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5 Written questions

5 Matching questions

  1. Price Discrimination
  2. Collusion
  3. Mutual Interdependence
  4. Price Leadership
  5. Unbalanced Oligopoly
  1. a An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them.
  2. b A firm whose price decisions are tacitly accepted and followed by others in the industry.
  3. c 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
  4. d Offering specific goods or services at different prices to different segments of the market. Example: First class versus business class on airlines.
  5. e An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition.

5 Multiple choice questions

  1. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
  2. A group of firms that collude to limit competition in a market by negotiating and accepting agreed-upon prices and market shares.
  3. A particular "game" between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial to do so.
  4. The dominate firm in the oligopoly, whose pricing decisions are tacitly followed. The Godfather is the price leader.
  5. Variations on one good so that a firm can increase market share.

5 True/False questions

  1. Game TheoryThe 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.


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


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


  4. Tit-for-Tat StrategyA merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears


  5. Joint VentureA 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.