test 4 Flashcards
For an oligopoly to exist in the long run,
Entry into the industry must be difficult
The product must be differentiated
The product must be homogenous
Entry into the industry must be easy.
Entry into the industry must be difficult
Game theory is a technique designed to evaluate situations where individuals and organizations
are making decisions under conditions of certainty
cooperate to achieve common goals
have conflicting objectives
None of the above is correct
have conflicting objectives
In Game Theory, the cells of a payoff matrix show the
states of nature that may affect the outcome of employing different strategies
costs required to implement different strategies
outcomes resulting from different combinations of strategies employed by the game participants
None of the above
outcomes resulting from different combinations of strategies employed by the game participants
Participants in the Prisoners Dilemma game are
risk neutral
allowed to cooperate
None of the above
irrational
None of the above
Price discrimination occurs anytime that
cost differences correspond to variation in costs
price differences do not correspond to differences in cost
None of the above
price differences correspond to variation in costs
price differences do not correspond to differences in cost
Commodity bundling is like price discrimination in that part of the consumer surplus is captured by the firm.
True
False
True
First degree price discrimination involves
charging the minimum price for each unit sold
None of the above
charging different prices based on quantity purchased
charging different prices based on elasticities of demand
None of the above
Second degree price discrimination involves charging different prices based on the use to which the product is put by the consumer.
True
False
False
In general with price discrimination, the profit maximizing price to the consumer increases as demand becomes more elastic.
True
False
False
A necessary condition for price discrimination is that the firm must have declining long run average costs.
True
False
False
If the costs of serving customers are equal, price discrimination would take the form of
those with more elastic demand paying more
Those customers which cost less to serve pay less
Those customers which cost more to serve to pay more
Those with more elastic demand paying less
Those with more elastic demand paying less
An important advantage of cost plus pricing is simplicity of application.
True
False
True
