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5 Written questions

5 Matching questions

  1. Unbalanced Oligopoly
  2. Mutual Interdependence
  3. Collusion
  4. Joint Venture
  5. Merger
  1. a A combination of two or more companies into one company.
  2. b An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition.
  3. c 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.
  4. d 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
  5. e An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them.

5 Multiple choice questions

  1. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company.
  2. The dominate firm in the oligopoly, whose pricing decisions are tacitly followed. The Godfather is the price leader.
  3. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
  4. A merger between firms who have a buyer/supplier relationship. Example: BFGoodrich merging with rubber plantations.
  5. An oligopoly in which the sales of the leading (top four) firms are relatively balanced among them.

5 True/False questions

  1. 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


  2. Prisoners' DilemmaA particular "game" between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial to do so.


  3. 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.


  4. 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.


  5. Price LeadershipA table that shows the payoffs that each firm earns from every combination of strategies by the firms.


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