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5 Written Questions

5 Matching Questions

  1. Price Leadership
  2. Balanced Oligopoly
  3. Collusion
  4. Game Theory
  5. Kinked Demand Curve
  1. a The theory that studies decision making in situations in which one player anticipates the reactions of other players to its own actions. Firms are mutually interdendent.
  2. b The demand curve faced by an oligopolist. The curve is more elastic when the firm raises its price than when it lowers its price.
  3. c An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition.
  4. d A firm whose price decisions are tacitly accepted and followed by others in the industry.
  5. e An oligopoly in which the sales of the leading (top four) firms are relatively balanced among them.

5 Multiple Choice Questions

  1. Any combination of strategies in which each players' strategy is his or her best choice, given the other players' strategies.
  2. A merger between firms who have a buyer/supplier relationship. Example: BFGoodrich merging with rubber plantations.
  3. A combination of two or more companies into one company.
  4. A pricing strategy in game theory in which firms continue to match each others' pricing strategy.
  5. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market

5 True/False Questions

  1. Mutual InterdependenceA business arrangement in which two or more firms undertake a specific economic activity together. Once the activity is over, the firms go their own way.

          

  2. Prisoners' DilemmaA firm whose price decisions are tacitly accepted and followed by others in the industry.

          

  3. Payoff MatrixA table that shows the payoffs that each firm earns from every combination of strategies by the firms.

          

  4. Brand MultiplicationOffering specific goods or services at different prices to different segments of the market. Example: First class versus business class on airlines.

          

  5. GodfatherThe theory that studies decision making in situations in which one player anticipates the reactions of other players to its own actions. Firms are mutually interdendent.

          

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