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Exam 17: Oligopoly

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Question 21

True/False

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One way that public policy encourages cooperation among oligopolists is through antitrust law.

A) True
B) False

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Question 22

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The practice of selling a product to retailers and requiring the retailers to charge a specific price for the product is called

A) fixed retail pricing.
B) resale price maintenance.
C) cost plus pricing.
D) unfair trade.

E) A) and B)
F) None of the above

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Question 23

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Table 17-14 -Refer to Table 17-14.If player A chooses his/her best strategy,player B should

An oligopolist will increase production if the output effect is

For a firm,strategic interactions with other firms in the market become more important as the number of firms in the market becomes larger.

A dominant strategy is a strategy that is best for a player in a game regardless of the strategies chosen by the other players.

If a certain market were a monopoly,then the monopolist would maximize its profit by producing 1,000 units of output.If,instead,that market were a duopoly,then which of the following outcomes would be most likely if the duopolists successfully collude?

Explain the practice of tying and discuss why it is controversial.

A tit-for-tat strategy,in a repeated game,is one in which a player starts by cooperating and then does whatever the other player did last time.

A lack of cooperation by oligopolists trying to maintain monopoly profits

Scenario 17-1.Assume that the countries of Irun and Urun are the only two producers of crude oil.Further assume that both countries have entered into an agreement to maintain certain production levels in order to maximize profits.In the world market for oil,the demand curve is downward sloping. -Refer to Scenario 17-1.As long as the combined level of output is less than the Nash equilibrium level,both Irun and Urun have the individual incentive to

Table 17-9 $\begin{array} { | r | r | r | } \hline \text { Price } & \text { Quantity } & \begin{array} { c } \text { Total } \\\text { Revenues }\end{array} \\\hline 70 & 0 & 0 \\\hline 65 & 100 & 6500 \\\hline 60 & 200 & 12000 \\\hline 55 & 300 & 16500 \\\hline 50 & 400 & 20000 \\\hline 45 & 500 & 22500 \\\hline 40 & 600 & 24000 \\\hline 35 & 700 & 24500 \\\hline 30 & 800 & 24000 \\\hline 25 & 900 & 22500 \\\hline 20 & 1000 & 20000 \\\hline 15 & 1100 & 16500 \\\hline 10 & 1200 & 12000 \\\hline 5 & 1300 & 6500 \\\hline 0 & 1400 & 0 \\\hline\end{array}$ -Refer to Table 17-9.If Acme and Pinnacle operate to jointly maximize profits,then what quantity is sold?

Which of the following statements is correct?

In the game in which two oil companies own adjacent oil fields,the companies will not use the oil efficiently because

Which of the following is correct? When oligopolies collude

All cartels are inherently reliant on

Describe the source of tension between cooperation and self-interest in a market characterized by oligopoly.Use an example of an actual cartel arrangement to demonstrate why this tension creates instability in cartels.

Table 17-14 -Refer to Table 17-14.Which outcome is the Nash equilibrium in this game?

The essence of an oligopolistic market is that there are only a few sellers.

Game theory is important for the understanding of