Question

Chapter 13 Vocabulary

a. Non-price competition	b. Cartel	c. Prisoner’s dilemma
d.   Excess capacity	e. Collusion	f. Differentiated product
g.   Herfindahl index	h. Duopoly	i. Monopolistic competition
	j. Oligopoly

(     ) 7. Five or fewer firms produce most of the output in an industry, or control a large share of the market.

(     ) 5. Most type of retail stores, like J. Crew, fall into this market category.

(     ) 8. This is a two-firm oligopoly.

(     ) 1. In these markets, firms have more control over price than perfectly competitive firms, but less than monopolies.

(    ) 4. This is an attempt by firms to make their product stand out from the competitors product.

(     ) 9. This is an agreement among firms to limit output and keep the price high.

(     ) 3. This is a method of measuring the actions and reactions of firms in an Oligopoly to see how they influence the demand faced by the others.

(    ) 10. This game theory concept attempts to show that colluding firms have an incentive to break their agreements and increase output or offer lower prices.

(     ) 6. This is a group that is seeking to create a monopoly in a market. OPEC is a good example of this.

(     ) 2. This is used to explain why firms in an oligopoly always match price cuts

by other firms, but do not match their price increases.

Answer 1

1. In these markets, firms have more control over price than perfectly competitive firms, but less than monopolies.

Ans. j. Oligopoly

2. This is used to explain why firms in an oligopoly always match price cuts by other firms, but do not match their price increases.

Ans. d. Excess capacity

3.  This is a method of measuring the actions and reactions of firms in an Oligopoly to see how they influence the demand faced by the others.

Ans. g. Herfindahl Index

4. This is an attempt by firms to make their product stand out from the competitors product.

Ans. f. Differentiated product

5. Most type of retail stores, like J. Crew, fall into this market category.

Ans. i. Monopolistic competition

6. This is a group that is seeking to create a monopoly in a market. OPEC is a good example of this.

Ans. b) Cartel

7. Five or fewer firms produce most of the output in an industry, or control a large share of the market.

Ans. e. Collusion

8. This is a two-firm oligopoly.

Ans. h. Duopoly

9. This is an agreement among firms to limit output and keep the price high.

Ans. a. Non-price competition

10. This game theory concept attempts to show that colluding firms have an incentive to break their agreements and increase output or offer lower prices.

Ans. c. Prisoner's dilemma