#1
Which characteristic best defines an oligopoly market structure?
Few sellers and identical or differentiated products
ExplanationOligopoly: few sellers offering similar or different products.
#2
What is the primary factor that distinguishes oligopoly from monopolistic competition?
Number of firms
ExplanationOligopoly vs. monopolistic competition: determined by the number of firms.
#3
Which concept refers to a situation where one firm's actions directly impact the profits of other firms in an oligopoly?
Strategic interdependence
ExplanationStrategic interdependence: one firm's actions affect others' profits in oligopoly.
#4
What is the primary factor influencing the pricing decisions of firms in an oligopoly?
Competitor actions
ExplanationPricing decisions in oligopoly primarily influenced by competitor actions.
#5
What is the Cournot-Nash equilibrium in the context of oligopoly?
A situation where firms set prices simultaneously, considering the actions of others
ExplanationCournot-Nash equilibrium: firms set prices simultaneously, considering others' actions.
#6
What is a key feature of interdependence among firms in an oligopoly?
Strategic interaction
ExplanationFirms in oligopoly rely on strategic interaction.
#7
In an oligopoly, firms often engage in strategic behavior. What does strategic behavior involve?
Decisions based on competitor actions
ExplanationStrategic behavior: decisions influenced by competitor actions.
#8
What is the 'Tit-for-Tat' strategy in the context of oligopoly?
Reciprocal actions based on the competitor's previous move
Explanation'Tit-for-Tat': reciprocal actions based on competitors' moves.
#9
Which type of collusion involves explicit agreements among firms to coordinate their actions?
Overt collusion
ExplanationOvert collusion: explicit agreements among firms to coordinate actions.
#10
What is a key limitation of the Herfindahl-Hirschman Index (HHI) when measuring market concentration in oligopoly?
It ignores the number of firms in the market
ExplanationHHI limitation: disregards the number of firms in market concentration.
#11
What does the term 'price leadership' typically refer to in an oligopoly?
One firm influencing others to follow its pricing decisions
ExplanationPrice leadership: one firm influencing others' pricing decisions.
#12
What is the Kinked Demand Curve model used to explain in an oligopoly?
Price rigidity
ExplanationKinked Demand Curve model explains price rigidity in oligopoly.
#13
Which game theory concept is often applied to understand the behavior of firms in an oligopoly?
Nash equilibrium
ExplanationNash equilibrium: applied to understand oligopoly behavior.
#14
In the Cournot model of oligopoly, what assumption is made about the behavior of firms?
Simultaneous decision-making
ExplanationCournot model assumes simultaneous decision-making by firms.
#15
What is a strategic entry deterrence strategy used by firms in oligopoly?
Limit pricing
ExplanationLimit pricing: strategy to deter entry by maintaining prices below monopoly level.
#16
Which model assumes that firms in an oligopoly make decisions sequentially, taking into account the actions of their competitors?
Stackelberg model
ExplanationStackelberg model: firms make sequential decisions considering competitors.
#17
What is the Prisoner's Dilemma, and how does it relate to oligopoly behavior?
A scenario where rational self-interest leads to suboptimal outcomes for all firms
ExplanationPrisoner's Dilemma: rational self-interest leads to suboptimal outcomes in oligopoly.