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CH15 - Name Date 1 A situation in which a player has an...

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Name: __________________________ Date: _____________ 1. A situation in which a player has an incentive to cheat regardless of what the other player does, and in which, if both players act in this manner, both players will be worse off, is referred to as: A) prisoners' dilemma. B) tit-for-tat strategy. C) price leadership model. D) kinked demand curve model. 2. The HHI for ________ where ________ have (has) ________ of the market is ________ . A) monopolistic competition; four firms each; 25%; 10,000 B) oligopoly; three firms each; 50%; 5,000 C) oligopoly; two firms each; 50%; 5,000 D) monopoly; one firm; 100%; 100,000 Use the following to answer question 3: Figure: Collusion Page 1
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3. (Figure: Collusion) In the figure, panel (c) gives the combined marginal revenue, demand, and marginal cost curves for an industry containing several firms. Panels (a) and (b) give marginal cost curves for two of those firms. The price charged by the industry under collusion is shown by: Use the following to answer question 4: Scenario: Payoff Matrix for Firms X and Y Use the following payoff matrix which depicts the profits for Firms X and Y who are trying to decide whether to choose a high or low price in their competitive strategy with each other. They are the only two firms in this oligopolistic industry. 4. (Scenario: Payoff Matrix for Firms X and Y) If firms such as Firm X and Firm Y wish to maximize joint profits, they should: A) each choose their dominant strategy. B) have one choose a dominant strategy and the other choose a nondominant strategy. C) consider their specific situations before choosing a strategy since strategies also entail costs. D) each choose a nondominant strategy. 5. Assume an oligopolist faces a kinked demand curve due to tacit collusion. In this case, a decrease in marginal cost within the range of the marginal revenue that corresponds to the tacit collusion output will cause the firm to: Page 2
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6. A well-known example of an international cartel is: 7. In general, oligopolists find it easier to engage in collusive behavior when the industry is characterized by ________ behavior. A) Cournot B) Bertrand C) noncooperative D) interdependent 8. An industry that consists of two firms is:
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