Question

Chapter 14 Vocabulary

Name:

a. Kinked demand curve	b. Cartel	c. Price leadership
d.   Game theory	e. Collusion	f. Strategic behavior
g. Homogeneous oligopoly	h. Price war	i. Differentiated oligopoly
	j. Oligopoly

(    ) Five or fewer firms produce most of the output in an industry, or control a large share of the market.

(   ) Many consumer goods, like automobiles and sporting goods, are produced by a few firms.

(    ) This is when firm’s break from pricing decision to lower their price and the competition follows and lowers their price even lower.

(     ) Many industrial products, like steel and cement, are produced by a few firms.

(    ) Firms have to take into account the actions and reactions of their competitors.

(    ) This is an agreement among firms to limit output and keep the price high.

(   ) This is a method of measuring the actions and reactions of firms in an Oligopoly to see how they influence the demand faced by the others.

(    ) This is a where firms follow the dominant firm’s lead in pricing decisions.

(     ) This is a group that is seeking to create a monopoly in a market. OPEC is a good example of this.

(   ) This is used to explain why firms in an oligopoly always match price cuts

by other firms, but do not match their price increases.

Answer 1

Correct order:

1. Oligopoly

2. Differentiated oligopoly

3. Price war

4. Homogeneous oligopoly (similar products)

5. Strategic behaviour

6. Collusion

7. Game theory

8. Price leadership

9. Cartel

10. Kinked demand curve