Perfect Competition
Monopolistic Competition
Game Theory
Oligopoly
Price Discrimination
100
This kind of product is the closest example to real world perfect competiton
Commodities (like wheat or corn)
100
Brand management refers to
the efforts to maintain the differentiation of a product over time.
100
What is the purpose of game theory?
To help oligopolies make strategic decisions
100
Name three characteristics of an oligopoly
Dominated by a few main firms.
Mutual interdependence
Only possible with barriers to entry
Unlikely to achieve Productive or Allocative efficiency
Competitive focus on product differentiation instead of price
100
A firm with market power can use price discrimination to
Increase Profits
200
A monopoly violates this aspect of perfect competiton
Many buyers and sellers
200
The purpose of marketing in monopolistically competitive markets involves
the product, price, promotion, and placement or distribution of the product being offered for sale
200
What is a payoff matrix
a set of cells showing the profit to each firm for each combination of strategies
200
What is the difference between monopolistic competition and an oligopoly?
Monopolistic competition has more firms than oligopoly.
200
Taking advantage of price differences for the same good in different markets by buying low in one market and selling high in another market
Arbitrage
300
The USPS is an example of violating this aspect of perfect competition
Free entry and exit
300
A monopolistically competitive firm will do what with their price?
have some control over its price because its product is differentiated.
300
Nash Equilibrium
When both firms have a dominant strategy
300
What ways can oligopolies maximize profits besides payoff matrix?
Collusion and Cartels
300
In a competitive market, total industry costs are minimized because each firm produces where
price = marginal costs
400
Pepsi and Coca Cola represent this violation of an aspect of perfect competition
Branding
400
In August 2008, Ethan Nicholas developed the iPicture application for the Apple iPhone 3G (a relatively new product in 2008), and within five months had earned $800,000 from this program. By May 2009, Nicholas had dropped the price from $4.99 to $1.99 in an attempt to maintain sales. This example indicates that in a competitive market
earning an economic profit in the long run is extremely difficult.
400
The Nash Equilibrium is
Prairie Glen prices high and Mountain View advertises
400
What is the difference between collusion and a cartel?
Collusion is the act of setting price or quantity, but a cartel is a group of firms setting price or quantity
400
Each customer is charged his or her maximum willingness to pay
perfect price discrimination
500
These are the four characteristics of perfect competition, as well as underlying feature that is necessary for the others to function
Perfect info, homogenous products, free entry and exit, many buyers and sellers- property rights are well respected
500
Tony's Italian Ice is a monopolistically competitive firm. If Tony's earns a profit in the short run, which of the following is most likely to occur?
A) New firms that sell Italian ice will enter the market and Tony's cost curves will shift to the left.
B) New firms that sell Italian ice will enter the market and Tony's demand curve will shift to the left.
C) New firms that sell Italian ice will enter the market and Tony's demand curve will shift to the right.
B) New firms that sell Italian ice will enter the market and Tony's demand curve will shift to the left.
500
How many Nash Equilibrium are there in this payoff matrix?
three
500
If the market for cheese sandwiches is an oligopoly, which of the following would we expect to see?
no economic profit in the long run
no barriers to entry
consideration of rival firms’ strategies
consideration of rival firms’ strategies
500
Price discrimination is better than single pricing if
total surplus increases