If the 4-firm concentration ratio for industry A is 30:     A. The  four largest firms account for 70% of total output   B. The industry is competitive   C. The four largest firms account for 30% of output   D. The industry is an oligopoly

*You only need to answer question D*

8. Two firms, the only firms in the market, sell the same product and have the same marginal cost. They realise they would be better off if they didn't compete with each other. They enter an alternating offers bargaining game to decide how they will divide the monopoly profit, n. They have three periods to come to an agreement. If no agreement is reached after three periods, the firms will compete simultaneously in prices. The firms toss a coin to decide who makes the first offer in the bargaining game. Firm 1 wins and decides to go first. Each firm has a discount factor o. a) Draw the game tree. b) What is the subgame perfect equilibrium when 8 = 0.5? c) What is the equilibrium payoff for each firm? d) Was Firm 1 wise to opt to make the first offer? Explain your answer. %3D

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In an oligopoly, the firm tha has the largest market share will also be the leader. True or False? Why?

In an oligopoly market, the firms would earn the highest profit if they A.chose to ignore the actions of rival firms. B. chose to produce an output equal to the perfectly competitive output level. C. chose to ignore the implications of game theory. D.chose to produce the output equal to the monopoly output level.

OWhich of the following is NOT a characteristic of oligopoly?A. Few large firms dominate the marketB. High barriers to entryC. Homogeneous productsD. Interdependence among firms

According to the kinked demand curve theory of oligopoly each firm thinks its demand curve at prices above the existing price is a. less elastic than at prices below the exisiting price since price increases will be matched. b. more elastic than at prices below the exisiting price since price increases will be matched. c. less elastic than at prices below the exisiting price since price increases will not be matched. d. more elastic than at prices below the exisiting price since price increases will not be matched.

Question 32 In an oligopoly market structure, firms profits are interdependent. True False

8. Two firms, the only firms in the market, sell the same product and have the same marginal cost. They realise they would be better off if they didn't compete with each other. They enter an alternating offers bargaining game to decide how they will divide the monopoly profit, n. They have three periods to come to an agreement. If no agreement is reached after three periods, the firms will compete simultaneously in prices. The firms toss a coin to decide who makes the first offer in the bargaining game. Firm 1 wins and decides to go first. Each firm has a discount factor o. a) Draw the game tree. b) What is the subgame perfect equilibrium when o = 0.5? c) What is the equilibrium payoff for each firm? d) Was Firm 1 wise to opt to make the first offer? Explain your answer.