Chapter 10

Question 1

Cartel

Answer 1

A group of firms that collude to produce the monopoly output and sell at the monopoly price

Question 2

Collusion

Answer 2

One firms act together to reduce output and keep prices high

Question 3

Differentiated products

Answer 3

A product that consumers perceive as distinctive in some ways

Question 4

Duopoly

Answer 4

And oligopoly with only two firms

Question 5

Game theory

Answer 5

A branch of mathematics that economists use to analyze situations in which players must make decisions and then receive payoffs based on what decisions the other players make

Question 6

Imperfectly competitive

Answer 6

Firms or organizations that fall between extremes of monopolies and perfect competitors

Question 7

Kinked demand curve

Answer 7

A perceived demand curve that arises when competing oligopoly firms commit to match price cuts but not price increases

Question 8

Monopolistic competition

Answer 8

Many firms competing to sell similar but differentiated products

Question 9

Oligopoly

Answer 9

When a few large firms have all or most of the sales in an industry

Question 10

Prisoner’s dilemma

Answer 10

A gain in which the gains from cooperation are larger than the rewards from pursuing self interest

Question 11

Product differentiation

Answer 11

Any action that firms do to make consumers think their products are different from their competitor’s