Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. *To increase market share b) There are barriers to entry into the market. *The firm is failing to produce at the profit-maximizing output. C) other firms will raise their prices by an identical amount. *Prohibit the entry of new rivals, *Reduce uncertainty Because of this, every firm takes decisions very carefully by considering the possible reactions of the rival firms. A) only Bob would like to change his decision. Monopolistic Competition 4. The control of oligopolists over specialized inputs, such as resources, price, and production, makes it difficult for a new firm to survive. a) By decreasing total suppliers In December, General Motors produced 6,600 customized vans at its plant in Detroit. E) Dr. Smith does not advertise if Dr. Jones advertises. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. Thus, each firm gains a considerable market share with minimal potential profits. E) the firms are interdependent. Compared to pure monopolies, oligopolies ______. Economists identify four types of market structures: (1) perfect competition, (2) pure monopoly, (3) monopolistic competition, and (4) oligopoly. 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? 6) In the prisoners' dilemma with players Art and Bob, each prisoner would be best off if A) both prisoners confess. A. *It enhances competition and reduces monopoly power. D) unit elastic demand. Pure because the only source of market power is lack of competition. $1. d. 2. . The marketers of Budweiser Light beer and Miller Lite beer must decide whether or not to offer new advertising campaigns promoting their products. 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. *speeding up technological progress D) products that are slightly different. B) a market where two firms compete for profit and market share. B) both prisoners deny. c) By changing pricing strategies Oligopoly is a market structure characterized by a few firms. 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. The choices made by one firm have a significant effect on other firms. Each firm faces a downward-sloping demand curve. complexes. *Patents, *Preemptive pricing d) its rivals match both a price cut and price increase, b) its rivals match a price cut but ignore a price increase, When members of an oligopoly meet to set prices to maximize profits it demonstrates the ______ and/or the ______ model. A situation where firms meet to fix prices, divide markets, or restrict competition is called ______. Impure because have both lack of What kind of game is it if the firms must choose their pricing strategies at the same time? *The game would eventually end in the Nash equilibrium (cell A). 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. In these characteristics, manufacturers usually only produce and sell one product. a) Kinked-demand curve model E) none of the above is done. 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. a) They may produce homogeneous or differentiated products. c. Competing firms can enter the industry easily. . It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. Answer: An oligopoly is an industry which is dominated by a few firms. 8) 8)Which is not a characteristic of oligopoly? What is the characteristics of oligopoly? A small number of sellers. Its main characteristics are discussed as follows: 1. b) its rivals match price increases and price decreases Based on her experience with past negotiations, Marilyn knows that lenders are concerned about DTRs debt to equity C) Miller has a dominant strategy but Bud does not. *increasing economies of scale, *providing misleading information It is a reflection of quantity/output performance against cost/revenue performance. a) Firms have no control over their price. Use the figure below to answer the following question. d) game theory. The concept serves to be useful for companies focusing on multiple product lines and operating more than one business unit at a time. read more rather than lower prices to gain profits and market share. b) kinked demand d) through advertising, Firms have a desire to cheat on a collusive agreement because ______. 12) Which one of the following quotations best describes the kinked demand curve model of oliogopoly? A) Dr. Smith advertises no matter what Dr. Jones does. c) through product development This way, Samsung and Nokia ensure non-price competition by enhancing core capabilities to build a loyal customer base. D) a prisoner has no incentive to confess to his crime, and stands a greater chance of not going to prison. b) price leadership; collusion c) They lose most of their excess-production capability. b) its rivals match a price cut but ignore a price increase 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. *The firm's profits will be higher. E) Firms set prices. A) "Gas prices in this town always go up and down together." from chapter 12 ^-^, What is the only stable outcome in a payoff matrix? a) kinked and steep D) not an oligopoly. c) Localized markets ENGL1190_V0854_2023WI_Communications23.docx. b) An outcome in the payoff matrix from which both firms want to deviate since the current strategy is not optimal for either firm. as the price increases, demand decreases keeping all other things equal. E) unknown. 0. An oligopoly is an industry dominated by a few large firms (Few sellers supplying, many buyers). 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. 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 The value denotesthe marginalrevenue gained. A) price. e) Price leadership model, In the _______ model of oligopoly, firms react to price decreases but ignore price increases by other firms. d) elastic, An oligopoly firm's demand curve will be kinked if ______. *manipulating consumer preferences. the students used balls . Each optometrist can choose to advertise his service or not. 3) Which one the following industries is the best example of an oligopoly? An oligopoly is a market state where there is a limited amount of competition available for consumers to consider. As a result, each firm obligates to adhere to pre-determined price and quantity/output levels to maximize revenue. E) Bud and Miller each have a dominant strategy. Oligopolies are typically composed of a few large firms. b) Mutual interdependence The total market demand is P(Q) = 50 - 2Q, where Q is the total quantity produced by all (active) firms in the industry. e) It could be downward sloping or kinked. A Which of the following is not a characteristic of oligopoly? The concentration ratio is a tool that measures the market share leading companies have in an industry. A)Each firm faces a downward -sloping demand curve. c) threatens E) 10,000. E) more elastic than the demand just above the price at the kink. B. El valor de cambio del bien se mide segn el trabajo que este tiene incorporado. In doing so, they reduce production and increase prices, a phenomenon called collusion. oligopoly, monopoly, monopolistic competition, pure competition pure competition, monopolistic competition, oligopoly, monopoly. d) both productive efficiency and allocative efficiency, b) neither productive efficiency nor allocative efficiency. A) a firm in an oligopoly market. What kind of game is it when firms choose their optimal pricing strategy today without worrying about possible interactions in the future? Course Hero is not sponsored or endorsed by any college or university. 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. . issued for the land? The existence of oligopoly requires that a few firms are able to gain significant market power, preventing other, smaller competitors from entering the market. A small number of sellers. D) the industry is government regulated the breakkkk, The fact that industry concentration may be overstated because the four-firm concentration ratio only accounts for production within the United States represents what kind of shortcoming with the four-firm concentration ratio? C) "Construction prices in this town seem to be always set by Big Jim's Dandy Construction Company." C) the good produced in the market has been deemed a necessity A) "I am producing extra widgets, even though it costs me short-run profits, to stop Wally's Widgets from expanding into my market." True or false: Firms in an oligopoly always produce a homogeneous product. Prisoners' dilemma describes a case where 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. Marilyn has been involved in negotiations between DTR and prospective lenders as DTR *Large capital investment 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. d) is always kinked a) price leadership C) average variable cost curve is discontinuous. On the other hand, if an oligopolist reduces output by raising prices, the rest refrain from doing so. a) purely competitive market E) only when there is no Nash equilibrium. Impure oligopoly - have a differentiated product. c) price leadership a) There are a few large firms that make up the industry. All firms stick to what has been decided, thereby ensuring price stability in the sector. $15. Due to minimal competition, each of them influences the rest through their actions and decisions. c) Nash equilibrium Oligopolistic behavior implies that oligopolists prefer competition ______. *It helps reduce demand for material products. The value denotesthe marginalrevenue gained. 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. b) Demand is highly elastic below the going price *It lowers search costs of information for consumers. Determinateness of demand curve is a part of law of demand and does not fall in oligopoly. B) 1. But in practice, there are several barriers to entre which make it quite difficult for the new firms to join the industry or market. Answers: 1 Show answers Another question on Social Studies. An oligopolistic market exhibits the followingoligopoly features: It raises barriers for new entrants to enter into the respective sector. 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. Oligopolistic firms do which of the following when they change their pricing strategies? a) Cartel That means higher the price, lower the demand. D) is; the smaller firms cannot become the dominant firm d) Localized markets, Suppose the rivals of an oligopolistic firm ignore both a price increase and decrease. B)Firms set prices. A) Each firm has an incentive to collude. 13) A dominant firm oligopoly might be one for which the Herfindahl-Hirschman Index is Nokia, however, offers Android phones with the same features and almost similar prices. Oligopoly. a) major firms in an industry ranked by employment E) entry into the industry of rival firms will raise cartel profit as long as the new firms join the cartel. Companies often merge to ______ monopoly power. c) less than or equal to 40% 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. B) "I am producing more widgets than Wally and I agreed to in our talk last week." Suppose that one of the two firms decided to reduce the price of its product by some amount resulting 20 % increase in its sales. Any decision taken by a firm in order to increase its sales would adversely affect the sales and hence profit of the other firms. . It is difficult to enter an oligopoly industry and compete as a small start-up company. Barriers to entry. D) the one producer of two goods sells the goods in a monopoly market And rest of the businesses or minor players follow the same. b) Lower prices, but greater output This has been a Guide to Oligopoly and its definition. The competing firms are few in number but each one is large enough so as to be able to control the total industry output and a moderate. Which one of the following observations is correct? I really hope you learned this article. *To decrease monopoly power D) marginal revenue curve is discontinuous. ), Oligopolists often compete through product development and advertising instead of price because ______. Each firm is so large that its actions affect market conditions. For example, an industry with a five-firm concentration ratio of greater than 50% is considered an oligopoly. Characteristics of an oligopoly The market has been shared equally by firms A and B The cost of firm A is lower than firm B Profit maximizing the output of firms A is XA and the price is PA Firm B adopts this price and sells XB (=XA) amount. Question: Which of the following is NOT a characteristic of an oligopoly? . Raised barriers to entry, price-making power, non-price competition, the interdependence of firms, and product differentiation are alloligopoly characteristics. Consequently, each firm must condition its behavior on the behavior of the other firms. D) specify how average cost is determined. 11) Because an oligopoly has a small number of firms, A) each firm can act like a monopoly. So when an oligopolist decreases prices to increase output, others follow the path. a) collusion; cartel E) produce the efficient quantity. The need to spend a huge amount of money on name recognition and market reputation may discourage entry by new firms. However, DTR does not intend to build any single family homes. A game that is played more than once between rivals is a ____ (Enter one word) game. B) the courts. A monopoly occurs when. b) are few in number Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. Oligopoly refers to a market situation or a type of market organisational in which a few firms control the supply of a commodity. B) a contestable market. Pure (Perfect) Competition 2. B) a monopoly. 0. d) achieve greater allocative efficiency but lesser productive efficiency, c) give the appearance of increased competition E) an outcome. E) a cartel. *The firm's demand curve will shift further to the left. a) The same as monopolistic competition D) A and B. c) Dominant firms Barriers to entry into an oligopoly most resemble those of a ______. E) downward-sloping demand curve with no kink. c) regulated monopoly Which of the following is not a characteristic of oligopoly? E) Each firm has an incentive to cheat. a) pricing theory 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. C) "Construction prices in this town seem to be always set by Big Jim's Dandy Construction Company." Marginal revenue = Change in total revenue/Change in quantity sold. C) specify how marginal cost is determined. 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 a) The number of average-sized firms in an industry needed to produce sales equivalent to the four largest firms as the price increases, demand decreases keeping all other things equal.read more shifts. ), Which of the following is true about the oligopolist if rivals match a price cut but ignore a price increase? As in an oligopoly market, the decision of one firm influences the process and working of another firm. B) interdependence of firms. e) Firms may sell a differentiated product. ENGL1190_V0854_2023WI_Communications23.docx. Required fields are marked *. For an industry to be considered an oligopoly the four-firm concentration ratio must be ______. b) OPEC And that is what turns out to be the unique selling proposition (USP) of the respective brands in the oligopolistic industry. b) are few in number B) unit elastic. b) upward-sloping Product differentiation refers to making a product look attractive and different from other products in the same class. *increasing sales and output Marilyn is also aware that DTR issued$10 million of common stock to a long-time friend of the a) fewer firms than monopolistic competition. 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? C) lower the price of their products. 21) It is difficult to maintain a cartel for a long period of time. Based on the figure, if one firm cheats on the collusive agreement it can increase its payoff by D) All of the above. In this market, there are a few firms which sell homogeneous or differentiated products. *The firm's profits will be lower. 36) Refer to Table 15.3.10. b) collusion model Oligopoly characteristics include high barriers to new entry, price-setting ability, the interdependence of firms, maximized revenues, product differentiation, and non-price competition. 1) A cartel is a group of firms which agree to c) The percentage of total industry sales accounted for by the four largest firms found that the most prevalent disorder was D) monopolistic competition. 12) Because an oligopoly has a small number of firms 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. *dominant firms E) a cartel. Typically, this means that at least 40% of the market is controlled by a few firms. *The firm's demand curve will shift further to the left. 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." When the government grants patents to, for example, three different pharmaceutical companies that each has its own drug for reducing high blood pressure, those three firms may become an oligopoly. e) Its marginal cost curve is made up of two segments, d) Its marginal revenue curve would consist of two segments. 9) In the dominant firm model of oligopoly, the dominant firm faces a E) a market with two distinct products. 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} 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. 13) Complete the following sentence. C) Dr. Smith advertises only if Dr. Jones doesn't advertise. (Enter one word per blank. *To increase control over the product's price c) horizontal or perfectly elastic C) changes in the output of any member firms will have no impact on the market price. 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. . d) straight and steep D) potential entrants not entering the market. a) Demand is highly elastic below the going price b) Collusive pricing model 6) According to the kinked demand curve theory of oligopoly, at the quantity corresponding to the kink, the firm's It is used as one of the strategies to increase the business firm's revenue and increase the market share. B) of barriers to entry. 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. Greater the number of firms, the higher the degree of interdependence. d) Firms choose strategies at the same time. 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) a firm in perfect competition. An oligopoly is a market structure that involves few producers and suppliers (www.oecd.org). Characteristics: There are few firms in the market serving many consumers. d. b) u-shaped E) other firms will not raise theirs. c) price leadership; cartel B) collusion d) import competition, Suppose the rivals of an oligopolistic firm match either a price increase or decrease. It determines the law of demand i.e. a) low to receive a payout of $15 e) through cartels, c) through product development 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 is a market with a few firms and in which a market is highly concentrated. C) The sales of one firm will not have a significant effect on other firms. Businesses or firms operating across a broad range of industries like the airline industry, electrical industry, automobile industry, wireless telecommunication services, petroleum industry, smartphone industry, steel industry, supermarkets, the tobacco industry, and railroads industry are commonly considered oligopolistic in different jurisdictions. 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. b) The possibility of price wars diminishes, but profits might be lower. C) 2. In third-degree price discrimination happens when customers are segregated by . Four characteristics of an oligopoly industry are: Few sellers. E) marginal cost. 2) In the dominant firm model of oligopoly, the larger firm acts like 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 . D) zero. Any change in either of them will affect the quantity/output sold by a producer. b) legal A) a Competition Tribunal. A non-collusive oligopoly refers to a market situation where the firms compete with each other rather than cooperating. It also means that each firm must be aware of the reaction of others to their actions. If Marilyn believes that the $10 million stock issue was undertaken only to improve DTRs 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. B) a market where two firms compete for profit and market share. C. La sociedad se encuentra dividida entre capitalistas, terratenientes y trabajadores. The first firm to move in a sequential game has an advantage by establishing a ____ _____ that is favorable to them. The characteristics of an oligopoly market or oligopolistic strategy are mentioned below: Interdependence . Which of the following is not a characteristic of an oligopoly? A) Strategic Independence Some of its fundamental characteristics include the existence of a small number of firms, differentiated or homogeneous products, and barriers to entry. Which of the following is not a characteristic of an oligopoly? A) equilibrium price and quantity will be sensitive to small cost changes. 3) The Nash equilibrium for a sequential game in a contestable market with locked-in first stage prices results in 11) Once a cartel determines the profit-maximizing price, The firms in the oligopolistic market are having full knowledge about the market particularly about their rival firms. Libertyville has two optometrists, Dr. Smith and Dr. Jones. Their differences can range from. B) assumes marginal cost is constant. A) there are only two producers of a particular good competing in the same market They do so through collusion that results in higher prices and fewer production or product choices for customers. c) through collusion Oligopolists do not stress competing with each other on the pricing front. . D. El desempleo voluntario hace que no se produzca el crecimiento econmico. debt to equity ratio and that it will be reversed whenever the presidents friend wants the e) low to receive a payout of $8. E) both are price takers. A) is; to comply regardless of the other firm's choice It is assumed that all of the sellers sellidentical or homogenous products. CFA And Chartered Financial Analyst Are Registered Trademarks Owned By CFA Institute. $4. E) rules, strategies, payoffs, and outcome. ) What are the 4 characteristics of oligopoly? ratio. c) it will prevent a price war Imperfect or Differentiated Oligopoly: ADVERTISEMENTS: 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? 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. Marilyn 1. See more documents like . It is an essential component of marketing strategy leading to brand recognition and business growth. c) competition Why Developing Countries Should Focus on International Trade? A) Each firm faces a downward-sloping demand curve. Which is the simple form of oligopoly market? 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. b) are always less efficient In the scenario above, the market is. D) the four-firm concentration ratio for the industry is small. The distinguishing characteristics of oligopoly are briefly explained below: 1. D) the four-firm concentration ratio for the industry is small. The urban land lease policy is not very friendly to rural households land in general and the poor land holders in particular.
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