e) increasing search time. c. Competing firms can enter the industry easily. A) equilibrium price and quantity will be sensitive to small cost changes. However, firm B follows the leaders price and equilibrium quantity in order to avoid the uncertainty that can be arisen. O B. Pure (Perfect) Competition. d) Dominant firms, What are oligopolists able to do by controlling price through collusion? C) a perfectly competitive market. E) none of the above. B) total revenue. 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. D) There is more than one firm in the industry. c) Blue jean designer A) oligopolists. 26) Refer to Table 15.3.4. e) Firms may sell a differentiated product. 3) Canada's anti-combine law is enforced by Interdependence what are the 5 characteristics of an oligopoly? Why Developing Countries Should Focus on International Trade? D) specify how average cost is determined. Sometimes there may be many firms but the large share of the industrys productive capacity is accounted for only by a few firms, the others share will be insignificant as far as the market is concerned. What are the 4 characteristics of oligopoly? Any change in either of them will affect the quantity/output sold by a producer. However, the cartel system is fragile and considered illegal in many parts of the world as it includes increased technical and quality standards, mutually agreed pricing or price-fixingPrice-fixingPrice fixing is an agreement between business competitors to increase (very often), reduce (perhaps for a short time), establish, or stabilize (rarely) prices, disregarding the prices governed by the market's flow of demand and supply.read more, etc. e) through cartels, c) through product development Consider a simple case of three firm oligopoly. 5. C) strategies Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. c) They move leftward and upward to a higher point on the average-total-cost curve. d) have interdependent pricing. D) Dr. Smith advertises only if Dr. Jones advertises. *localized markets, *dominant firms a) payoff The financial sector refers to businesses, firms, banks, and institutions providing financial services and supporting the economy. If productivity can be increased to $0.11 vans per labor hour, how many hours would the average laborer work that month? Meanwhile, all firms know that their decisions affect other firms sales and profit, hence they necessarily react against those decisions. Updated: Aug 16, 2022. command economy, economic system in which the means of production are publicly owned and economic activity is controlled by a central authority that assigns quantitative production goals and allots raw materials to productive enterprises. In other words, Therefore, within the oligopoly market the "ordinary" producers must have careful preparation to follow the changes in a policy coming from the main producers. E) is; to comply when the other firm cheats and to cheat when the other firm complies. 16) The firms Trick and Gear form a cartel to collude to maximize profit. *The firm's profits will be higher. Mr. mann's science students were experimenting with speed. C) firms in monopolistic competition. D) There is more than one firm in the industry. 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. c) regulated monopoly La renta de la tierra de primera calidad ser siempre superior a la renta de la tierra de segunda categora. 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. C) Trick cheats, while Gear complies with the agreement. c) game theory Businesses in such a market collaborate to dominate the rest of the players and maximize joint revenue. C) other firms will raise their prices by an identical amount. Course Hero is not sponsored or endorsed by any college or university. Strategic independence. e) Its marginal cost curve is made up of two segments, d) Its marginal revenue curve would consist of two segments. When the negotiations began, DTR had debt of$80 million and equity of $50 million. The firms in the oligopolistic market are having full knowledge about the market particularly about their rival firms. E) None of the above. a) often c) through collusion The key characteristics of an oligopoly market structure include: Few firms : There are only a few firms in the market, which makes it easy for the firms to coordinate their behavior and to reach . Even though the products of companies A and B are similar, there must be something that distinguishes them. Over a long time period, cheating ______ collusive oligopolies a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and . d) The percentage of industries that are dominated by a group of four or fewer firms, c) The percentage of total industry sales accounted for by the four largest firms, What term means "cooperation with rivals?" A) 0. Compared to pure monopolies, oligopolies ______. b) Interindustry competition c) its rivals match a price increase but ignore a price cut A) price. a) Import competition The land is in an area zoned only for OA. C) Firms in the cartel will want to raise the price. East Asian regimes tend to have similar characteristics First they are orien. 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. *It eliminates competition among firms. D) "I have been spending extra on research and development of my new two-way widget." b) its rivals match a price cut but ignore a price increase Wal-Mart's marginal cost of a flat panel TV has fallen, and as a result Wal-Mart will ________. 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. It also means that each firm must be aware of the reaction of others to their actions. The factors that determine a market structure include the number of businesses, control over prices, and barriers to market entry. Impure because have both lack of c) The possibility of price wars increases, but profits are maximized. marginal cost pricing The joining of firms that are producing or selling a similar product is a horizontal merger Suppose an industry has total sales of $25 million per year. B) both firms comply with the agreement. 0. Marginal revenue = Change in total revenue/Change in quantity sold. This way, Samsung and Nokia ensure non-price competition by enhancing core capabilities to build a loyal customer base. debt to equity ratio and that it will be reversed whenever the presidents friend wants the 7) The kinked demand curve theory of oligopoly predicts that C) changes in the output of any member firms will have no impact on the market price. d) price changes are often difficult to match It is one of the four market situations, including perfect competitionPerfect CompetitionPerfect competition is a market in which there are a large number of buyers and sellers, all of whom initiate the buying and selling mechanism. c) Its marginal cost curve is made up of two segments Barriers to entry. E) a cartel. Furthermore, no restrictions apply in such markets, and there is no direct competition. B) it prevents or substantially lessens competition In doing so, they reduce production and increase prices, a phenomenon called collusion. The marketers of Budweiser Light beer and Miller Lite beer must decide whether or not to offer new advertising campaigns promoting their products. c) high to receive a payout of $12 36) Refer to Table 15.3.10. It helps avoid the potential price war and price rigidity. b) legal a) Import competition e) undefined, In the graph, the price elasticity of demand is highly ______ above the price of P0. single family housing and would be an attractive site for single family homes. 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. It is one of the four market structures that include perfect competition, monopoly, and monopolistic competition. Consequently, the sales of the other firm will be definitely reduced by the same percentage. Such companies have complete control of the market, earning high profits and gains in a specific sector or service. Oligopoly Models: 1. Our assessments, publications and research spread knowledge, spark enquiry and aid understanding around the world. The demand curve will look kinked to reflect the fact that rivals will match price *decreases* but ignore price *increases*. a) It could be downward or upward sloping. An oligopoly (from Greek , oligos "few" and , polein "to sell") is a market form wherein a market or industry is dominated by a small group of large sellers (oligopolists). In the credit card industry, for example, Visa and MasterCard have a duopoly.read more. B. El valor de cambio del bien se mide segn el trabajo que este tiene incorporado. B) there are two producers of two goods competing in an oligopoly market An oligopolistic firm's marginal revenue curve is made up of two segments if ______. 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. Which scenario describes a simultaneous game? a) are monopolies Pure oligopoly - have a homogenous product. It is used as one of the strategies to increase the business firm's revenue and increase the market share. b) are few in number Firms are more likely to cheat on a collusive agreement when the economy is experiencing a _____ (Enter one word). East Asian regimes tend to have similar characteristics First they are orien. b) product development and advertising are relatively difficult to copy What happens to oligopolistic firms when a recession occurs? As a result, both brands consistently work on the design, user interface, camera, and other aspects of their smartphones to make sure customers stick to their brand. Greater the number of firms, the higher the degree of interdependence. *world trade read more rather than lower prices to gain profits and market share. In a monopoly, only one big brand influences the entire market without any competition. Oligopolists do not compete with each other. d) through advertising A Computer Science portal for geeks. a) They may produce homogeneous or differentiated products. E) none of the above. B) the firms may legally form a cartel. Economies of scale are the cost advantage a business achieves due to large-scale production and higher efficiency. C) rules, strategies, profit, and outcome. Oligopolies are typically composed of a few large firms. Economists identify four types of market structures: (1) perfect competition, (2) pure monopoly, (3) monopolistic competition, and (4) oligopoly. Market players in an oligopolistic market focus on non-price competition, ensure their brands are uniquely identifiable and apply hidden advertising tactics. 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 ______. A) zero economic profits in the long-run. price rigidity Element of monopoly. B) "Every time Sparrow's Donuts has a donut sale, so does Tim Horton's." Companies often merge to ______ monopoly power. b) Mutual interdependence A dominant-bank oligopoly confronting a competitive fringe There are two sets of banks: dominant banks and fringe banks. They do it strategically so they do not lose their customers in what could be a price war. However, DTR does not intend to build any single family homes. 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. 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 . A) there are only two producers of a particular good competing in the same market Which of the five do you feel is the most important? E) other firms will not raise theirs. b) potential for mergers and acquisitions a) gentleman's agreement Imperfect or Differentiated Oligopoly: ADVERTISEMENTS: However, too much price decrease can lead to a price warPrice WarA 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. *The game would temporarily move to either cell B or cell C. 18) A market with a single firm but no barriers to entry is known as a. small number of firms b. has some pricing power c. the firms are interdependent d. the good produced may be unique or not e. low barriers to entry; Which of the following is not a characteristic of an oligopolistic market structure? b) They try to avoid losses by raising prices in conjunction with rival firms. *It enhances competition and reduces monopoly power. c) price leadership D) if Bob does not change his decision, Jane would like to change hers. Because of their large size and minimal competition, each firm in an oligopoly market structure influences the others. C) in a repeated game but not a single-play game. a) increasing firm profits 3) The Nash equilibrium for a sequential game in a contestable market with locked-in first stage prices results in OA. D) Consumers will eventually decide not to buy the cartel's output. A) each firm can act like a monopoly. b) The Herfindahl model Marilyn is also aware that DTR issued$10 million of common stock to a long-time friend of the What are three models used to study pricing and output by oligopolies? b) They achieve productive efficiency because their marginal revenue equals marginal cost. 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 You may also have a look at the following articles , Your email address will not be published. If so, then the firm's demand curve will be ______. $15. After each player chooses his or her best strategy and sees the result, A game that is played more than once between rivals is a ____ (Enter one word) game. *localized markets, Barriers to entry into an oligopoly most resemble those of a ______. A market is considered to be a(n) ______ when the largest four firms in an industry control more than 40% or more of the market. 8) Firm X is competing in an oligopolistic industry. Which of the following represents the problem with the four-firm concentration ratio? The profit-maximizing price of firm B is PB(>PA) and the quantity is Xbe. If one of the firms cheats on this agreement, what will happen? *manipulating consumer preferences 11) Because an oligopoly has a small number of firms, A) each firm can act like a monopoly. 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. 4. Oligopoly is said to prevail when there are few firms or sellers in the market producing or selling a product. It is an essential component of marketing strategy leading to brand recognition and business growth. a) Firms have no control over their price. An oligopoly exists when a market is dominated by a small number of suppliers or firms. Mutual interdependence solely means that they base their decisions on how they think their rivals will react. E) only when there is no Nash equilibrium. The labor productivity at this plant is known to have been 0.100.100.10 vans per labor-hour during that month. D) its profit will rise by the same percentage. ECO-FINALS_LESSON-1 - Read online for free. Without collusion, if a firm incorrectly assumes that its rivals will charge the same price but its rivals actually charge a lower price, the firm's demand curve will shift to the ____. 10) In the dominant firm model of oligopoly, the dominant firm produces the quantity at which marginal revenue equals Monopolistic Competition and Economic Efficiency, Monopolistic Competition Equilibrium| Long-run, Short-run, What is Inflation Mean | Definitions, Types, Causes, How to Calculate the GDP [Definition & Formula], Main Theories of Inflation (With Diagram), Indifference Curve Q&A [Download Indifference Curve Pdf]. B) a market where two firms compete for profit and market share. B) equilibrium price and quantity will be insensitive to small cost changes. 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." d) can set its price and output to maximize profits. 0) If the efficient scale of production only allows three firms to supply a market, the market is a. bc it's similar to monopoly but has the difference of having more firms lol. A firm in an oligopolistic market ______. It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. 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) competitively Oligopoly is a market structure characterized by a few firms. E) an oligopoly. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. $4. Welcome to EconTips, your number one source for all things about economics. B) marginal cost curve is discontinuous. C) if Jane does not change her decision, Bob would like to change his. D) in neither a repeated game nor a single-play game. A) average total cost curve is discontinuous. D. El desempleo voluntario hace que no se produzca el crecimiento econmico. *Prohibit the entry of new rivals. *To increase control over the product's price You can calculate it by adding Direct Material cost, Direct Labor Cost, & Manufacturing Overhead Cost. 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. 13) Complete the following sentence. b) demand; losses; increase b) collusion The need to spend a huge amount of money on name recognition and market reputation may discourage entry by new firms. d) Mutual interdependence. True or false: Firms in an oligopoly always produce a homogeneous product. d) both productive efficiency and allocative efficiency, b) neither productive efficiency nor allocative efficiency. C. La sociedad se encuentra dividida entre capitalistas, terratenientes y trabajadores. c) Firms earn zero economic profits in the long-run. Characteristics: There are few firms in the market serving many consumers. Therefore, necessarily they tend to react. Despite having the same market share, a smaller number of firms causes oligopolists to get influenced by each others decisions, such as price cuts and increases. Their differences can range from. as the price increases, demand decreases keeping all other things equal.read more shifts. c) is always downward sloping The distinctive feature of an oligopoly is interdependence. A) there are fewer than 6 firms in a market How are profitability and risk impacted by changes in the current liabilities to total assets ratio? c) The outcomes for all firms are positive. characterized by the presence of a few large firms who produces . Hence, undoubtedly it will react to the price reduction decision. C) Parliament. a) The number of average-sized firms in an industry needed to produce sales equivalent to the four largest firms Advertising benefits society by ______. In the scenario above, the market is. Strategic independence. b) greater than or equal to 50% B) Other firms will enter the industry. What kind of problem does this represent with the four-firm concentration ratio? a) Kinked-demand curve model D) the four-firm concentration ratio for the industry is small. D) a firm in perfect competition. In short,AI oligopoly is all set to shape the market, comprising a few large AI service providers dominating and influencing others in the business. Marginal cost formula helps in calculating the value of increase or decrease of the total production cost of the company during the period under consideration if there is a change in output by one extra unit. 2) In the dominant firm model of oligopoly, the larger firm acts like d) The market contains a few large producers. 9) If the efficient scale of production only allows three firms to supply a market, the market is a, 10) A cartel is a group of firms that agree to. *interindustry competition b) it will lower the firm's costs A) Dr. Smith advertises no matter what Dr. Jones does. 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. Which of the following is characteristic of oligopoly, but not of monopolistic competition? Which of the following is not a characteristic of oligopoly? C) both have MR curves that lie beneath their demand curves. O D. Some barriers to entry. c) A more efficient industry The study of how people behave in strategic situations is called _____ theory. d) They do not achieve allocative efficiency because their price exceeds marginal cost. Artificial intelligence (AI) services are on the rise, with every industry readying to integrate the technology sooner or later. An oligopoly is an industry dominated by a few large firms (Few sellers supplying, many buyers). 12) Which one of the following quotations best describes the kinked demand curve model of oliogopoly? Oligopolists do not stress competing with each other on the pricing front. An oligopoly is a market state where there is a limited amount of competition available for consumers to consider. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. d) The firms in the industry are interdependent. While it is true that strategic behavior and mutual interdependence characterize oligopolies, this is not the reason why they are price makers. c) conveying information to consumers In third-degree price discrimination happens when customers are segregated by . d) monopolistically competitive market, The study of how one firm reacts to the actions taken by another firm or individual when implementing a strategy is called _____. Answer: An oligopoly is an industry which is dominated by a few firms. Firms are profit-maximizers. Brand reputation, company size, and minimal completion make decision-making crucial and influential across the group. A) rules ADVERTISEMENTS: This fact is recognized by all the firms in an oligopolistic industry. What is oligopoly and its characteristics? Features: Many and small sellers, so that no one can affect the market c) costs; uncertainty; increase a) Firms have no control over their price. E) potential entrants taking all the business away from existing firms. Thus, each firm gains a considerable market share with minimal potential profits. B) raise the price of their products. 9) Which isnota characteristic of oligopoly? Interdependence: The foremost characteristic of oligopoly is interdependence of the various firms in the decision making. a) depends on the actions of rivals to price changes b) u-shaped 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. Is Microsoft an oligopoly Do you want to know Click Here. C. Some market power. c) Kinked-supply curve model b) It will always be downward sloping because it is a price maker. b) kinked demand B) the firms may legally form a cartel. C) is; the dominant firm is making an economic profit Impure oligopoly - have a differentiated product. *Cause price wars during business recessions b) neither productive efficiency nor allocative efficiency What are the 4 characteristics of oligopoly? E) specify what happens if costs change. c) may be less desirable because they are not regulated by government to protect consumers *The game would eventually end in either cell B or cell C. *The firm's demand curve will shift further to the right. C)The sales of one firm will not have a significant effect on other firms. Marginal revenue = Change in total revenue/Change in quantity sold. A) a market where three dominant firms collude to decide the profit-maximizing price. as the price increases, demand decreases keeping all other things equal. The existence of oligopoly requires that a few firms are able to gain significant market power, preventing other, smaller competitors from entering the market. *Diseconomies of scale c) kinked It is used as one of the strategies to increase the business firm's revenue and increase the market share.read more. Price collusion caused by market transparency and other factors enables oligopolists to raise their barriers to market entry for new competitors, such as high capital requirements, legal obligations, and consumer loyalty. 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.

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