Reference no: EM131171509

1. The interdependence of profits in oligopoly markets is caused by

a.   the existence of only a few relatively large firms in the market.

b.   rival firms producing homogeneous products.

c.   managers keenly engaged in competitor-oriented behavior (i.e., the desire to beat rivals out of market share).

d.   both b and c

2. In sequential decision making situations, which if any of the following statements is NOT true about using the roll-back method to solve a strategic decision problem?

a. Roll-back methodology requires that predictions about what the second-mover will do to be employed by the decision maker going first.

b. Roll-back analysis always finds a Nash equilibrium.

c. Using the roll-back methodology, the firm going second can safely ignore what its rival chooses to do –i.e., the first-mover’s decision is irrelevant for determining how the second-mover will act.

d. All of the above statements are true statements

3. In a duopoly market where the two firms are competing in setting their prices, price “HIGH” is a dominant strategy if HIGH

a. would never be the best strategy for either of the two firms.

b. always leads to the best outcome no matter which strategy a firm’s rival might choose.

c. always provides the best possible outcome for both firms.

d. is strategically stable for BOTH firms.