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1. Which of the following statements about oligopolies is not correct?
a.
An oligopolistic market has only a few sellers.
b.
The actions of any one seller can have a large impact on the profits of all other sellers.
c.
Oligopolistic firms are interdependent in a way that competitive firms are not.
d.
Unlike monopolies and monopolistically competitive markets, oligopolies prices do not exceed their marginal
revenues.
2. In the language of game theory, a situation in which each person must consider how others might respond to his or her
own actions is called a
a.
quantifiable situation.
b.
cooperative situation.
c.
strategic situation.
d.
tactical situation.
3. In general, game theory is the study of
a.
how people behave in strategic situations.
b.
how people behave when the possible actions of other people are irrelevant.
c.
oligopolistic markets.
d.
all types of markets, including competitive markets, monopolistic markets, and oligopolistic markets.
4. Which of the following statements is correct?
a.
Strategic situations are more likely to arise when the number of decision-makers is very large rather than very
small.
b.
Strategic situations are more likely to arise in monopolistically competitive markets than in oligopolistic
markets.
c.
Game theory is useful in understanding certain business decisions, but it is not really applicable to ordinary
games such as chess or tic-tac-toe.
d.
Game theory is not necessary for understanding competitive or monopoly markets.
5. In which of the following markets are strategic interactions among firms most likely to occur?
a.
markets to which patent and copyright laws apply
b.
the market for piano lessons
c.
the market for tennis balls
d.
the market for corn
6. Game theory is important for understanding which of the following market types?
a.
perfectly competitive and oligopolistic markets
b.
perfectly competitive markets but not oligopolistic markets
c.
oligoplistic but not perfectly competitive markets
d.
neither oligopolistic nor perfectly competitive markets.
7. In choosing among alternative courses of action, Raj must consider how others might respond to the action he takes. In
the language of game theory, we say that Raj must think
a.
openly.
b.
strategically.
c.
dominantly.
d.
cooperatively.
8. We must be knowledgeable of how people behave in strategic situations if we are to understand
a.
perfectly competitive markets.
b.
monopolistically competitive markets.
c.
oligopolistic markets.
d.
All of the above are correct.
9. In an oligopoly, each firm knows that its profits
a.
depend only on how much output it produces.
b.
depend only on how much output its rival firms produce.
c.
depend on both how much output it produces and how much output its rival firms produce.
d.
will be zero in the long run because of free entry.
10. Because oligopoly markets have only a few sellers, the actions of any one seller
a.
do not affect other sellers in the market.
b.
can have a large impact on the profits of other sellers in the market.
c.
will affect how other firms behave in the market.
d.
Both b and c are correct.
11. Game theory is necessary to understand which kinds of markets?
a.
monopoly
b.
competitive
c.
oligopoly
d.
All of the above are correct.
12. Which of the following examples illustrates an oligopoly market?
a.
a farmers’ market with many individuals selling sweet corn and tomatoes
b.
a city whose electrical service is provided by one electric co-operative
c.
a city with two firms who are licensed to sell school uniforms for the local schools
d.
a city with many independently-owned hair styling salons
13. Game theory is necessary to understand which kinds of markets?
(i)
perfectly competitive
(ii)
monopolistically competitive
(iii)
oligopoly
(iv)
duopoly
(v)
monopoly
a.
(i) and (ii) only
b.
(iii), (iv), and (v) only
c.
(iii) and (iv) only
d.
(i), (ii), (iii), (iv), and (v)
14. Game theory is useful to analyze oligopoly markets because
a.
each firm is a price taker.
b.
the market is comprised of a single firm.
c.
the firms in the market engage in strategic behavior.
d.
each firm produces a differentiated product.
