C) strategies Marginal costMarginal CostMarginal 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. E) more elastic than the demand just above the price at the kink. a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and . Which of the following is not a characteristic of oligopoly? a. the bc it's similar to monopoly but has the difference of having more firms lol. C) Trick cheats, while Gear complies with the agreement. Oligopolistic firms do which of the following when they change their pricing strategies? However, DTR does not intend to build any single family homes. Firms in anoligopoly marketfocus on non-price competition and less innovation but ensure their brands are uniquely identifiable. d) their profits and sales will rise. B) both firms comply with the agreement. 2003-2023 Chegg Inc. All rights reserved. Oligopoly is an important form of imperfect competition. c) is always downward sloping B) in a single-play game but not a repeated game. Advertising can reduce efficiency by ______. d) The market contains a few large producers. 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) only Bob would like to change his decision. b) greater than or equal to 50% Furthermore, no restrictions apply in such markets, and there is no direct competition. c) may be less desirable because they are not regulated by government to protect consumers Monopolists are not allocatively efficient, because they do not produce at the quantity where P = MC. *mutual interdependence *price elasticity of demand Brand reputation, company size, and minimal completion make decision-making crucial and influential across the group. b) They achieve productive efficiency because their marginal revenue equals marginal cost. For a particular industry there may be a low four-firm concentration ratio since it is measured on a nationwide scale, but there can still be a local oligopoly. A) there are fewer than 6 firms in a market a) is needed in So here we can see a one-way interdependence pattern. Based on the figure, if one firm cheats on the collusive agreement it can increase its payoff by d) both productive efficiency and allocative efficiency, b) neither productive efficiency nor allocative efficiency. E)Firms are profit -maximizers. a) are always more efficient Sweezy Oligopoly - based on a very specific assumption regarding how other firms will respond to price increases and price cuts. chapter 26 oligopoly Flashcards | Quizlet at least $10 million. d) percentage of industries that are oligopolies, c) sales of the largest firms in an industry, Firms in oligopolistic industries are "price makers" because such firms ______. It is assumed that all of the sellers sellidentical or homogenous products.read more, monopoly, and monopolistic competition. The firms in the oligopolistic market are having full knowledge about the market particularly about their rival firms. OA. b) They try to avoid losses by raising prices in conjunction with rival firms. 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. E) rivalry of the participants leads to the worst solution from their point of view. b) are few in number b) Strategies are chosen for a single time period. Marginal revenue = Change in total revenue/Change in quantity sold. Keep its price constant and thus decrease its market share C. Increase its price and thus increase its market share D. Decrease its price and thus decrease its market share (Pure) Monopoly 3. d) Its marginal revenue curve would consist of two segments c) through collusion b) strengthens Such companies have complete control of the market, earning high profits and gains in a specific sector or service. a) pricing theory Market players in an oligopolistic market focus on non-price competition, ensure their brands are uniquely identifiable and apply hidden advertising tactics. Use the figure below to answer the following question. d) Oligopolistic collusion, Compared to monopolies, oligopolies ______. Collusion becomes more difficult as the number of firms ____. 15 Oligopoly Advantages and Disadvantages - ConnectUS 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. b) flexible Small Number of Number: The number of firms in an oligopoly market is small where each firm controls an important proportion of the total supply. d) have interdependent pricing. Also, they rely on free-market forces to earn higher profits than a competitive market. 8) Which of the following quotes shows a contestable market in the widget industry? The policy implementation process has not taken in to account the life of rural peasants living in vicinity of cities. Mutual interdependence among the firms in decision making is the essential feature of the oligopolistic market. Question: Which of the following is NOT a characteristic of an oligopoly? A) "Gas prices in this town always go up and down together." e) straight. 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). Oligopoly is said to prevail when there are few firms or sellers in the market producing or selling a product. For example, the existing firms might threaten to reduce the price drastically if entry occurs. (Enter one word per blank. Demand and cost differences, the number of firms in the industry, and the potential for cheating all represent _____ (one word) to collusion. A) "I am producing extra widgets, even though it costs me short-run profits, to stop Wally's Widgets from expanding into my market." The labor productivity at this plant is known to have been 0.100.100.10 vans per labor-hour during that month. The payoffs in the table are the economic profit made by Bud and Miller. That means higher the price, lower the demand. C) 2. E) a cartel. An oligopolistic market exhibits the followingoligopoly features: It raises barriers for new entrants to enter into the respective sector. *The firm's profits will be higher. Interdependence: The foremost characteristic of oligopoly is interdependence of the various firms in the decision making. C) in a repeated game but not a single-play game. 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 . Oligopoly: Definition, Characteristics and Concepts - Toppr-guides Market Structures - Market Structures Characteristics of 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. *Cause price wars during business recessions b) Demand is highly elastic below the going price 16) The firms Trick and Gear form a cartel to collude to maximize profit. 6) Which one of the following characteristics applies to oligopolistic markets? D) is not; to comply when the other firm complies and to cheat when the other firm cheats *Preemptive pricing c) conveying information to consumers 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. b) Collusive pricing model 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. e) straight The number of suppliers in a market defines the market structure. Oligopoly Characteristics: 4 Important Characteristics of Oligopoly Pure because the only source of market power is lack of competition. E) None of the above. The firms produce differentiated products. b) depends on the firm's cost structure The market share of the firms is unequal. D) A and B. The distinctive feature of an oligopoly is interdependence. c) price leadership Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. 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. C) other firms will raise their prices by an identical amount. To further understand market modules follow the below topics. The concentration ratio measures the market share of the. 6) According to the kinked demand curve theory of oligopoly, at the quantity corresponding to the kink, the firm's It helps avoid the potential price war and price rigidity. Solved Which of the following is NOT a characteristic of an - Chegg Oligopoly: Definition, Characteristics & Examples | StudySmarter 7) The kinked demand curve theory of oligopoly predicts that Business Economics Consider a Cournot oligopoly with n = 2 firms. c) Dominant firms d) lowering the cost of production a) There are a few large firms that make up the industry. 13) A tit-for-tat strategy can be used Characteristics and Features of Oligopoly (6 Answers) 11) Once a cartel determines the profit-maximizing price, The existence of oligopoly requires that a few firms are able to gain significant market power, preventing other, smaller competitors from entering the market. Which of the following is not a characteristic of oligopoly? Furthermore, no restrictions apply in such markets, and there is no direct competition. Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. Which is the simple form of oligopoly market? C) there are numerous producers of two goods competing in a competitive market *The firm's profits will be lower. complexes. Companies often merge to ______ monopoly power. *Patents, *Preemptive pricing C) the firms keep profits and prices so low that no rivals are . 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. B) assumes marginal cost is constant. 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. Some market power. $3. *Increase profits It is one of the four market structures that include perfect competition, monopoly, and monopolistic competition. xxx\underline{\phantom{\text{xxx}}}xxx. b) OPEC 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. d) Firms choose strategies at the same time. Assignment 7.pdf - Principles of Microeconomics Instructor: $4. A. cutting prices C) a firm in monopolistic competition. 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? Many firms b. e) Price leadership model, a) Kinked-demand curve model 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. D) Gear cheats, while Trick complies with the agreement. Their differences can range from. C) a perfectly competitive market. 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. *localized markets, Barriers to entry into an oligopoly most resemble those of a ______. Which of the following are characteristics of oligopolistic markets 5) A market with a dominant firm and with weak barriers to entry ________ in long-run equilibrium because ________. Some of its fundamental characteristics include the existence of a small number of firms, differentiated or homogeneous products, and barriers to entry. 6. B) "Every time Sparrow's Donuts has a donut sale, so does Tim Horton's." So when an oligopolist decreases prices to increase output, others follow the path. Demand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. When members of an oligopoly react to price changes by a ____ _____ dominant firm, the model is most applicable. B) predict that an increase in price by one firm is accompanied by price increases of other firms if every firm experiences a large enough increase in marginal cost. If productivity can be increased to $0.11 vans per labor hour, how many hours would the average laborer work that month? b) collusion model B) 1. *interindustry competition Impure because have both lack of B) total revenue. 2. Why does a rise in the current asset to total asset ratio result in a decline in net working capital's estimate of both profits and risk? In the graph, the price elasticity of demand is ______ below the price of P0. Let us consider the followingexamplesto understand the concept better: Samsung and Nokia are two big players in the Android smartphones industry, with the former trying to capture the market by keeping the price lenient. $1. *Ownership and control of raw materials document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright 2023 . *localized markets, *dominant firms D) Bud has a dominant strategy but Miller does not. It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. 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. The Oligopoly Market: Example, Types and Features | Micro Economics What would have been DTRs debt to equity ratio if the$10 million of stock had not been c) product development and advertising are relatively inexpensive a) Demand is highly elastic below the going price E) a cartel. D. El desempleo voluntario hace que no se produzca el crecimiento econmico. *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. (Figure) summarizes the characteristics of each of these market structures. A(n) _______ (Enter one word) is a market dominated by a few large producers of a homogeneous or differentiated product. c) horizontal or perfectly elastic Cost of firm A is lower than firm B Profit maximizing price and quantity of firm A is PA and XA respectively. It also means that each firm must be aware of the reaction of others to their actions. 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 . *To increase economies of scale. What kind of game is it when firms choose their optimal pricing strategy today without worrying about possible interactions in the future? Answer: An oligopoly is an industry which is dominated by a few firms. The financial sector refers to businesses, firms, banks, and institutions providing financial services and supporting the economy. *The game would eventually end in the Nash equilibrium (cell A). *The firm's demand curve will shift further to the left. c) Firms' advertising decisions are interdependent. C) assumes that marginal revenue equals marginal cost only at the quantity at the "kink." b) competitively E) is not; frequently one of the smaller firms becomes the dominant firm, and the original dominant firm becomes less important. a) its rivals do not respond to either a price cut or price increase B) revenues, elasticity, profit, and payoffs. ADVERTISEMENTS: This fact is recognized by all the firms in an oligopolistic industry. Share with Email, opens mail client Which one of the following observations is correct? It is the most important feature of an oligopolistic market. Which of the following are characteristics of oligopolistic markets? b) The Herfindahl model A situation where firms meet to fix prices, divide markets, or restrict competition is called ______. E) marginal cost. B) both can earn an economic profit in the long run. Oligopoly Models: 1. b) it will lower the firm's costs c) They lose most of their excess-production capability. A) Each firm faces a downward-sloping demand curve. what are the 5 characteristics of an oligopoly? Oligopoly - Definition, Market, Characteristics, How it Works? Each optometrist can choose to advertise his service or not. B) other firms will lower theirs. 9) Which is not a characteristic of oligopoly? they set up a 1 meter (100 cm) track. C) potential entrants entering and making zero economic profit. a) its rivals collude b) neither productive efficiency nor allocative efficiency Oligopolists in an oligopolisticmarket structure agree not to raise their prices but match only price cuts to avoid price rigidity. What are the four characteristics of market structure? c) kinked 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. True or false: Firms in an oligopoly always produce a homogeneous product. Save my name, email, and website in this browser for the next time I comment. b) are always less efficient d) By updating manufacturing equipment, What is the four-firm concentration ratio? What is the difference between monopoly and oligopoly? c) its rivals match a price increase but ignore a price cut A duopoly is d) They do not achieve allocative efficiency because their price exceeds marginal cost. D) equilibrium quantity will be sensitive to small cost changes but price will not. A) kinked demand curve. c) its rivals ignore price increases and price decreases Oligopoly - Definition, Characteristics and Examples | Microeconomics But in practice, there are several barriers to entre which make it quite difficult for the new firms to join the industry or market. A small number of sellers. D) increase the amount they produce. d) strategic theory. If a firm assumes that its rivals will match all price changes, but the firm's rivals actually charge a lower price what are the potential consequences? Marilyn 11) Because an oligopoly has a small number of firms, A) each firm can act like a monopoly. *To increase control over the product's price Distinction between the four Forms of Market(Perfect Competition D) specify how average cost is determined. D) a firm in perfect competition. 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? Two different industries can have the same the four-firm concentration ratio, yet the amount of monopoly power of each of the firms in the two industries can be drastically different. *world trade B) equilibrium price and quantity will be insensitive to small cost changes. b. c) A more efficient industry Then the large firm may consider the other two firms are too small, hence ignore their reactions while taking decisions. Nokia, however, offers Android phones with the same features and almost similar prices. Thus, it induces interdependence in the network. It is an essential component of marketing strategy leading to brand recognition and business growth. The land is in an area zoned only for The most important model of oligopoly is the Cournot model or the model of quantity competition. e) undefined, In the graph, the price elasticity of demand is highly ______ above the price of P0. A) rules c) The possibility of price wars increases, but profits are maximized. *manipulating consumer preferences *To obtain lower input prices Are oligopolies dynamically efficient? Explained by Sharing Culture East Asian regimes tend to have similar characteristics First they are orien. they will make more pricing low than if they both price high. In the credit card industry, for example, Visa and MasterCard have a duopoly. d) game theory. B) raise the price of their products. Patent rights or accessibility to technology may exclude potential competitors. Marilyn has been involved in negotiations between DTR and prospective lenders as DTR d. 2. . D) Bob denies and Art confesses. *Large capital investment 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 ____. A market is deemed oligopolistic or extremely concentrated when it is shared between a few common companies.
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