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5 Written Questions

5 Matching Questions

  1. Unbalanced Oligopoly
  2. Horizontal Merger
  3. Vertical Merger
  4. Balanced Oligopoly
  5. Cartel
  1. a An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them.
  2. b A group of firms that collude to limit competition in a market by negotiating and accepting agreed-upon prices and market shares.
  3. c A merger between firms who have a buyer/supplier relationship. Example: BFGoodrich merging with rubber plantations.
  4. d An oligopoly in which the sales of the leading (top four) firms are relatively balanced among them.
  5. e A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears

5 Multiple Choice Questions

  1. Variations on one good so that a firm can increase market share.
  2. 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.
  3. 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.
  4. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition.
  5. A table that shows the payoffs that each firm earns from every combination of strategies by the firms.

5 True/False Questions

  1. Nash EquilibriumAny combination of strategies in which each players' strategy is his or her best choice, given the other players' strategies.


  2. Concentration RatioA measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market


  3. Tit-for-Tat StrategyA pricing strategy in game theory in which firms continue to match each others' pricing strategy.


  4. GodfatherThe dominate firm in the oligopoly, whose pricing decisions are tacitly followed. The Godfather is the price leader.


  5. Mutual InterdependenceThe 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


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