The assumption that rival firms will match a firm's price decreases but not its price increases is a basic feature of:

A) model of limit pricing.

B) the kinked demand curve model.

C) the predatory pricing model.

D) cartel theory.

Answer:

18) In game theory, the strategy that results in the highest payoff to a player regardless of what the other player decides to do is called the:

A) Stackleberg equilibrium.

B) equilibrium strategy.

C) min-max strategy.

D) dominant strategy.

Answer:

19) The primary objective of a cartel is to:

A) maximize the amount of profit received by each member of the organization.

B) maximize the joint profits of the members of the organization.

C) ensure each member of the organization some minimum amount of profit.

D) maximize the average profits of the members of the organization.

Answer:

20) Price leadership:

A) has rarely occurred in U.S. history.

B) is always illegal in the United States.

C) is usually the result of a dominant firm in the industry.

D) usually results in the smaller firms in the industry incurring economic losses.