Chapter 11 or 24 Monopolistic Competition, Oligopoly, & Game Theory: Pre- Class & In - Class Activities Packet Name/I.D. Number: Section: Date: Part 2. Matching: Match the Key terms in Column "A" with the definitions in Column "B" by writing the block (upper) case letter of your choice under column "A" and match the definitions in column "B" with the meanings or examples or real world applications in column "C" by writing the small (lower) case letter of your choice under column "B". Column "A" Column "B" Column "C" 1. Monopolistic A. An organization of firms that reduces output and a. A theory that oligopolistic firms join a cartel to increase their increases price in an effort to increase joint profits. market power, and members work together to determine jointly Competition B. The percentage of industry sales (or assets, the level of output that each member will produce and/or the output, labor force, or some other factor) accounted price that each member will charge. 2. Excess Capacity for by x number of firms in the industry. b. A market in which a firm may have seamless transition & low cost to enter an industry and costless exit from an industry if it Theorem C. A theory of market structure based on three assumptions: many sellers and buyers, firms wishes to do so. producing and selling slightly differentiated products, C. A kind of game in which a player's strategy is based on the 3. Oligopoly and easy entry and exit. options shelhe can choose in a setting where the outcome D. A market in which entry is easy and exit is depends not only on their own actions but also on the action of others. Example: the games of Rock-Paper-Scissors or costless, new firms can produce the product at the Tic-Tac-Toe. 4. Concentration same cost as current firms, and exiting firms can d. An association of firms under oligopoly that act cooperatively easily dispose of their fixed assets by selling them. as if they are one giant company to influence output and price. Ratio E. A theory of market structure based on three If each firm in an oligopoly sells an undifferentiated product like assumptions: few sellers and many buyers, firms oil, demand curve that each firm faces will be horizontal at the 5. Cartel Theory producing either homogeneous or differentiated market price as in perfect competition instead of downward products, and significant barriers to entry. sloping under monopoly. Example: O.P.E.C.(Organization of F. A monopolistic competitor in equilibrium produces Petroleum Exporting Countries by 15 member nations). 6. Cartel an output smaller than the one that would minimize @. The ratio of the combined market shares of a given number of its costs of production. firms to the total market size to determine the degree of G. A mathematical technique used to analyze the saturation. behavior of decision makers who try to reach an T. A market structure in which few firms dominate and 7. Game Theory optimal position for themselves through game playing characterized by highly concentrated market. or the use of strategic behavior, who are fully aware g. Refers to a situation where a firm is forced to produce the of the interactive nature of the process at hand and level of output below its capacity due to lack of demand or who anticipate the moves of other decision makers. intentionally limit output to boost price. 8. Contestable H. A theory of oligopoly in which oligopolistic firms h. A market structure where there are fairly large number of `act as if there were only one firm in the industry. firms competing by producing differentiated products & Market advertising is one of the characteristic features