in the same industry may consider the ______of two or more companies together
merging
barriers to entry into an oligopoly most resemble those of a:
monopoly
one of the dominant firms in an oligopoly is
oligopolist
an __________ is present when the largest four firms in an industry control ore than 60% or more of the market
oligopoly
the barrier to entry that involves giving inventors the exclusive right to market and sell their creation is:
patents
barriers to entry exist for monopolies as well as oligopolies in the form of
patents, mergers and acquisitions, distribution control, government regulations
market share is the ____ of total market output produced by a single firm
percentage
temporary price reductions designed to alter market shares or drive out competition is known as
predatory pricing
a type of implicit understanding used by oligopolists to coordinate prices without entering in explicit agreements is known as
price leadership
when members of an oligopoly react to price changes by a lead firm, the _______ model is most applicable
price leadership
a situation where firms explicitly agree to charge a certain price, divide markets, or restrict competition is called
price-fixing
when members of an oligopoly agree to set prices to maximize profits this applies mainly to the _______ model
price-fixing
when members of an oligopoly maintain output and price at profit-maximizing levels and each oligopolistic firm is content with its market share, this is best represented by the ______ model
price-fixing
oligopolists tend to avoid _____ competition and instead pursue ______ competition
price; nonprice
by controlling _____ through coordination of their production, oligopolists may be able to ______ profits
prices; increase
If RC cola conducts a marketing campaign to make their soda appealing to youth, this is an example of
product differentiation
competition from multinational corporations ______ the market power of monopolies in the US
reduce
in an oligopolistic market, the two types of _____ include improving marketing efforts and cutting prices
retaliation
what are determinants of market power?
size of each firm, barriers to entry, number of producers, availability of substitute goods
when quantifying the risk of a rival's actions, you need two pieces of information:
the probability of the payoff's occurrence and the size of each payoff
firms in oligopolistic industries have market power because
they are few in number
true or false: oligopolistic firms take into account the reactions of others
true