That means higher the price, lower the demand. characterized by the presence of a few large firms who produces *The game would eventually end in the Nash equilibrium (cell B or C). The distinctive feature of an oligopoly is interdependence. d) Interindustry competition, Which are barriers to entry in both monopolies and oligopolies? The policy implementation process has not taken in to account the life of rural peasants living in vicinity of cities. The market share of the firms is unequal. However, firm B will follow the leaders price and equilibrium quantity in order to avoid the uncertainty that can be arisen. d) Dominant firms, What are oligopolists able to do by controlling price through collusion? B) perfectly inelastic demand. B) other firms will lower theirs. *Reduce inputs used in production For example, an industry with a five-firm concentration ratio of greater than 50% is considered an oligopoly. Course Hero is not sponsored or endorsed by any college or university. c) The percentage of total industry sales accounted for by the four largest firms d) The advertising model, To reduce uncertainty or increase profits, oligopolists may change their prices ______. a) gentleman's agreement B) rivalry among a large number of rivals leads to lower overall profit. c) Affect costs and influence the supply of rival firms 9) Which isnota characteristic of oligopoly? 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. d) The market contains a few large producers. b) potential for mergers and acquisitions 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." Our assessments, publications and research spread knowledge, spark enquiry and aid understanding around the world. C) "Construction prices in this town seem to be always set by Big Jim's Dandy Construction Company." B) both firms comply with the agreement. c) price leadership; cartel A) rules b) By increasing recruiting expenses A) "Gas prices in this town always go up and down together." Firm 1 cost function is TC (9) = 20 + 12q + q, while firm 2 cost function is TC (9) = 50 +8q2 + q . 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 . a) are monopolies C) average variable cost curve is discontinuous. C) strategies Final Exam Study - Oligopoly And Game Theory ECON e) Its marginal cost curve is made up of two segments, d) Its marginal revenue curve would consist of two segments. *dominant firms They are A situation where firms meet to fix prices, divide markets, or restrict competition is called ______. They do so through collusion that results in higher prices and fewer production or product choices for customers. A) zero economic profits in the long-run. e) through cartels, c) through product development An oligopoly is a market structure where a few large firms collude and dominate a particular market segment. It encompasses several industries, including banking and investment, consumer finance, mortgage, money markets, real estate, insurance, retail, etc. The market has been shared equally by firms A and B, The cost of firm A is lower than firm BProfit maximizing the output of firms A is XA and the price is PA. Firm B adopts this price and sells XB(=XA) amount. As their products seem visually identical, both the brands have to make sure they offer customers something that the other does not. A study based on over 9,0009,0009,000 U. S. residents c) is always downward sloping Oligopoly is a market structure characterized by a few firms. A) price. What are the positive effects of large oligopolists advertising? As in an oligopoly market, the decision of one firm influences the process and working of another firm. Because of their large size and minimal competition, each firm in an oligopoly market structure influences the others. D) a prisoner has no incentive to confess to his crime, and stands a greater chance of not going to prison. What is Oligopoly: Types, Characteristics and Examples C) 2. In third-degree price discrimination happens when customers are segregated by . C) one prisoner has no chance to be acquitted since there is no other prisoner to support his testimony. 4. As a result, each firm obligates to adhere to pre-determined price and quantity/output levels to maximize revenue. Question: Which of the following is NOT a characteristic of an oligopoly? Mutual interdependence among the firms in decision making is the essential feature of the oligopolistic market. 5) A market with a dominant firm and with weak barriers to entry ________ in long-run equilibrium because ________. price changes, not production costs, so it can't be b. a) An outcome in the payoff matrix from which one firm wants to deviate since the current strategy is not optimal given the rival's strategic choice. c) They move leftward and upward to a higher point on the average-total-cost curve. 1) In the dominant firm model of oligopoly, the smaller firms behave as C) equilibrium price will be sensitive to small cost changes but quantity will not. But the other firms act considering the interdependence. Each firm faces a downward-sloping demand curve. c) it will prevent a price war A) average total cost curve is discontinuous. b) Strategies are chosen for a single time period. ENGL1190_V0854_2023WI_Communications23.docx. E) more elastic than the demand just above the price at the kink. c) through product development d) are more efficient because cartels and collusion is always successful An oligopolistic firm's marginal revenue curve is made up of two segments if ______. a) payoff And rest of the businesses or minor players follow the same. They do it strategically so they do not lose their customers in what could be a price war. 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. c) Price war price rigidity Element of monopoly. 14) A duopoly occurs when ________. E) the firms are interdependent. a) increasing firm profits A) This game has no dominant strategies. *The game would temporarily move to either cell B or cell C. 0. b) demand; losses; increase b) They try to avoid losses by raising prices in conjunction with rival firms. B) raise the price of their products. a) greater than or equal to 40% E) cheat on each other. The characteristics of oligopoly include interdependence, product differentiation, high barriers to entry, uncertainty, price setters. 5.3.5 Apply Concepts of Oligopoly and Oligopoly Models .pdf. a) are less efficient due to competition A)Each firm faces a downward -sloping demand curve. d) greater than or equal to 60%, How can oligopolistic firms influence their profits and the profits of their rivals? Oligopolies are typically composed of a few large firms. 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?" B) revenues, elasticity, profit, and payoffs. . The firms produce differentiated products. ECON 1001: Chapter 14 (Oligopoly and Strategic Behavior) - Quizlet a) kinked and steep An oligopoly is an industry dominated by a few large firms. 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? 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. Oligopoly. A) a Competition Tribunal. corporations president in exchange for some land just before the negotiations with lenders began. Advertising benefits society by ______. In a(n) _____ game one firm moves first, committing to a strategy and then the rival firm responds. Oligopolies are typically composed of a few large firms. We are dedicated to providing you with the very best in economics knowledge, with an emphasis on microeconomics and macroeconomics. e) straight Managerial Economics - Oligopoly bc it's similar to monopoly but has the difference of having more firms lol. A) a market where three dominant firms collude to decide the profit-maximizing price. When firm X increases its price. Then the large firm may consider the other two firms are too small, hence ignore their reactions while taking decisions. It is the most important feature of an oligopolistic market. Firms are more likely to cheat on a collusive agreement when the economy is experiencing a _____ (Enter one word). View full document. 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? Oligopolistic Market - Overivew, Examples, How an Oligopoly Works b) pure monopoly 11) Once a cartel determines the profit-maximizing price, 6) Wal-Mart follows the kinked demand curve model of oligopoly. The number of suppliers in a market defines the market structure. D) its profit will rise by the same percentage. 2003-2023 Chegg Inc. All rights reserved. *Reduce uncertainty A) all members of the cartel have a strong incentive to abide by the agreed-upon price. C) a perfectly competitive market. xxx\underline{\phantom{\text{xxx}}}xxx. If one firm is large enough to account, which is that 80% of sales in the industry. *It enhances competition and reduces monopoly power. 3) Canada's anti-combine law is enforced by All firms stick to what has been decided, thereby ensuring price stability in the sector. When the number of firms in an oligopolistic industry increases from 3 to 10, it is ______ to collude. Each firm has a substantial share of the market supply. 6) In the prisoners' dilemma with players Art and Bob, each prisoner would be best off if A) both prisoners confess. d) have interdependent pricing. Your email address will not be published. B. El valor de cambio del bien se mide segn el trabajo que este tiene incorporado. Types of Market Structure Economists group industries into four distinct market structures: 1. a) Affect profits and influence the profits of rival firms The group that colludes is referred to as a cartelCartelA cartel is a group of producers of goods or suppliers of services formed through an agreement amongst themselves to regulate the supply of goods or services with the basic intent to illegally regulate the prices or restrict competition regarding the said goods or services.read more. C) the same as a monopoly. See more documents like . C) Parliament. A small number of sellers. Its main characteristics are discussed as follows: 1. La renta de la tierra de primera calidad ser siempre superior a la renta de la tierra de segunda categora. 8) Firm X is competing in an oligopolistic industry. An oligopoly is a market structure that involves few producers and suppliers (www.oecd.org). 14) The kinked demand curve model *The firm's profits will be higher. Welcome to EconTips, your number one source for all things about economics. a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and . b) increasing monopoly power a) pricing theory 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. B) Other firms will enter the industry. 8) 8)Which is not a characteristic of oligopoly? 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. Oligopoly Characteristics & Examples | What is an Oligopoly? - Video As a result, the implementation of the policy has been marginalizing the rural settled peasant . It is calculated by dividing the change in the costs by the change in quantity.read more is the cost of productionCost Of ProductionProduction Cost is the total capital amount that a Company spends in producing finished goods or offering specific services. 18) A market with a single firm but no barriers to entry is known as Production Cost is the total capital amount that a Company spends in producing finished goods or offering specific services. Which of the following are characteristics of oligopolistic markets? There are just several sellers who control all or most of the sales in the industry. c) allocative efficiency but not productive efficiency What is duopoly and its characteristics? Explained by FAQ Blog The presence of a small number of companies in an oligopoly market structure makes it highly concentrated. E) A and C. 8) A merger is unlikely to be approved if ________. It determines the law of demand i.e. Business Economics Consider a Cournot oligopoly with n = 2 firms. *It lowers search costs of information for consumers. D) monopolistic competition. 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? 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) This game has no Nash equilibrium. The payoffs in the table are the economic profit made by Bud and Miller. In the credit card industry, for example, Visa and MasterCard have a duopoly. c) Dominant firms C) specify how marginal cost is determined. D) a firm in perfect competition. 6. The most important model of oligopoly is the Cournot model or the model of quantity competition. This way, Samsung and Nokia ensure non-price competition by enhancing core capabilities to build a loyal customer base. D) 2,750. 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. c) The possibility of price wars increases, but profits are maximized. Oligopolists offer comparable products or services, so they control prices rather than the market. d) Oligopolistic collusion, Compared to monopolies, oligopolies ______. A) equilibrium price and quantity will be sensitive to small cost changes. C) is; to cheat regardless of the other firm's choice a) The outcomes for all firms are negative. How oligopolists react to the price change by one firm can be best understood with the downward-sloping Kinked demand curve. They collude and agree to share the market equally. read more, and marginal revenue is the product price. a) L-shaped C) assumes that marginal revenue equals marginal cost only at the quantity at the "kink." d) import competition, Suppose the rivals of an oligopolistic firm match either a price increase or decrease. c) Firms' advertising decisions are interdependent. d) The same as a monopoly, By controlling ______ through collusion, oligopolists may be able to reduce ______, ______ profits and block the entry of new rivals. D. 2021. b. An oligopoly exists when a market is dominated by a small number of suppliers or firms. Which of the following correctly arranges market structures in order D. Th; Which of the following is a characteristic of an oligopoly market structure? ratio. If productivity can be increased to $0.11 vans per labor hour, how many hours would the average laborer work that month? A. a) There are a few large firms that make up the industry. homogeneous or differentiated products i. (Enter one word per blank. 5. always one step ahead. b) flexible A Computer Science portal for geeks. 6) Which one of the following characteristics applies to oligopolistic markets? a) often D) Gear cheats, while Trick complies with the agreement. b) high to receive a payout of $15 *Prohibit the entry of new rivals. Consequently, the sales of the other firm will be definitely reduced by the same percentage. A) Strategic Independence All right then. a) Its demand curve is downward-sloping *localized markets, Barriers to entry into an oligopoly most resemble those of a ______. 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. a) The possibility of price wars diminishes and profits are maximized. The characteristics of an oligopoly market or oligopolistic strategy are mentioned below: Interdependence . *To obtain lower input prices E) a cartel. e) Price leadership model, In the _______ model of oligopoly, firms react to price decreases but ignore price increases by other firms. *The firm's demand curve will shift further to the left. In the credit card industry, for example, Visa and MasterCard have a duopoly.read more. 21) It is difficult to maintain a cartel for a long period of time. Lets identify the oligarchy before identifying the characteristics of an oligopoly. The value denotesthe marginalrevenue gained. d) They do not achieve allocative efficiency because their price exceeds marginal cost. A. c) competition b) are always less efficient Economics questions and answers. What are examples of monopoly and oligopoly? D) "I have been spending extra on research and development of my new two-way widget." A) there are only two producers of a particular good competing in the same market 12) Because an oligopoly has a small number of firms It is a reflection of quantity/output performance against cost/revenue performance. An oligopoly is a market structure with a small number of firms, none of which can keep the others from having significant influence. d) Mutual interdependence. When members of an oligopoly react to price changes by a ____ _____ dominant firm, the model is most applicable. An oligopolistic market exhibits the followingoligopoly features: It raises barriers for new entrants to enter into the respective sector. b) legal 0) If the efficient scale of production only allows three firms to supply a market, the market is a. *It lowers search costs of information for consumers. Which of the following is not a characteristic of oligopoly? a) purely competitive market D) marginal revenue curve is discontinuous. d) ow to receive a payout of $12 Oligopoly characteristics include high barriers to new entry, price-setting ability, the interdependence of firms, maximized revenues, product differentiation, and non-price competition. 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. Mr. mann's science students were experimenting with speed. D) the one producer of two goods sells the goods in a monopoly market a) The same as monopolistic competition 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. B) each member will face the temptation to cheat on the cartel price to increase its sales and profit. Marketers highlight the distinguishing features in the product commonly through packaging or a good design, which helps communicate the benefitting factors to the shoppers. D) All of the above. *increasing economies of scale, *providing misleading information Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. a) major firms in an industry ranked by employment For example, the existing firms might threaten to reduce the price drastically if entry occurs. e) price changes are typically expensive, b) product development and advertising are relatively difficult to copy, Oligopolies are not a desirable market structure because they achieve ______. D) entry into the industry of rival firms will have no impact on the profit of the cartel. Thus, each firm gains a considerable market share with minimal potential profits. land back or when DTRs debt to equity position improves, what should she do? The incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. C) Art denies and Bob confesses.

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