← C12-Oligopoly Test
5 Written Questions
5 Matching Questions
- Kinked Demand Curve
- Brand Multiplication
- Prisoners' Dilemma
- Joint Venture
- Conglomerate Merger
- a A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company.
- b Variations on one good so that a firm can increase market share.
- c A 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.
- d A particular "game" between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial to do so.
- e The demand curve faced by an oligopolist. The curve is more elastic when the firm raises its price than when it lowers its price.
5 Multiple Choice Questions
- A combination of two or more companies into one company.
- An oligopoly in which the sales of the leading (top four) firms are relatively balanced among them.
- The situation that exists when two or more groups need each other and must depend on each other to accomplish a goal that is important to each of them
- An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition.
- A firm whose price decisions are tacitly accepted and followed by others in the industry.
5 True/False Questions
Unbalanced Oligopoly → An oligopoly in which the sales of the leading (top four) firms are relatively balanced among them.
Tit-for-Tat Strategy → A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Godfather → The dominate firm in the oligopoly, whose pricing decisions are tacitly followed. The Godfather is the price leader.
Horizontal Merger → A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Payoff Matrix → A table that shows the payoffs that each firm earns from every combination of strategies by the firms.