Economics

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Economics

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Period *

Period 1

Period 2

Period 3

Period 4

Period 5

Oligopolists *

1 point

a. are price takers.

b. rarely advertise.

c. must take rivals’ reactions into account.

d. offer homogeneous products.

The analysis of oligopolistic behavior is difficult because *

1 point

a. there are few real-world examples of oligopolies for economists to study.

b. oligopolists make decisions independently of each other.

c. firms in oligopolistic industries react to each other’s behavior in many ways.

d. economists have paid little attention to the topic in recent years and so have not yet

The game theory approach to the analysis of oligopoly assumes that oligopolists *

1 point

a. ignore their interdependence.

b. behave with little forethought.

c. do not take their businesses seriously.

d. act strategically.

A situation in which both players can adopt moves such that each player’s move is its most profitable response to the move of the other is the *

1 point

a. prisoner’s dilemma.

b. Nash equilibrium.

c. maximin criterion.

d. tacit collusion.

The figure below shows the payoff matrix for two producers of bottled water, Blue Spring and Purple Rain. The Nash equilibrium in the figure is reached when: *

1 point

a. both firms charge a high price.

b. both firms charge a low price.

c. Blue Spring charges a high price and Purple Rain charges a low price.

d. Purple Rain charges a high price and Blue Spring charges a low price.

Each has two strategies available to it: a high price and a low price. The dominant strategy for Purple Rain is to: *

1 point

a. always charge a low price.

b. always charge a high price.

c. always adopt the same strategy as Blue Spring.

d. Purple Rain does not have a dominant strategy.

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