Mod 4.5: Oligopoly & Game Theory

Which of the following is a feature of oligopolies?

• low barriers to entry

• few firms in the market

• control over prices

• interdependence between firms

• allocative efficiency

Oligopolists engage in collusion in order to:

• increase output

• decrease costs

• increase prices and profits

• increase market share

• increase consumer surplus

In which of the following situations is noncooperative game theory more likely?

• Firms trust their customers.

• Firms do not have a relationship with one another.

• Firms do not trust the government.

• Firms trust one another.

• Firms trust the government.

Which of the following is true of every Nash equilibrium?

• It is the only Nash equilibrium in the game.

• It is also a dominant strategy equilibrium.

• Neither player wants to independently change their strategy.

• Neither player gains more than the other.

• Neither player can gain from changing their strategy.

Players have incentive to choose an action that makes them both worse off than if neither had chosen it. This describes:

• a dominant strategy

• the prisoner's dilemma

• the beta strategy

• Nash equilibrium

• interdependence