In an oligopoly market, a firm must lower price in order to sell more output. ea
ID: 1216754 • Letter: I
Question
In an oligopoly market, a firm must lower price in order to sell more output. each firm faces a demand curve that depends on how the firm's rivals behave. a few firms account for a large portion of industry sales. both a and b. all of the above. What is a dominant strategy? A strategy that provides the best possible outcome for both firms. A strategy that would never be the best choice. A strategy that leads to the best outcome for a firm no matter what decision rivals make both a and c. Profits are interdependent in oligopoly markets because Products are differentiated. managers are trying to set prices cooperatively in order to maximize total industry entry into the market is restricted by some form of entry barrier. each firm in the market is relatively large. all of the above. A conditional strategic move, such as a threat or promise, can be credible only if rivals believe the manager making the move can be trusted to follow through on commitment, threat, or promise that he or she makes. the strategic movie harms rivals. it can increase each firm's payoff. it leads to a Nash equilibrium outcome. none of the above. Which of the following are trigger strategies? eye-for-an-eye tit-for-tat grim both b and c. all of the above. In every prisoners' dilemma situation, cooperation is possible. reduces the payoff to at least one of the firms. reduces the payoff to all players. is likely. both c and d. In a one-time prisoners' dilemma decision, all firms expect the other firms to cheat. cheating is usually not a value-maximizing decision. cheating is less likely when the discount rate is low. cheating is less likely when the discount rate is high. In a repeated decision for which the present value of the benefits of cheating are less present value of the costs of cheating, deciding not to cheat is a value-maximizing decision.Explanation / Answer
1. in an oligopoly market few firms dominates the industry and demand curve faces by one firm depends on it's rival firm. There if one firm raises the price of it's product it will lose the market share. so the answer is all of the above.
2. dominant strategy is a strategy which provides best possible outcome for no matter what decision rival firm takes,(c)
3. e. all of the above as in oligopoly with differentiated product there is few number of firms and each firm can affect the market, there is high barrier to entry so firms cooeparate with each other to set the prices in order to maximise the profit.
4. e. conditional strategic move is credible only when fulfilling the threat or promise is the best possible outcome at that point of time.
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