Chapter 8 Self-test questions

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Economies of scope occur when ________.

the firm is able to plan ahead correct incorrect

unit costs are lower when the firm produces higher quantities of a good. correct incorrect

the unit costs of production of several goods are lower when they are all produced by one firm rather than a number of separate firms correct incorrect

the industry involved is an oligopoly correct incorrect

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A Nash equilibrium is ________.

an equilibrium in which each player's best strategy is to maintain their present behaviour, given the present behaviour of other firms correct incorrect

an equilibrium where each player chooses their strategy to maximize the other players' payoffs, assuming all other players are playing their Nash equilibrium strategies correct incorrect

defined by both the given possibilities correct incorrect

defined by neither of the given possibilities correct incorrect

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A Nash equilibrium is

self-policing correct incorrect

stable because the players can cooperate correct incorrect

unstable because the players cannot cooperate correct incorrect

a hypothetical possibility only correct incorrect

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Empirical evidence suggests that in the very long run _______.

monopolies generate more innovations than oligopolies correct incorrect

oligopolies generate more innovations than monopolies correct incorrect

perfect competition generates the most innovations correct incorrect

the rate of technical innovation is independent of market structure correct incorrect

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Economies of scale provide ________.

a natural barrier to entry correct incorrect

an artificial barrier to entry correct incorrect

no real barrier to entry correct incorrect

a justification for legislation against monopolies correct incorrect

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In game theory a player's strategy __________.

will never include random elements correct incorrect

will sometimes include random elements correct incorrect

will always include random elements correct incorrect

is entirely random correct incorrect

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An extensive form game is one where ______________.

the normal rules are relaxed correct incorrect

there is a wide range of outcomes correct incorrect

a large piece of paper is needed to set out the game properly correct incorrect

players make moves in some order over time. correct incorrect

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In game theory a strategy that is one player's best response independent of what other players do is known as a __________

deterrent strategy correct incorrect

dominant strategy correct incorrect

dominated strategy correct incorrect

domino effect correct incorrect

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Industry profits under oligopoly ____________.

are always much more than under perfect competition correct incorrect

are always much less than under monopoly correct incorrect

always exceed those of monopolistic competition correct incorrect

None of the above correct incorrect

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The market share available to a new entrant, with a single product, entering an oligopolistic market where N differentiated products are already being sold, is __________.

smaller, the bigger N is correct incorrect

independent of N. correct incorrect

larger, the bigger N is correct incorrect

the reciprocal of N correct incorrect