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C12-Oligopoly Test

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5 Written Questions

5 Matching Questions

  1. Cartel
  2. Brand Multiplication
  3. Conglomerate Merger
  4. Mutual Interdependence
  5. Collusion
  1. a Variations on one good so that a firm can increase market share.
  2. b 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
  3. c A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company.
  4. d An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition.
  5. e A group of firms that collude to limit competition in a market by negotiating and accepting agreed-upon prices and market shares.

5 Multiple Choice Questions

  1. A pricing strategy in game theory in which firms continue to match each others' pricing strategy.
  2. A merger between firms who have a buyer/supplier relationship. Example: BFGoodrich merging with rubber plantations.
  3. A firm whose price decisions are tacitly accepted and followed by others in the industry.
  4. 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.
  5. A particular "game" between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial to do so.

5 True/False Questions

  1. Balanced OligopolyAn oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them.

          

  2. Kinked Demand CurveThe demand curve faced by an oligopolist. The curve is more elastic when the firm raises its price than when it lowers its price.

          

  3. MergerA group of firms that collude to limit competition in a market by negotiating and accepting agreed-upon prices and market shares.

          

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

          

  5. 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

          

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