1. A market is considered “unconcentrated” if the Herfindahl–Hirschman Index (HHI) is belowand is “highly” concentrated if the HHI is at least
.
2. For a market with four firms, each with a 25 percent market share, the Herfindahl–Hirschman Index (HHI) is equal to
.
3. Arrows up or down: If we move from the cartel outcome to the duopoly outcome, the price
, the quantity per firm , and the profit per firm
.
4. A dominant strategy is the strategy that allows one firm to dominate the market
. (True/False)
5.The duopolists’ dilemma is that each firm would make more profit if both picked the
price, but both firms pick the price
.
6. In a Nash equilibrium, each player is doing the best he or she can, given
.
7. In Figure 27.3 on page 603, rectangle 3 is not a Nash equilibrium because if
picks a(n) price, the best response of
is to pick the price
.
8. In Figure 27.3 on page 603, suppose Jack promises Jill that if she picks the high price, he will too. Is this promise credible? Explain.
9. The salt cartels of the nineteenth century were
(short/long) lived, in part because individual firms
on the cartel. (Related to Application 1 on page 606.)
10. Buzz and Moe are duopolists in the lawn-care market. The following game tree shows the possible pricing outcomes and their payoffs. The outcome of the pricing game is that Buzz will pick the price and
Moe will pick theprice.