4) Which one of the following industries is the best example of an oligopoly? *To increase economies of scale. Any decision taken by a firm in order to increase its sales would adversely affect the sales and hence profit of the other firms. Market players in an oligopolistic market focus on non-price competition, ensure their brands are uniquely identifiable and apply hidden advertising tactics. d) their profits and sales will rise B) raise the price of their products. Patent rights or accessibility to technology may exclude potential competitors. It is calculated by dividing the change in the costs by the change in quantity. What is duopoly and its characteristics? Explained by FAQ Blog c) The percentage of total industry sales accounted for by the four largest firms *price elasticity of demand Consider a simple case of three firm oligopoly. C) Firms in the cartel will want to raise the price. E) Dr. Smith does not advertise if Dr. Jones advertises. C) a firm in monopolistic competition. a) The number of average-sized firms in an industry needed to produce sales equivalent to the four largest firms 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. Solved . Which of the following is not a characteristic - Chegg e) is always upward sloping, a) depends on the actions of rivals to price changes, The four-firm concentration ratio understates the competition in the aluminum industry because aluminum competes with copper in many applications. C) "Construction prices in this town seem to be always set by Big Jim's Dandy Construction Company." The payoffs in the table are the economic profit made by Bud and Miller. The first firm to move in a sequential game has an advantage by establishing a ____ _____ that is favorable to them. C) the firms keep profits and prices so low that no rivals are . A) behave competitively. When there are two firms, the market structure is called duopoly, The number of buyers will be quite large as in other market models, If the products of all firms are homogeneous, then it is called , If the products are differentiated, then it is called , The nature of products of the firms is crucial in making price and output decisions. 7) The kinked demand curve theory of oligopoly predicts that Oligopolies are typically composed of a few large firms. Business Economics Consider a Cournot oligopoly with n = 2 firms. B) perfectly inelastic demand. 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) pricing theory 0) If the efficient scale of production only allows three firms to supply a market, the market is a. b) depends on the firm's cost structure 8) 8)Which is not a characteristic of oligopoly? 300 laborers were employed at the plant that month. Oligopoly: Definition, Characteristics & Examples | StudySmarter O D. Some barriers to entry. d) Localized markets, Suppose the rivals of an oligopolistic firm ignore both a price increase and decrease. The amount of time (in seconds) needed to complete a critical task on an assembly line was measured for a sample of 50 assemblies. The existence of oligopoly requires that a few firms are able to gain significant market power, preventing other, smaller competitors from entering the market. Oligopoly. Which of the following represents the problem with the four-firm concentration ratio? a) increasing firm profits E) only when there is no Nash equilibrium. B) the firms may legally form a cartel. *manipulating consumer preferences If this occurs, then the firm's demand curve will look ______. The marketers of Budweiser Light beer and Miller Lite beer must decide whether or not to offer new advertising campaigns promoting their products. As their products seem visually identical, both the brands have to make sure they offer customers something that the other does not. B) collusion *The game would eventually end in the Nash equilibrium (cell A). d) greater than or equal to 60%, How can oligopolistic firms influence their profits and the profits of their rivals? All firms stick to what has been decided, thereby ensuring price stability in the sector. D) a firm in perfect competition. b) Lower prices, but greater output C) changes in the output of any member firms will have no impact on the market price. b) pure monopoly 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. D) not an oligopoly. C) one prisoner has no chance to be acquitted since there is no other prisoner to support his testimony. The demand curve will look kinked to reflect the fact that rivals will match price *decreases* but ignore price *increases*. a) They may produce homogeneous or differentiated products. Share with Email, opens mail client b) strengthens 8 8 which is not a characteristic of oligopoly a each - Course Hero Which of the following is NOT a characteristic of an oligopoly? It encompasses several industries, including banking and investment, consumer finance, mortgage, money markets, real estate, insurance, retail, etc.read more is in progress, the automobile industry has already introduced AI-powered self-driving cars. 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. e) Firms may sell a differentiated product. a) greater than or equal to 40% b) are few in number Which of the following correctly arranges market structures in order from chapter 12 ^-^, What is the only stable outcome in a payoff matrix? D. 2021. E) rules, strategies, payoffs, and outcome. ) *Cause price wars during business recessions 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. You are free to use this image on your website, templates, etc., Please provide us with an attribution linkHow to Provide Attribution?Article Link to be HyperlinkedFor eg:Source: Oligopoly (wallstreetmojo.com). homogeneous or differentiated products i. Top 5 Characteristics of an Oligopoly - EconTips 5) Which one of the following is not a feature common to all games? B) marginal cost curve is discontinuous. c) harder You are free to use this image on your website, templates, etc., Please provide us with an attribution link. Oligopolistic firms do which of the following when they change their pricing strategies? Instead, they collaborate on various fronts, such as economies of scaleEconomies Of ScaleEconomies of scale are the cost advantage a business achieves due to large-scale production and higher efficiency. Also, they rely on free-market forces to earn higher profits than a competitive market. O B. Based on the figure, if one firm cheats on the collusive agreement it can increase its payoff by *increasing economies of scale, *providing misleading information The incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. Demand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. 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. Which of the following are characteristics of oligopolistic markets *The firm's profits will be lower. a) The possibility of price wars diminishes and profits are maximized. complexes. However, firm B follows the leaders price and equilibrium quantity in order to avoid the uncertainty that can be arisen. 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. . c) price leadership; cartel 1) In the dominant firm model of oligopoly, the smaller firms behave as read more, and marginal revenue is the product price. C) Parliament. 16) A monopolistically competitive firm is like an oligopolistic firm insofar as A) both face perfectly elastic demand. Features: Many and small sellers, so that no one can affect the market 12) Which one of the following quotations best describes the kinked demand curve model of oliogopoly? *world trade price rigidity Element of monopoly. Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. These data are as follows: 30.334.531.130.933.731.933.131.130.032.734.430.134.631.632.432.831.030.230.232.831.130.733.134.431.032.230.932.134.230.730.730.730.630.233.436.830.231.530.135.730.530.630.231.430.730.637.930.334.130.4\begin{array}{lllll}30.3 & 34.5 & 31.1 & 30.9 & 33.7 \\ 31.9 & 33.1 & 31.1 & 30.0 & 32.7 \\ 34.4 & 30.1 & 34.6 & 31.6 & 32.4 \\ 32.8 & 31.0 & 30.2 & 30.2 & 32.8 \\ 31.1 & 30.7 & 33.1 & 34.4 & 31.0 \\ 32.2 & 30.9 & 32.1 & 34.2 & 30.7 \\ 30.7 & 30.7 & 30.6 & 30.2 & 33.4 \\ 36.8 & 30.2 & 31.5 & 30.1 & 35.7 \\ 30.5 & 30.6 & 30.2 & 31.4 & 30.7 \\ 30.6 & 37.9 & 30.3 & 34.1 & 30.4\end{array} c) price leadership a) necessary Which of the following are characteristics of oligopolistic markets c) A more efficient industry *world trade 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 _____. d) price changes are often difficult to match E 12) Because an oligopoly has a small number of firms A) each firm can act like a monopoly. 16) The firms Trick and Gear form a cartel to collude to maximize profit. B) Other firms will enter the industry. b) are less efficient because they are often regulated by the government While adopting the leaders price, if firm B supplies less amount than XB which needs to maintain the equilibrium price, the leader will push to a non-profit maximizing position. 11) Which one of the following quotations best describes a dominant firm oligopoly? a) purely competitive market Firms are profit-maximizers. Your email address will not be published. A monopoly occurs when. b) greater than or equal to 50% c) All oligopolists' or imperfect competitors' demand curves are down-sloping because they are price makers. D) There is more than one firm in the industry. 18) A market with a single firm but no barriers to entry is known as An oligopoly is a market structure that involves few producers and suppliers (www.oecd.org). It is difficult to enter an oligopoly industry and compete as a small start-up company. A) the government will impose price controls. D) specify how average cost is determined. C) Trick cheats, while Gear complies with the agreement. Oligopoly: Definition, Characteristics and Concepts - Toppr-guides E) a cartel. A) Each firm faces a downward-sloping demand curve. C) potential entrants entering and making zero economic profit. B) 1. Essay on Oligopoly, Perfect Competition, Cournot's and Bertrand's The distinctive feature of an oligopoly is interdependence. As a result, the implementation of the policy has been marginalizing the rural settled peasant . a) Kinked-demand curve model Which of the following is not a characteristic of oligopoly? a. the Is Microsoft an oligopoly Do you want to know Click Here. B) rivalry among a large number of rivals leads to lower overall profit. (Enter one word for each blank. 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. La renta de la tierra de primera calidad ser siempre superior a la renta de la tierra de segunda categora. a) often A) zero economic profits in the long-run. A firm in an oligopolistic market ______. Final Exam Study - Oligopoly And Game Theory ECON Oligopoly is a market with a few firms and in which a market is highly concentrated. 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. B) in a single-play game but not a repeated game. D) increase the amount they produce. OA. 6. A) raise the price if marginal revenue increases B) lower the price if the new marginal cost curve lies below the break in the marginal revenue curve C) definitely lower the price D) not change the price E) raise the price if other firms raise their prices. 11) Once a cartel determines the profit-maximizing price, That means higher the price, lower the demand. The number of suppliers in a market defines the market structure. A) 0. a) productive efficiency but not allocative efficiency So here we can see a one-way interdependence pattern. b) Collusive pricing model Click the card to flip Definition 1 / 84 d) The advertising model, To reduce uncertainty or increase profits, oligopolists may change their prices ______. *The firm is failing to produce at the profit-maximizing output. 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? Interdependence: The foremost characteristic of oligopoly is interdependence of the various firms in the decision making. as the price increases, demand decreases keeping all other things equal.read more shifts. c) through product development Even though the products of companies A and B are similar, there must be something that distinguishes them. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. *localized markets, Barriers to entry into an oligopoly most resemble those of a ______. Oligopolies are typically composed of a few large firms. After each player chooses his or her best strategy and sees the result, The control of oligopolists over specialized inputs, such as resources, price, and production, makes it difficult for a new firm to survive. b) collusion e) through cartels, c) through product development In December, General Motors produced 6,600 customized vans at its plant in Detroit. B) raise the price of their products. In the scenario above, the market is. 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) Mutual interdependence CFA And Chartered Financial Analyst Are Registered Trademarks Owned By CFA Institute. It encourages existing brands to improve product quality and originality by instilling a sense of rivalry. b) price leadership; collusion Short run equilibrium in monopolyPerfect Competition: Definition, Graphs, short run, long runTop 5 characteristics of an oligopolyMonopoly Price discrimination: Types, Degrees, Graphs, ExamplesDifferent Types of Monopolies| 7 TypesMonopolistic competition assumptionsMonopolistic Competition Equilibrium| Long-run| Short-runMonopolistic Competition and Economic Efficiency. A. cutting prices However, at this price profit of firm B is not maximized. B) the firms may legally form a cartel. B) "I am producing more widgets than Wally and I agreed to in our talk last week." An oligopoly is a market structure where a few large firms collude and dominate a particular market segment. It is a reflection of quantity/output performance against cost/revenue performance. *interindustry competition C. Some market power. E) a market with two distinct products. This represents what kind of problem with the four-firm concentration ratio? Collusion becomes more difficult as the number of firms ____. We are dedicated to providing you with the very best in economics knowledge, with an emphasis on microeconomics and macroeconomics. It is the most important feature of an oligopolistic market. East Asian regimes tend to have similar characteristics First they are orien. The factors that determine a market structure include the number of businesses, control over prices, and barriers to market entry. D. Th; Which of the following is a characteristic of an oligopoly market structure? 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? C) lower the price of their products. Oligopolyis a market structure d) Affect costs and influence the products of rival firms, a) Affect profits and influence the profits of rival firms, Which of the following is a model used to examine oligopolistic pricing? D) firms in perfect competition. $3. 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. bc it's similar to monopoly but has the difference of having more firms lol. E) marginal cost. Chapter-9 -Basic-Oligopoly-Models - CHAPTER 9: Basic Oligopoly Models 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. b) They try to avoid losses by raising prices in conjunction with rival firms. c) regulated monopoly 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) Its demand curve is downward-sloping e) may be no more efficient due to a lack of firm interdependence, c) may be less desirable because they are not regulated by government to protect consumers. The presence of a small number of companies in an oligopoly market structure makes it highly concentrated. 26) Refer to Table 15.3.4. *Ownership and control of raw materials The value denotesthe marginalrevenue gained. Businesses in such a market collaborate to dominate the rest of the players and maximize joint revenue. *Reduce uncertainty Marginal revenue = Change in total revenue/Change in quantity sold. Which statement is true about oligopolies? a) localized markets . 4. A) "Gas prices in this town always go up and down together." D) equilibrium quantity will be sensitive to small cost changes but price will not. A) Dr. Smith advertises no matter what Dr. Jones does. Economists identify four types of market structures: (1) perfect competition, (2) pure monopoly, (3) monopolistic competition, and (4) oligopoly. The value denotesthe marginalrevenue gained. b) its rivals match a price cut but ignore a price increase a) The possibility of price wars diminishes and profits are maximized. B. The characteristics of oligopoly include interdependence, product differentiation, high barriers to entry, uncertainty, price setters. 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) cheat on each other. c. Competing firms can enter the industry easily. E) marginal revenue curve is upward sloping. Marilyn is also aware that DTR issued$10 million of common stock to a long-time friend of the C) Art denies and Bob confesses. d) Its marginal revenue curve would consist of two segments Principles of Microeconomics Instructor: Sandhya Patlolla Assignment 7 1) In two firm oligopoly, if one firm increases its price, then the other firm can: A. Question: Which of the following is NOT a characteristic of an oligopoly? 8) A weakness of the kinked demand curve theory of oligopoly is that it does not ECON Chapter 11: Imperfect Competition and Factor Markets - Quizlet chapter 26 oligopoly Flashcards | Quizlet 3) Canada's anti-combine law is enforced by Mutual interdependence solely means that they base their decisions on how they think their rivals will react. E) both are price takers. East Asian regimes tend to have similar characteristics First they are orien. B) neither player would be willing to change his or her decision unless the other player also changes his or her decision. Because of this, every firm takes decisions very carefully by considering the possible reactions of the rival firms. ), Oligopolists often compete through product development and advertising instead of price because ______. Oligopoly - Economics Help 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. *localized markets, *dominant firms Here, they focus on each other and try to exceed customer expectations in every possible way. D) a prisoner has no incentive to confess to his crime, and stands a greater chance of not going to prison. *To obtain lower input prices Interdependence If one firm is large enough to account, which is that 80% of sales in the industry. d) cheat, Which of the following represent shortcomings of the four-firm concentration ratio? E) an outcome. c) product development and advertising are relatively inexpensive B) monopolists. 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? *Large capital investment found that the most prevalent disorder was c) its rivals match a price increase but ignore a price cut You can calculate it by adding Direct Material cost, Direct Labor Cost, & Manufacturing Overhead Cost. e) straight. Furthermore, no restrictions apply in such markets, and there is no direct competition. (Enter one word per blank. 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. It is an essential component of marketing strategy leading to brand recognition and business growth. C) is; the dominant firm is making an economic profit If the products of the firms are differentiated the degree of interdependence is then weakened. a) Dominant strategy The need to spend a huge amount of money on name recognition and market reputation may discourage entry by new firms. *The game would eventually end in the Nash equilibrium (cell A). E) potential entrants taking all the business away from existing firms. A) price. What is Oligopoly: Types, Characteristics and Examples An oligopoly is an industry dominated by a few large firms. Answer: An oligopoly is an industry which is dominated by a few firms. C) specify how marginal cost is determined. A duopoly is E) the firms are interdependent. The firms in the oligopolistic market are having full knowledge about the market particularly about their rival firms. a) Import competition a) price leadership Also, as there are few sellers in the market, every seller influences the behavior of the other firms and other firms influence it. . C) if Jane does not change her decision, Bob would like to change his. A) there are fewer than 6 firms in a market Which of the following is not a characteristic of oligopoly? B) is not; to comply when the other firm cheats and to cheat when the other firm complies 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. A Computer Science portal for geeks. Imperfect or Differentiated Oligopoly: ADVERTISEMENTS: *Increase profits The urban land lease policy is not very friendly to rural households land in general and the poor land holders in particular. d) does not influence. a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and . Pure (Perfect) Competition 2. The concept serves to be useful for companies focusing on multiple product lines and operating more than one business unit at a time. If the products of the firms are homogeneous then the interdependence will tend to be strong because of the perfect substitutability of the products of the firms. What kind of problem does this represent with the four-firm concentration ratio? Have you a question about something that I covered.