Question

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.

Answer 1

1-	Answer is B	Kinked demand curve	because a business may face a dual demand curve for its product based on the likely reaction of other firms to a change in its price
2-	Answer is D	dominant strategy
3-	Answer is C	ensure each member of the organization some minimum amount of profit.	In cartel a group of manufacturers of the same nature of product comes together and create a monopoly situation and sell the product in the market and share profit proportionally
4-	Answer is C	is usually the result of a dominant firm in the industry.	because a market leader in the industry charges premium price for their product due to superior quality product or due to some Unique selling proposition of product