Question 1(1 point)

When firms cooperate to raise their joint profits, they are necessarily

a	in a competitive industry.
b	colluding.
c	a monopoly.
d	in a duopoly.
e	in a cartel.

Question 2(1 point)

An agreement among several producers to restrict output and increase profit is necessary for

a	collusion.
b	cooperation.
c	monopolization.
d	a cartel.
e	competition.

Question 3(1 point)

Oligopolists are tempted to produce more than the quantity that would maximize industry profits because when they increase output,

a	the price effect is spread across multiple firms.
b	the quantity effect is zero.
c	the price effect is zero.
d	the price effect is larger than the quantity effect.
e	the price effect equals the quantity effect.

Question 4(1 point)

Each player has an incentive to choose an action that, when both players choose it, make them worse off than if neither had chosen it.This situation describes

a	interdependence.
b	game theory.
c	the prisoner's dilemma.
d	dominant strategy.
e	Nash equilibrium.

Question 5(1 point)

Which of the following is true of every Nash equilibrium?

a	It is also a dominant strategy equilibrium.
b	Each player receives the same payoff.
c	Neither player wants to independently change his or her strategy.
d	It is the only Nash equilibrium of the game.
e	There is no better outcome in the payoff matrix for either player.

Question 6(1 point)

A situation in which each player in a game chooses the action that maximizes his or her payoff, given the actions of the other players, ignoring the effects of his or her action on the payoffs received by others, is known as a

a	dominant strategy.
b	cooperative equilibrium.
c	strategic situation.
d	Nash equilibrium.
e	prisoners' dilemma.

Question 7(1 point)

Oligopolists engage in tacit collusion in order to

a	all of the above.
b	increase market share.
c	increase output.
d	share profits.
e	raise prices.

Question 8(1 point)

Having which of the following makes it easier for oligopolies to coordinate raising prices?

a	identical perceptions of fairness
b	a larger number of firms
c	complex pricing schemes
d	differentiated products
e	buyers with bargaining power

Question 9(1 point)

In the context of the Richard and Justin story in the example, suppose that Justin discovers Richard's action (confess or don't confess) before choosing his own action.

Based on the payoff matrix provided, Justin will

a	not confess only if Richard confessed.
b	confess only if Richard did not confess.
c	not confess only if Richard didn't confess.
d	not confess regardless of whether or not Richard confessed.
e	confess whether or not Richard confessed.