Problem 1
Which of the following apply to oligopoly industries? Select one or more answers from the choices shown. a. A few large producers. b. Many small producers. c. Strategic behavior. d. Price taking.
Problem 2
Faceblock, Gargle+, and SnapHat are rival firms in an oligopoly industry. If kinked-demand theory applies to these three firms, Faceblock's demand curve will be: a. More elastic above the current price than below it. b. Less elastic above the current price than below it. c. Of equal elasticity both above and below the current price. d. None of the above.
Problem 3
Consider an oligopoly industry whose firms have identical demand and cost conditions. If the firms decide to collude, then they will want to collectively produce the amount of output that would be produced by: \(L O 14.3\) a. A monopolistic competitor. b. A pure competitor. c. A pure monopolist. d. None of the above.
Problem 4
In an oligopoly, each firm's share of the total market is typically determined by: a. Scarcity and competition. b. Kinked-demand curves and payoff matrices. c. Homogeneous products and import competition. d. Product development and advertising.
Problem 5
Some analysts consider oligopolies to be potentially less efficient than monopoly firms because at least monopoly firms tend to be regulated. Arguments in favor of a more benign view of oligopolies include: a. Oligopolies are self-regulating. b. Oligopolies can be kept in line by foreign competition. c. Oligopolistic industries may promote technological progress. d. Oligopolies may engage in limit pricing to keep out
Problem 6
Collusive agreements can be established and maintained by: a. Credible threats. c. Empty threats. b. One-time games. d. First-mover advantage.
Problem 7
True or false. Potential rivals may be more likely to collude if they view themselves as playing a repeated game rather than a one-time game.
Problem 8
Property developers who build shopping malls like to have them "anchored" with the outlets of one or more famous national retail chains, like Target or Nordstrom. Having such "anchors" is obviously good for the mall developers because anchor stores bring a lot of foot traffic that can help generate sales for smaller stores that lack well-known national brands. But what's in it for the national retail chains? Why become an anchor? Choose the best answer from the following list. a. The anchor stores want to make a credible threat against the developer. b. The anchor stores may feel there is a first-mover advantage to becoming one of only a few anchor stores at a new mall. c. The property developers are making empty threats to smaller stores. d. The smaller stores face a negative-sum game.
