5 Written questions
5 Matching questions
- Game Theory
- Mutual Interdependence
- Concentration Ratio
- Prisoners' Dilemma
- a 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
- b The dominate firm in the oligopoly, whose pricing decisions are tacitly followed. The Godfather is the price leader.
- c A particular "game" between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial to do so.
- d A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
- e 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.
5 Multiple choice questions
- An oligopoly in which the sales of the leading (top four) firms are relatively balanced among them.
- 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.
- A merger between firms who have a buyer/supplier relationship. Example: BFGoodrich merging with rubber plantations.
- A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company.
- A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
5 True/False questions
Nash Equilibrium → A table that shows the payoffs that each firm earns from every combination of strategies by the firms.
Tit-for-Tat Strategy → A pricing strategy in game theory in which firms continue to match each others' pricing strategy.
Brand Multiplication → Offering specific goods or services at different prices to different segments of the market. Example: First class versus business class on airlines.
Price Discrimination → Variations on one good so that a firm can increase market share.
Payoff Matrix → The dominate firm in the oligopoly, whose pricing decisions are tacitly followed. The Godfather is the price leader.