Final Exam - Econ 40
Terms in this set (12)
An "oligopoly" arises when:
a few large firms dominate
Which of the following is a
characteristic of an oligopoly?
the firms in the industry are
Which of the following is not a characteristic of an oligopoly?
firms necessarily earn zero
economic profits in the long-run.
In economics, the term "collusion" refers to a situation where:
firms act together to reduce output and keep prices high.
A group of producers colluding with
one another to produce at the
monopoly output and sell at the monopoly
price is called:
Carmen and Michael are the only two editors of
mystery novels in Bookville. If Carmen and Michael form a cartel and successfully collude to earn more
profits, they will:
each reduce the number of books published and raise prices.
A "kinked demand curve" arises when:
competing oligopoly firms match price decreases but
not price increases.
Quality Airline is in an oligopolistic market.
According to the kinked demand curve model, if
Quality Airline raises its prices to increase profits, its competitors will:
do nothing - they will maintain their current prices and level of output.
Game theory is a branch of
mathematics used to analyze
situations in which:
players must make decisions and then receive payoffs based on the decisions the other players makers make
In economics, game theory is used to explore the behavioral aspects of the _________ that is
typical of oligopolistic markets.
In game theory, the
"prisoner's dilemma" is a scenario
involving two players in which:
the rewards from cooperation are larger than the rewards from
Suppose that Rich and Sheri each own the two
largest helicopter tour companies at the
Grand Canyon. If each uses a pricing strategy
that leads to a "prisoner's dilemma," what would be the result?
tourists would end up receiving good deals for helicopter tours.
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