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.