Podcast
Questions and Answers
An oligopoly consists of few sellers offering similar or identical products.
An oligopoly consists of few sellers offering similar or identical products.
True (A)
In an oligopoly, firms’ decisions on price or quantity do not influence competitors.
In an oligopoly, firms’ decisions on price or quantity do not influence competitors.
False (B)
If oligopolies cooperate, they can achieve monopoly-level profits by acting as a cartel.
If oligopolies cooperate, they can achieve monopoly-level profits by acting as a cartel.
True (A)
If one firm cheats in a collusion agreement, it can achieve higher profits temporarily.
If one firm cheats in a collusion agreement, it can achieve higher profits temporarily.
If both firms cheat and sell more than the agreed quantity, their profits are lower than if they had cooperated.
If both firms cheat and sell more than the agreed quantity, their profits are lower than if they had cooperated.
Game theory studies strategic interactions where participants’ outcomes depend on others’ decisions.
Game theory studies strategic interactions where participants’ outcomes depend on others’ decisions.
The Prisoners’ Dilemma shows that rational self-interest leads to the cooperative outcome.
The Prisoners’ Dilemma shows that rational self-interest leads to the cooperative outcome.
Nash equilibrium occurs when neither player can improve their outcome by unilaterally changing strategies.
Nash equilibrium occurs when neither player can improve their outcome by unilaterally changing strategies.
In a repeated game, strategies like “tit-for-tat” can encourage cooperation.
In a repeated game, strategies like “tit-for-tat” can encourage cooperation.
In an “ad wars” scenario, the dominant strategy is for both firms to advertise even though both would benefit from not advertising.
In an “ad wars” scenario, the dominant strategy is for both firms to advertise even though both would benefit from not advertising.
A dominant strategy is one that benefits a player regardless of the other player’s actions.
A dominant strategy is one that benefits a player regardless of the other player’s actions.
The “tit-for-tat” strategy means a firm always cheats in response to any behavior from a competitor.
The “tit-for-tat” strategy means a firm always cheats in response to any behavior from a competitor.
When oligopolists compete in a one-shot game, the Nash equilibrium often involves cheating rather than cooperation.
When oligopolists compete in a one-shot game, the Nash equilibrium often involves cheating rather than cooperation.
Flashcards
Oligopoly Definition
Oligopoly Definition
A market structure with a few sellers offering similar or identical products.
Oligopoly Firm Decisions
Oligopoly Firm Decisions
Firms' pricing and output decisions affect competitors, unlike in a competitive market.
Oligopoly Cooperation
Oligopoly Cooperation
If oligopolies cooperate, they can reach monopoly-level profits as a cartel.
Cheating in Collusion
Cheating in Collusion
Signup and view all the flashcards
Mutual Cheating
Mutual Cheating
Signup and view all the flashcards
Game Theory
Game Theory
Signup and view all the flashcards
Prisoners' Dilemma
Prisoners' Dilemma
Signup and view all the flashcards
Nash Equilibrium
Nash Equilibrium
Signup and view all the flashcards
Repeated Games & Cooperation
Repeated Games & Cooperation
Signup and view all the flashcards
Dominant Strategy
Dominant Strategy
Signup and view all the flashcards
Ad Wars
Ad Wars
Signup and view all the flashcards
Tit-for-Tat
Tit-for-Tat
Signup and view all the flashcards
One-Shot Oligopoly
One-Shot Oligopoly
Signup and view all the flashcards
