18 Questions
What is the main reason for the breakdown in cooperation between the two firms in the Prisoner's Dilemma?
The fear of being exploited by the other firm
What is the potential outcome if both companies prioritize cost-cutting?
Stagnation in the market due to lack of innovation
What is the primary benefit of both companies investing in R&D?
Improved product quality
What is a reason for oligopolistic firms to exhibit price rigidity?
Fear of sparking price wars or retaliatory actions from competitors
What type of market structure is characterized by a small number of firms competing with each other?
Oligopoly
What is the primary reason why mutual awareness is crucial in the Prisoner's Dilemma?
To understand the other firm's strategy
What is an example of a strategic partnership in the aerospace industry?
Companies collaborating on large-scale projects like commercial aircraft development
Why do oligopolistic firms closely monitor their competitors' actions and strategies?
To anticipate and respond to competitive moves promptly
What is NOT a possible outcome of the Prisoner's Dilemma in the context of the two smartphone manufacturers?
Both companies form a joint venture
What is a benefit of government-granted patents to oligopolistic firms?
Temporary monopolies over innovative products or technologies
What is a characteristic of the global oil and gas industry?
Coordination of production levels to stabilize prices
What is a driving force behind the actions of oligopolistic firms in the smartphone industry?
Mutual awareness
What is the primary purpose of antitrust laws?
To protect consumer interests and promote fair competition
Why do oligopolistic firms face difficulties in cooperating with each other?
Because they are unable to sign legally enforceable contracts
What is an alternative strategy for oligopolistic firms to cooperate without violating antitrust laws?
Monitoring each other's production and market behavior
What is a potential outcome of mutual defection in an oligopolistic market?
Suboptimal outcomes for both firms
What is the primary goal of government-granted patents in an oligopolistic market?
To grant exclusive rights to produce a product
What is the significance of mutual awareness in an oligopolistic market?
It allows firms to infer the intentions of their competitors
Test your understanding of oligopoly, a market structure characterized by a small number of firms competing with each other. This quiz covers the features of oligopoly, including cooperation, price rigidity, and strategic partnerships.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
