It is assumed that all of the sellers sellidentical or homogenous products. Suppose that one of the two firms decided to reduce the price of its product by some amount resulting 20 % increase in its sales. D) 2,750. Over a long time period, cheating ______ collusive oligopolies Firms are profit-maximizers. That is, the firm is myopic or short sighted not to learn from its past mistakes and take d 1 d'1, as if it will not shift. They do it strategically so they do not lose their customers in what could be a price war. Save my name, email, and website in this browser for the next time I comment. B) Dr. Smith does not advertise no matter what Dr. Jones does. d) straight and steep It can be also called as one form. CFA Institute Does Not Endorse, Promote, Or Warrant The Accuracy Or Quality Of WallStreetMojo. When there are two market leaders in any industry or service, this is referred to as a duopoly. *interindustry competition 16) The firms Trick and Gear form a cartel to collude to maximize profit. d) Mutual interdependence. CFA And Chartered Financial Analyst Are Registered Trademarks Owned By CFA Institute. When two major players dominate a sector, the market becomes a duopolyDuopolyWhen there are two market leaders in any industry or service, this is referred to as a duopoly. 36) Refer to Table 15.3.10. What are the 4 characteristics of oligopoly? Question: Which of the following is NOT a characteristic of an oligopoly? c) product development and advertising are relatively inexpensive C) independence of firms. D) All of the above. It is difficult to enter an oligopoly industry and compete as a small start-up company. D) unit elastic demand. b) competitively B) Firms are profit-maximizers.C) The sales of one firm will not have a significant effect on other firms. b) Collusive pricing model from a social viewpoint, monopolistic competition is better than perfect competition None of these Question 8 (1 point) A firm using advertising differs from a firm not using advertising in that the firm using advertising. C) Miller has a dominant strategy but Bud does not. D) Consumers will eventually decide not to buy the cartel's output. a) are always more efficient In these characteristics, manufacturers usually only produce and sell one product. Why is collusion desirable to oligopolistic firms? d) The firms in the industry are interdependent. D) potential entrants not entering the market. Though, it is rare to find pure oligopoly situation, yet, cement, steel, aluminum and chemicals producing industries approach pure oligopoly. 1. a) Firms have no control over their price. E) None of the above. Select one: O a. there are a few firms that are mutually interdependent O b. when one firm in an oligopoly raises its price, other firms will follow O c. firms may collude in order to act like a monopoly O d. barriers to entry exist to limit the entrance of new firms a) An outcome in the payoff matrix from which one firm wants to deviate since the current strategy is not optimal given the rival's strategic choice. Have you a question about something that I covered. Each firm has a substantial share of the market supply. *Diseconomies of scale a) fewer firms than monopolistic competition. D. Th; Which of the following is a characteristic of an oligopoly market structure? c) have no rivals c) conveying information to consumers Some of its fundamental characteristics include the existence of a small number of firms, differentiated or homogeneous products, and barriers to entry. Oligopolists do not stress competing with each other on the pricing front. Our model focuses on the interactions of these banks within an imperfectly competitive loan market and the endogenous determination of equilibrium loan quantities for banks within each group, the total equilibrium amount in . Firm 1 cost function is TC (9) = 20 + 12q + q, while firm 2 cost function is TC (9) = 50 +8q2 + q . OA. d) greater than or equal to 60%, How can oligopolistic firms influence their profits and the profits of their rivals? c) Nash equilibrium A) "Gas prices in this town always go up and down together." C) assumes that marginal revenue equals marginal cost only at the quantity at the "kink." C) Art denies and Bob confesses. It determines the law of demand i.e. E) a competitive market produces two goods. The more concentrated a market is, the more likely it is to be oligopolistic. The firms produce differentiated products. Besides, high capital requirements, licensing, patents, market demand, economies of scale, limit-pricing, and customer loyalty restrict the entry of new businesses. 30.331.934.432.831.132.230.736.830.530.634.533.130.131.030.730.930.730.230.637.931.131.134.630.233.132.130.631.530.230.330.930.031.630.234.434.230.230.131.434.133.732.732.432.831.030.733.435.730.730.4. In the scenario above, the market is. as the price increases, demand decreases keeping all other things equal.read more shifts. E) entry into the industry of rival firms will raise cartel profit as long as the new firms join the cartel. A firm in an oligopolistic market ______. E) downward-sloping demand curve with no kink. Each firm is so large that its actions affect market conditions. You are free to use this image on your website, templates, etc., Please provide us with an attribution link. Because of their large size and minimal competition, each firm in an oligopoly market structure influences the others. attempts to raise $425 million to use to build apartments in a growing area of Tulsa. Any decision taken by a firm in order to increase its sales would adversely affect the sales and hence profit of the other firms. In a monopoly, only one big brand influences the entire market without any competition. Interdependence: The foremost characteristic of oligopoly is interdependence of the various firms in the decision making. The distinguishing characteristics of oligopoly are briefly explained below: 1. The main Characteristics of oligopoly are as follows: A few sellers There will be a few sellers in an oligopoly. As a result, each firm obligates to adhere to pre-determined price and quantity/output levels to maximize revenue. If Marilyn believes that the $10 million stock issue was undertaken only to improve DTRs True or false: Firms in an oligopoly always produce a homogeneous product. Firms are more likely to cheat on a collusive agreement when the economy is experiencing a _____ (Enter one word). B) potential entrants entering and incurring economic loss. B) collusion Monopolists are not allocatively efficient, because they do not produce at the quantity where P = MC. 6) Which one of the following characteristics applies to oligopolistic markets? b) it will lower the firm's costs 1) All games share four common features. In the graph, the price elasticity of demand is ______ below the price of P0. Thus, it induces interdependence in the network. 3) Canada's anti-combine law is enforced by What are the 4 characteristics of oligopoly? It also means that each firm must be aware of the reaction of others to their actions. d) easier. found that the most prevalent disorder was a) price changes occur slowly a) inelastic Answer: An oligopoly is an industry which is dominated by a few firms. A) Each firm faces a downward-sloping demand curve. D) zero. Nokia, however, offers Android phones with the same features and almost similar prices. B) both firms comply with the agreement. E) the firms are interdependent. In the credit card industry, for example, Visa and MasterCard have a duopoly. Which of the following is not a characteristic of an oligopoly? A. firms have no control over their price B. firms may sell a differentiated product C. firms have market power D. firms may sell a standardized product E. the market contains a few large products A, C In an oligopolistic market, the two types of retaliation include. c) inflexible C) changes in the output of any member firms will have no impact on the market price. OA. 21) It is difficult to maintain a cartel for a long period of time. Based on the elasticity of demand and its response to the price change, the demand curveDemand CurveDemand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. b) Localized markets D. El desempleo voluntario hace que no se produzca el crecimiento econmico. Pure oligopoly - have a homogenous product. a) low to receive a payout of $15 b) They achieve productive efficiency because their marginal revenue equals marginal cost. 2) In the dominant firm model of oligopoly, the larger firm acts like What are the 4 characteristics of oligopoly? 11) Which one of the following quotations best describes a dominant firm oligopoly? Perfect competition is a market in which there are a large number of buyers and sellers, all of whom initiate the buying and selling mechanism. Brand reputation, company size, and minimal completion make decision-making crucial and influential across the group. Strategic independence. You may also have a look at the following articles , Your email address will not be published. *It enhances competition and reduces monopoly power. c) losses; prices; increase, What is it called when a group of producers creates a formal written agreement stating the level of output by each firm and the prices that must be charged? d) Oligopolistic collusion, Compared to monopolies, oligopolies ______. Advertising benefits society by ______. ratio. d) through advertising, Firms have a desire to cheat on a collusive agreement because ______. E) produce the efficient quantity. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. Oligopolies are typically composed of a few large firms. 5) According to the kinked demand curve theory of oligopoly, each firm believes that if it raises its price, d) cost leadership. *providing misleading information Such companies have complete control of the market, earning high profits and gains in a specific sector or service. Thus, the land is worth ), Which of the following is true about the oligopolist if rivals match a price cut but ignore a price increase? A(n) _______ (Enter one word) is a market dominated by a few large producers of a homogeneous or differentiated product. a) localized markets Determinants of Price Elasticity of Supply. Patent rights or accessibility to technology may exclude potential competitors. A price war is a competition among the competitors of the business in lowering the price of their products to gain an advantage over their competitors in price and capture a greater market share. issued for the land? This is different compared to the perfectly competitive market and the monopolistic market that consist of a large number of sellers whereas there is only one sole seller in the monopoly market. 3) The Nash equilibrium for a sequential game in a contestable market with locked-in first stage prices results in d) Interindustry competition, Which are barriers to entry in both monopolies and oligopolies? In doing so, they reduce production and increase prices, a phenomenon called collusion. 16) A monopolistically competitive firm is like an oligopolistic firm insofar as A) both face perfectly elastic demand. e) It could be downward sloping or kinked. What are three models used to study pricing and output by oligopolies? Oligopolies exist and do not attract new rivals because A) of competition. $4. Is Microsoft an oligopoly Do you want to know Click Here. C. The choices made by one firm have a significant effect on other firms. 11) Because an oligopoly has a small number of firms, A) each firm can act like a monopoly. In second-degree price discrimination the monopolist offers a menu of quantity-based pricing options designed to induce customers to self-select based on how highly they value the product. 3) Which one the following industries is the best example of an oligopoly? C)The sales of one firm will not have a significant effect on other firms. It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. E) Bud and Miller each have a dominant strategy. 8) A weakness of the kinked demand curve theory of oligopoly is that it does not E) Each firm has an incentive to cheat. D) Gear cheats, while Trick complies with the agreement. B) 1. a) productive efficiency but not allocative efficiency The firms in the oligopolistic market are having full knowledge about the market particularly about their rival firms. What is the characteristics of oligopoly? As a result, monopolists produce less, at a higher average cost, and charge a higher price than would a combination of firms in a perfectly competitive industry. *manipulating consumer preferences A) behave competitively. D) neither is protected by high barriers to entry. However, at this price profit of firm B is not maximized. d) its rivals match price decreases but ignore price increases, d) its rivals match price decreases but ignore price increases, Which of the following is true about the oligopolist if rivals match a price cut but ignore a price increase? e) straight C) perfectly elastic demand. *It enhances competition and reduces monopoly power. b) Collusive pricing model The distinctive feature of an oligopoly is interdependence. d) By updating manufacturing equipment, What is the four-firm concentration ratio? Determinateness of demand curve is a part of law of demand and does not fall in oligopoly. In December, General Motors produced 6,600 customized vans at its plant in Detroit. *interindustry competition a) pricing theory bc it's similar to monopoly but has the difference of having more firms lol. Oligopolyis a market structure c) They move leftward and upward to a higher point on the average-total-cost curve. Hence, undoubtedly it will react to the price reduction decision. c) its rivals match a price increase but ignore a price cut 6) According to the kinked demand curve theory of oligopoly, at the quantity corresponding to the kink, the firm's E) All of the above. D) in neither a repeated game nor a single-play game. C) Parliament. a) It could be downward or upward sloping. Monopolistic Competition 4. Imperfect or Differentiated Oligopoly: ADVERTISEMENTS: c) An outcome in the payoff matrix from which neither firm wants to deviate since the current strategy is optimal given the rival's strategic choice. 300 laborers were employed at the plant that month. Segn Ricardo no es posible que exista equidad en el mercado debido a que: A. b) Interindustry competition Features: Many and small sellers, so that no one can affect the market 1) A cartel is a group of firms which agree to A) behave competitively. B) in a single-play game but not a repeated game. A) Each firm has an incentive to collude. b) Mutual interdependence As in an oligopoly market, the decision of one firm influences the process and working of another firm. 13) A tit-for-tat strategy can be used b) flexible D) assumes that competitors will match price cuts and ignore price increases. Since there are few dominating firms which are having full knowledge about the market, the decisions on the price and output of a firm depend on the reactions of other firms. ), Oligopolists often compete through product development and advertising instead of price because ______. D) There is more than one firm in the industry. It is calculated by dividing the change in the costs by the change in quantity.read more is the cost of productionCost Of ProductionProduction Cost is the total capital amount that a Company spends in producing finished goods or offering specific services. We reviewed their content and use your feedback to keep the quality high. *To increase economies of scale. b) collusion The most important model of oligopoly is the Cournot model or the model of quantity competition. The demand curve will look kinked to reflect the fact that rivals will match price *decreases* but ignore price *increases*. An oligopoly in economics refers to a market structure comprising multiple big companies that dominate a particular sector through restrictive trade practices, such as collusion and market sharing. 18) A market with a single firm but no barriers to entry is known as Why Developing Countries Should Focus on International Trade? c) Kinked-supply curve model b) increasing monopoly power b) They try to avoid losses by raising prices in conjunction with rival firms. D) its profit will rise by the same percentage. Any change in either of them will affect the quantity/output sold by a producer. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. A) in a single-play game or a repeated game. Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. E) rules, strategies, payoffs, and outcome. ) Social Studies, 22.06.2019 00:00. *Prohibit the entry of new rivals, *Reduce uncertainty Non-Collusive Oligopoly-Sweezy's Kinked Demand Curve Model (Price-Rigidity) Usually, in Oligopolistic markets, there are many price rigidities. D) marginal revenue curve is discontinuous. B) both prisoners deny. C) the same as a monopoly. b) There are barriers to entry into the market. They believe in making customers stick to their brands for core competenciesCore CompetenciesThe core competencies in business refer to its resources and unique fundamental capabilities that distinguish it from market competitors. What are the 4 characteristics of oligopoly? Our assessments, publications and research spread knowledge, spark enquiry and aid understanding around the world. e) Its marginal cost curve is made up of two segments, d) Its marginal revenue curve would consist of two segments. Marginal revenue = Change in total revenue/Change in quantity sold. b) An outcome in the payoff matrix from which both firms want to deviate since the current strategy is not optimal for either firm. B) equilibrium price and quantity will be insensitive to small cost changes. *It lowers search costs of information for consumers. B) the firms may legally form a cartel. A) a market where three dominant firms collude to decide the profit-maximizing price. B) a contestable market. What is the Nash equilibrium? EconTips 2022 - All Right Reserved, Designed and Developed by Harshasoft, Perfect Competition: Definition, Graphs, short run, long run, Monopoly Price discrimination: Types, Degrees, Graphs, Examples, Monopolistic Competition Equilibrium| Long-run| Short-run. True or false: A one-time game occurs when firms will choose their pricing strategy for today without concern about future interactions with their rivals. D) equilibrium quantity will be sensitive to small cost changes but price will not. E) none of the above. E) a market with two distinct products. Barriers to entry into an oligopoly most resemble those of a ______. Which of the following represents the problem with the four-firm concentration ratio? A) This game has no dominant strategies. b) kinked demand The point at which an upward-sloping marginal cost curve intersects a downward-sloping marginal revenueMarginal RevenueThe marginal revenue formula computesthe change in total revenue with more goods and units sold." a) Import competition Oligopoly refers to a market situation or a type of market organisational in which a few firms control the supply of a commodity. a) gentleman's agreement B) a market where two firms compete for profit and market share. B) raise the price of their products. There are just several sellers who control all or most of the sales in the industry. *mutual interdependence After each player chooses his or her best strategy and sees the result, Impure oligopoly - have a differentiated product. True or false: A cartel abides by a formally written agreement that specifies the output and price of each member firm and is a form of overt collusion. As their products seem visually identical, both the brands have to make sure they offer customers something that the other does not. d) does not influence. c) Dominant firms C) firms in monopolistic competition. (Pure) Monopoly 3. B) each member will face the temptation to cheat on the cartel price to increase its sales and profit. 4. How are profitability and risk impacted by changes in the current liabilities to total assets ratio? Types of Market Structure Economists group industries into four distinct market structures: 1. they will make more pricing low than if they both price high. So when an oligopolist decreases prices to increase output, others follow the path. *increasing sales and output That means higher the price, lower the demand. D) There is more than one firm in the industry. Four characteristics of an . *The game would eventually end in the Nash equilibrium (cell B or C). E) equilibrium price and quantity will be insensitive to small demand changes. B) a market where two firms compete for profit and market share. Cost of firm A is lower than firm B Profit maximizing price and quantity of firm A is PA and XA respectively. The concept serves to be useful for companies focusing on multiple product lines and operating more than one business unit at a time. a) increasing firm profits (Figure) summarizes the characteristics of each of these market structures. C) other firms will raise their prices by an identical amount. This way, Samsung and Nokia ensure non-price competition by enhancing core capabilities to build a loyal customer base. Product differentiation refers to making a product look attractive and different from other products in the same class. When the number of firms in an oligopolistic industry increases from 3 to 10, it is ______ to collude. In other words, when there are two or more than two, but not many, producers or sellers of a product, oligopoly is said to exist. (Enter one word per blank. C. La sociedad se encuentra dividida entre capitalistas, terratenientes y trabajadores. D) is; the smaller firms cannot become the dominant firm Which scenario describes a simultaneous game? A characteristic found only in oligopolies is A) break even level of profits. a) Kinked-demand curve model Raised barriers to entry, price-making power, non-price competition, the interdependence of firms, and product differentiation are alloligopoly characteristics. E) an outcome. B. D. 2021. C) "If only Wally and I could agree on a higher price, we could make more profits." The payoff matrix of economic profits above displays the possible outcomes for Bob and Jane who are involved in game of whether or not to advertise. D) a prisoner has no incentive to confess to his crime, and stands a greater chance of not going to prison. d) have interdependent pricing. B) rivalry among a large number of rivals leads to lower overall profit. Consequently, the output and pricing policies of a particular company can affect market conditions. Increasing returns to scale is a term that describes an industry in which the rate of increase in output is higher than the rate of increase in inputs. E) None of the above. c) They lose most of their excess-production capability. It is the most important feature of an oligopolistic market. An oligopoly is a market structure that involves few producers and suppliers (www.oecd.org). Many firms b. It encompasses several industries, including banking and investment, consumer finance, mortgage, money markets, real estate, insurance, retail, etc. They do so through collusion that results in higher prices and fewer production or product choices for customers. D) the four-firm concentration ratio for the industry is small. a) are monopolies d) cheat, Which of the following represent shortcomings of the four-firm concentration ratio? E) a cartel. b) u-shaped d) The market contains a few large producers. Experts are tested by Chegg as specialists in their subject area. And rest of the businesses or minor players follow the same. *The game would temporarily move to either cell B or cell C. Chapter 14 Oligopoly and Strategic Behavior L, ECON 1001: Chapter 20 (Public Finance and Exp, Test Practice Questions (Exam 3), Chapter 10, ECON 1001: Chapter 23 (Income Inequality, Pov, Fundamentals of Engineering Economic Analysis, David Besanko, Mark Shanley, Scott Schaefer, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal, Alexander Holmes, Barbara Illowsky, Susan Dean. The equilibrium ________ a dominant strategy equilibrium because the strategy in this game is for a firm ________. Which is the simple form of oligopoly market? *Preemptive pricing E 12) Because an oligopoly has a small number of firms A) each firm can act like a monopoly. d. 2. . E) is not; frequently one of the smaller firms becomes the dominant firm, and the original dominant firm becomes less important. at least $10 million. While AI integration in the medical, legal, and financial sectorsFinancial SectorsThe financial sector refers to businesses, firms, banks, and institutions providing financial services and supporting the economy. b) high to receive a payout of $15 C) potential entrants entering and making zero economic profit. D) a firm in perfect competition. c) The possibility of price wars increases, but profits are maximized. *It helps reduce demand for material products. The profit-maximizing price of firm B is PB(>PA) and the quantity is Xbe. If one firm is large enough to account, which is that 80% of sales in the industry. It continues to behave on the assumption that its new demand (d 1 d' 1 ) will not shift further because the effect of its own decisions on other sellers' demand would be negligible. C) lower the price of their products. *Ownership and control of raw materials e) Price leadership model, a) Kinked-demand curve model 4) According to the kinked demand curve theory of oligopoly, each firm thinks that demand just below the price at the kink is A) less elastic than the demand just above the price at the kink. B) the firms may legally form a cartel. A) only Bob would like to change his decision. The policy implementation process has not taken in to account the life of rural peasants living in vicinity of cities. b) The possibility of price wars diminishes, but profits might be lower. B) "I am producing more widgets than Wally and I agreed to in our talk last week." An oligopoly is a market structure with a small number of firms, none of which can keep the others from having significant influence. A Which of the following is not a characteristic of oligopoly? a) their prices will be unchanged . Oligopoly is an important form of imperfect competition. Based on the figure, if RareAir honors an agreement with Uptown to price high, and Uptown needs to increase profits due to stockholder pressure, Uptown will price ______. C) a firm in monopolistic competition. c) horizontal or perfectly elastic C. Some market power. The land is in an area zoned only for C) specify how marginal cost is determined. c) The percentage of total industry sales accounted for by the four largest firms c) An outcome in the payoff matrix from which neither firm wants to deviate since the current strategy is optimal given the rival's strategic choice. A type of implicit understanding used by oligopolists to coordinate prices without engaging in outright collusion is known as ______. Gentleman's agreements are a type of covert collusion, occurring in social settings where a product's _____ is agreed upon and market shares are determined by _____ competition. The value denotesthe marginalrevenue gained. What kind of game is it if the firms must choose their pricing strategies at the same time? read more, market demand, and product differentiationProduct DifferentiationProduct differentiation refers to making a product look attractive and different from other products in the same class. a market structure characterized by a small number of interdependent sellers is called a oligopoly Which of the following is NOT a common characteristic of oligopoly? For example, the existing firms might threaten to reduce the price drastically if entry occurs. D) entry into the industry of rival firms will have no impact on the profit of the cartel. e) increasing search time. b) demand; losses; increase e) straight. Oligopolistic behavior implies that oligopolists prefer competition ______. Oligopoly is a market with a few firms and in which a market is highly concentrated. D) is not; to comply when the other firm complies and to cheat when the other firm cheats D) "I have been spending extra on research and development of my new two-way widget." La renta de la tierra de primera calidad ser siempre superior a la renta de la tierra de segunda categora. a) payoff C) equilibrium price will be sensitive to small cost changes but quantity will not. In an oligopoly, dominant market players are influential enough to decide on the price of products and services. d) Its marginal revenue curve would consist of two segments Such companies have complete control of the market, earning high profits and gains in a specific sector or service. The need to spend a huge amount of money on name recognition and market reputation may discourage entry by new firms. In third-degree price discrimination happens when customers are segregated by . *The game would eventually end in the Nash equilibrium (cell A). E) A and C. 8) A merger is unlikely to be approved if ________. b) neither productive efficiency nor allocative efficiency A. ENGL1190_V0854_2023WI_Communications23.docx. So go ahead and leave a comment below. What happens to oligopolistic firms when a recession occurs? *It eliminates competition among firms. B) revenues, elasticity, profit, and payoffs. E) none of the above. *The firm's profits will be lower.

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