Question 1

All examples of the prisoner's dilemma game are characterized by one and only one Nash equilibrium.

Accepted Answer

A) True 
 B)False

Question 2

If duopolists individually pursue their own self-interest when deciding how much to produce,the amount they will produce collectively will

Accepted Answer

A)  be less than the monopoly quantity.
B)  be equal to the monopoly quantity.
C)  be greater than the monopoly quantity.
D)  Any of the above are possible.E) A) and B)
F) A) and C)

Question 3

When all firms choose their best strategy given the strategies that all the other firms have chosen,the result is a Nash equilibrium.

Accepted Answer

A) True 
 B)False

Question 4

The practice of requiring someone to buy two or more items together,rather than separately,is called

Accepted Answer

A)  resale maintenance.
B)  product fixing.
C)  tying.
D)  free-riding.E) C) and D)
F) B) and C)

Question 5

The story of the prisoners' dilemma shows why

Accepted Answer

A)  predatory pricing is clearly not in society's best interest.
B)  economists are unanimous in condemning resale price maintenance,since it inevitably reduces competition.
C)  oligopolies can fail to act independently,even when independent decision-making is in their best interest.
D)  oligopolies can fail to cooperate,even when cooperation is in their best interest.E) A) and B)
F) C) and D)

Question 6

Ford and General Motors are considering expanding into the Vietnamese automobile market.Devise a simple prisoners' dilemma game to demonstrate the strategic considerations that are relevant to this decision.

Accepted Answer

The answer should present two strategies...

Question 7

Even when allowed to collude,firms in an oligopoly may choose to cheat on their agreements with the rest of the cartel.Why?

Accepted Answer

Individual profits can be incr...

Question 8

In some games,the noncooperative equilibrium is bad for the players and bad for society.

Accepted Answer

A) True 
 B)False

Question 9

The paradoxical nature of oligopoly can be demonstrated by the fact that,even though the monopoly outcome is best for the oligopolists,

Accepted Answer

A)  they collude to set the output level equal to the Nash equilibrium level of output.
B)  they have incentives to increase production above the monopoly outcome.
C)  they do not behave as profit maximizers.
D)  self-interest juxtaposes the profits earned at the Nash equilibrium.E) None of the above
F) A) and B)

Question 10

In game theory,a Nash equilibrium is

Accepted Answer

A)  an outcome in which each player is doing his best given the strategies chosen by the other players.
B)  an outcome in which no player wishes to change her chosen strategy given the strategies chosen by the other players.
C)  the outcome that occurs when all players have a dominant strategy.
D)  All of the above are correct.E) A) and D)
F) All of the above

Question 11

A cooperative agreement among oligopolists is less likely to be maintained,

Accepted Answer

A)  the greater the number of oligopolists.
B)  the larger the number of buyers of the oligopolists' product.
C)  the smaller the number of buyers of the oligopolists' product.
D)  the more likely it is that the game among the oligopolists will be played over and over again.E) A) and C)
F) A) and B)

Question 12

Because each oligopolist cares about its own profit rather than the collective profit of all the oligopolists together,

Accepted Answer

A)  they are unable to maintain the same degree of monopoly power enjoyed by a monopolist.
B)  each firm's profit always ends up being zero.
C)  society is worse off as a result.
D)  Both a and c are correct.E) All of the above
F) A) and D)

Question 13

Which of these situations produces the largest profits for oligopolists?

Accepted Answer

A)  The firms reach a Nash equilibrium.
B)  The firms reach the monopoly outcome.
C)  The firms reach the competitive outcome.
D)  The firms produce a quantity of output that lies between the competitive outcome and the monopoly outcome.E) A) and B)
F) B) and C)

Question 14

Tying can be thought of as a form of price discrimination.

Accepted Answer

A) True 
 B)False

Question 15

A cooperative agreement among oligopolists is more likely to be maintained,

Accepted Answer

A)  the greater the number of oligopolists.
B)  the larger the number of buyers of the oligopolists' product.
C)  the smaller the number of buyers of the oligopolists' product.
D)  the more likely it is that the game among the oligopolists will be played over and over again.E) B) and C)
F) A) and D)

Question 16

The primary purpose of antitrust legislation is to

Accepted Answer

A)  protect small businesses.
B)  protect the competitiveness of U.S.markets.
C)  protect the prices of American-made products.
D)  ensure firms earn only a fair profit.E) A) and D)
F) A) and C)

Question 17

Any market that is served by an oligopoly is in effect served by a monopoly.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements is (are) true of the prisoners' dilemma?
(i) Rational self-interest leads neither party to confess.
(ii) Cooperation between the prisoners is difficult to maintain.
(iii) Cooperation between the prisoners is individually rational.

Accepted Answer

A)  (ii) only
B)  (ii) and (iii) 
C)  (i) and (iii) 
D)  (i) ,(ii) ,and (iii) E) All of the above
F) C) and D)

Question 19

Table 17-22 
-Refer to Table 17-22.Which of the following statements is correct?

Accepted Answer

A)  Matt's dominant strategy is to charge a low price.
B)  Brian's dominant strategy is to charge a high price.
C)  The dominant strategy for both Brian and Matt is to charge a low price.
D)  Matt's dominant strategy is to charge a high price.E) A) and D)
F) A) and B)

Question 20

Table 17-14 
-Refer to Table 17-14.Which of the following statements about this game is true?

Accepted Answer

A)  Up is a dominant strategy for A and Right is a dominant strategy for B.
B)  Up is a dominant strategy for A and Left is a dominant strategy for B.
C)  Down is a dominant strategy for A and Right is a dominant strategy for B.
D)  Down is a dominant strategy for A and Left is a dominant strategy for B.E) A) and D)
F) C) and D)

Exam 17: Oligopoly

Even when allowed to collude,firms in an oligopoly may choose to cheat on their agreements with the rest of the cartel.Why?

Correct AnswerverifiedIndividual profits can be incr...View AnswerShow Answer

Table 17-14 -Refer to Table 17-14.Which of the following statements about this game is true?

Correct AnswerverifiedShow Answer

Ford and General Motors are considering expanding into the Vietnamese automobile market.Devise a simple prisoners' dilemma game to demonstrate the strategic considerations that are relevant to this decision.

Correct AnswerverifiedThe answer should present two strategies...View AnswerShow Answer

The story of the prisoners' dilemma shows why

Correct AnswerverifiedShow Answer

All examples of the prisoner's dilemma game are characterized by one and only one Nash equilibrium.

Correct AnswerverifiedShow Answer

Tying can be thought of as a form of price discrimination.

Correct AnswerverifiedShow Answer

Because each oligopolist cares about its own profit rather than the collective profit of all the oligopolists together,

Correct AnswerverifiedShow Answer

Which of the following statements is (are) true of the prisoners' dilemma? (i) Rational self-interest leads neither party to confess. (ii) Cooperation between the prisoners is difficult to maintain. (iii) Cooperation between the prisoners is individually rational.

Correct AnswerverifiedShow Answer

In some games,the noncooperative equilibrium is bad for the players and bad for society.

Correct AnswerverifiedShow Answer

When all firms choose their best strategy given the strategies that all the other firms have chosen,the result is a Nash equilibrium.

Correct AnswerverifiedShow Answer

A cooperative agreement among oligopolists is less likely to be maintained,

Correct AnswerverifiedShow Answer

Table 17-22 -Refer to Table 17-22.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The practice of requiring someone to buy two or more items together,rather than separately,is called

Correct AnswerverifiedShow Answer

If duopolists individually pursue their own self-interest when deciding how much to produce,the amount they will produce collectively will

Correct AnswerverifiedShow Answer

The primary purpose of antitrust legislation is to

Correct AnswerverifiedShow Answer

Any market that is served by an oligopoly is in effect served by a monopoly.

Correct AnswerverifiedShow Answer

In game theory,a Nash equilibrium is

Correct AnswerverifiedShow Answer

A cooperative agreement among oligopolists is more likely to be maintained,

Correct AnswerverifiedShow Answer

The paradoxical nature of oligopoly can be demonstrated by the fact that,even though the monopoly outcome is best for the oligopolists,

Correct AnswerverifiedShow Answer

Which of these situations produces the largest profits for oligopolists?

Correct AnswerverifiedShow Answer

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Individual profits can be incr...
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The answer should present two strategies...
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