Question : 59) Collusion occurs when A) a firm chooses a level of : 1387873

59) Collusion occurs when

A) a firm chooses a level of output to maximize its own profit.

B) two firms’ price and output decisions come into conflict.

C) there is an agreement among firms to charge the same price or otherwise not to compete.

D) firms refuse to follow their price leaders.

60) An agreement among firms to charge the same price or otherwise not to compete is called

A) a payoff matrix.

B) a subgame-perfect equilibrium.

C) a Nash equilibrium.

D) collusion.

61) A table that shows the possible payoffs each firm earns from every combination of strategies by all firms is called

A) an earnings table.

B) a payoff table.

C) a payoff matrix.

D) a strategic matrix.

62) A dominant strategy is

A) an equilibrium where each firm chooses the best strategy, given the strategies of other firms.

B) a strategy chosen by two firms that decide to charge the same price or otherwise not to compete.

C) a strategy that is obviously the best for each firm that is a party to a business decision.

D) a strategy that is the best for a firm no matter what strategies other firms use.

63) Who won a Nobel Prize in economics for his work in the development of game theory?

A) John von Neuman

B) Oskar Morgenstern

C) John Nash

D) Howard Schultz

64) Two firms would sometimes be better off if they got together and agreed to charge a high price, rather than to compete and risk having to charge a lower, competitive price. What is the greatest deterrent to this strategy?

A) The firms may find that the price they charge is greater than the price that would maximize their profits.

B) An agreement by firms to charge high prices is illegal. The government can fine the firms and send their managers to jail.

C) Consumers may resent having to pay high prices and not buy from either of the firms.

D) One of the firms may decide to lower its price and take business away from the firm that charged the high price.

65) An equilibrium in a game in which players pursue their own self-interest is called

A) a Nash equilibrium.

B) a cooperative equilibrium.

C) a noncooperative equilibrium.

D) a prisoner’s dilemma.

66) When an oligopoly market is in Nash equilibrium,

A) firms have colluded to set their prices.

B) firms will not behave as profit maximizers.

C) a firm will not take into account the strategies of its rivals.

D) a firm will choose its best pricing strategy, given the strategies that it observes other firms have taken.

67) The Brooks Appliance Store and the Lefingwell Appliance Store (both are located in the same city) each sell an identical washer-dryer. The owner of each store considered offering the washer-dryer for $700, but decided on a price of $500. If this is a Nash equilibrium we can conclude that

A) each store owner feared charging the higher price would result in being undercut by the other store charging the lower price.

B) the owners of the stores feared that charging $700 could be used as evidence of collusion.

C) charging $500 was the most profitable strategy for each store, regardless of what price was charged by the other store.

D) the stores were less concerned about making a profit from the washer-dryers than they were with attracting customers who would also buy other appliances.

68) eBay is an online auction site where more than 200 million items are auctioned annually. What type of auctions are run on eBay?

A) noncooperative auctions

B) second-price auctions

C) cooperative auctions

D) double-blind auctions