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Economists would describe the U.S. automobile industry as
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an oligopoly.
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The term oligopoly indicates
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a few firms producing either a differentiated or a homogeneous product.
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If the firms in an oligopolistic industry can establish an effective cartel, the resulting output and price will approximate those of
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a pure monopoly.
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Concentration ratios measure the
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percentage of total industry sales accounted for by the largest firms in the industry.
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The music streaming industry, where a firm's profitability depends on its interactions with other firms, is an example of
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oligopoly.
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An oligopolistic industry is characterized by all of the following except
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firms pursuing aggressive business strategies, independent of rivals' strategies.
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A four-firm concentration ratio measures
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the fraction of an industry's sales accounted for by the four largest firms.
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Which of the following is not a reason why government officials are willing to impose entry barriers?
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to promote an equitable distribution of income
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Interdependence of firms is most common in
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oligopolistic industries.
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Oligopolies exist and do not attract new rivals because
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of barriers to entry.
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Consider a U-shaped long-run average cost curve that has a minimum efficient scale at 6,000 units of output. In this case, this industry would be
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an oligopoly if the market quantity demanded is 18,000 units.
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The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called
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game theory.
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A set of actions that a firm takes to achieve a goal, such as maximizing profits, is called
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a business strategy.
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A market comprised of only two firms is called a
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duopoly.
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A dominant strategy
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is one that is the best for a firm, no matter what strategies other firms use.
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A Nash equilibrium is
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reached when each player chooses the best strategy for himself, given the other strategies chosen by the other players in the group.
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Collusion between two firms occurs when
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firms explicitly or implicitly agree to adopt a uniform business strategy.
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What is a prisoner's dilemma?
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a game in which players act in rational, self-interested ways that leave everyone worse off
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A cartel is
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a group of firms that enter into a formal agreement to fix prices to maximize joint profits.
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A table that shows the possible payoffs each firm earns from every combination of strategies by all firms is called
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a payoff matrix.
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In many business situations one firm will act first, and then other firms will respond. To help analyze these types of situations economists use
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sequential games.
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The larger the number of firms in an industry
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the more intense the rivalry among firms.
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The five competitive forces model was developed by
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Michael Porter.
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Which of the following is not one of the five competitive forces?
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the firm's ability to differentiate its product
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