Chapter 15

Question 1

Oligopoly

Answer 1

A market structure in which:

• Natural or legal barriers prevent the entry of new firms.
• A small number of firms compete

Question 2

Duopoly

Answer 2

An oligopoly market with two firms.

Question 3

Cartel

Answer 3

A group of firms acting together - colluding - to limit output, raise price and increase economic profit.

Question 4

Game theory

Answer 4

A set of tools for studying strategic behavior - behavior that takes into account the expected behavior of others and the recognition of mutual interdependence.

Question 5

Collusive agreement

Answer 5

An agreement between two producers to form a cartel to restrict output, raise the price and increase profits.