ECON 2301 DSM Ch 8 part 1

Another measure of industry concentration is the:

Herfindahl-Hirschman Index

A situation where each firm chooses the best strategy, given the strategies chosen by other firms is known as:

nash equilibrium

Prisoner's dilemma is an example of:

non-cooperative equilibrium

In 2002, the cheese manufacturing industry in the United States had a four-firm concentration ratio of 34 percent. This implies that the cheese manufacturing industry is:

not an oligopoly market

A game where pursuing dominant strategies results in noncooperation that leaves everyone worse off is called a:

prisoner's dilemma

in the broadest sense, game theory studies the decisions of firms in industries where the profits of each firm depend on:

the firm's interactions with other firms

Suppose that Walmart and Target are selling Sony flat-screen computer monitors for a price of $150 or $200 each. Based on the information in the payoff matrix, does a Nash equilibrium exist?

yes

Equilibrium in a game in which players cooperate to increase their mutual payoff is called a:

cooperative equilibrium

An oligopoly is a market structure with:

high barriers to entry

Economists believe that the oligopoly market is a market with a four-firm concentration ratio that is greater than or equal to:

40%

Which of the following is the definition of business strategy?

Actions taken by firms to attain their objectives

How does the prisoner's dilemma compare to the outcome of a repeated game?

In a repeated game, two firms are more likely to charge the high price and receive high profits

Which of the following terms is defined as a market structure in which a small number of interdependent firms compete?

Oligopoly

A Nash equilibrium is where each firm chooses the best strategy:

given the strategies chosen by other firms

In a repeated game, the losses associated with not cooperating are __________ the losses of cooperating.

greater than

Price leadership is a form of __________ in which one firm in an oligopoly announces a price change and the other firms in the industry match the change.

implicit collusion

If the individual countries that are members of OPEC exceed their production quotas, the amount of oil supplied to the world __________, and the price of oil __________.

increases, decreases

When firms agree to act as a monopoly and set prices they are called __________.

a cartel

A strategy that is the best for a firm, no matter what strategies other firms use is known as:

a dominant strategy

Suppose that Walmart and Target are selling Sony flat-screen computer monitors for a price of $150 or $200 each. Based on the information in the payoff matrix, what is the dominant strategy?

both firms will charge 150

A group of firms that colludes by agreement to restrict output to increase prices and profits is called a(n) __________.

cartel

An agreement among firms to charge the same price or to otherwise not compete is __________.

collusion

A cooperative equilibrium is equilibrium in which players __________ to increase their mutual payoffs, while a noncooperative equilibrium is an equilibrium in which players __________.

cooperate, do not cooperate

In 2007, the U.S. government discovered a long-run formal conspiracy to fix the price of marine hose. This type of activity is known as:

explicit collusion

The four-firm concentration ratio is the percentage of sales accounted for by the largest:

four firms in the industry