Micro ch 17 shsu – Flashcards
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A market consists of three firms of similar sizes, each selling a product that is similar but not identical. Which type of market is this?
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Oligopoly
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Which of the following statements about oligopolies is NOT correct?
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Unlike monopolies and monopolistic ally competitive markets, oligopolies prices do not exceed their marginal revenues.
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In the language of game theory, a situation in which each person must consider how others might respond to his or her own actions is called a
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Strategic situation
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In general, game theory is the study of
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How people behave in strategic situations
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Game theory is important for understandings which of the following market types?
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Oligopolistic but not perfectly competitive markets
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A distinguishing feature of an oligopolistic industry is the tension between
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Cooperation and self interest
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The simplest type of oligopoly is
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Duopoly
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An agreement among firms in a market about quantities to produce or prices to charge is called
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Collusion
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An agreement between two duopolists to functions as a monopolist usually breaks down because
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Each duopolist wants a larger share of the market in order to capture more profit.
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As the number of firms in an oligopoly increases, the
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Price approaches marginal costs, and the quantity approaches the socially efficient level.
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A situation in which firms choose their best strategy given the strategies chosen by the other firms in the market is called
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A Nash equilibrium
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Which of these situations produces the largest profits for for oligopolists?
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The firms reach the monopoly outcome.
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When firms have agreements among themselves on the quantity to produce and the price at which to sell output, we refer to their form of organization as a
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Cartel
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The equilibrium quantity in markets characterized by oligopoly is
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Higher than in monopoly markets and lower than in perfectly competitive markets.
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The equilibrium price in a market characterized by oligopoly is
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Lower than in monopoly markets and higher than in perfectly competitive markets.
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A group of firms that act in unison to maximize collective profits is called a
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Cartel
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Once a cartel is formed, the market is in effect served by
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A monopoly
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An oligopolist will increase production if the output effect is
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Greater than the price effect.
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Oligopolies can end up looking like competitive markets if the number of firms is
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Larger and they do not cooperate
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The theory of oligopoly provides another reason that free trade can benefit all countries because:
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As the number of firms within a given market increases, the price of the good decreases.
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Game theory is necessary for understanding
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Oligopoly, but it is not necessary for understanding monopoly or competition.
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The prisoners' Selena provides insights into the
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Difficulty of maintaining cooperation.
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The likely outcome of the standard prisoners' dilemma game is that
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Both prinsoners confress
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In a game, a dominant strategy is
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The best strategy for a player to follow, regardless of the strategies followed by other players
