Oligopoly characteristics include high barriers to new entry, price-setting ability, the interdependence of firms, maximized revenues, product differentiation, and non-price competition. C) equilibrium price will be sensitive to small cost changes but quantity will not. A) Dr. Smith advertises no matter what Dr. Jones does. D) perfectly inelastic. C) firms in monopolistic competition. *Diseconomies of scale 0) If the efficient scale of production only allows three firms to supply a market, the market is a. 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 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. As in an oligopoly market, the decision of one firm influences the process and working of another firm. Advertising benefits society by ______. Characteristics: There are few firms in the market serving many consumers. (Enter one word for each blank. Oligopolies exist and do not attract new rivals because A) of competition. b) upward-sloping In doing so, they reduce production and increase prices, a phenomenon called collusion. E) equilibrium price and quantity will be insensitive to small demand changes. d) vertical A Computer Science portal for geeks. An oligopoly is a market structure where a few large firms collude and dominate a particular market segment. E) None of the above. Barriers to entry into an oligopoly most resemble those of a ______. What kind of game is it when firms choose their optimal pricing strategy today without worrying about possible interactions in the future? They do so through collusion that results in higher prices and fewer production or product choices for customers. B) a market where two firms compete for profit and market share. a) are monopolies A firm in an oligopolistic market ______. CFA And Chartered Financial Analyst Are Registered Trademarks Owned By CFA Institute. D) monopolistic competition. In December, General Motors produced 6,600 customized vans at its plant in Detroit. 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. That means higher the price, lower the demand. Which statement is true about oligopolies? A) only Bob would like to change his decision. It determines the law of demand i.e. a) Demand is highly elastic below the going price Which scenario describes a simultaneous game? Four characteristics of an oligopoly industry are: Few sellers. Each firm has a substantial share of the market supply. C) Parliament. $1. a) Its demand curve is downward-sloping E) other firms will not raise theirs. A. 16) The firms Trick and Gear form a cartel to collude to maximize profit. d) The market contains a few large producers. Collusion becomes more difficult as the number of firms ____. b. C) other firms will raise their prices by an identical amount. D) There is more than one firm in the industry. b) flexible Artificial intelligence (AI) services are on the rise, with every industry readying to integrate the technology sooner or later. Instead, they try different approaches, such as rewarding customers for their loyalty, differentiating their product offerings, providing sales promotion schemes, acting as sponsors, etc. 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) costs, prices, profit, and strategies. *price elasticity of demand the students used balls . Each firm is so large that its actions affect market conditions. 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. Any change in either of them will affect the quantity/output sold by a producer. B) Firms are profit-maximizers.C) The sales of one firm will not have a significant effect on other firms. Businesses in such a market collaborate to dominate the rest of the players and maximize joint revenue. *Increase profits Economists identify four types of market structures: (1) perfect competition, (2) pure monopoly, (3) monopolistic competition, and (4) oligopoly. La renta de la tierra de primera calidad ser siempre superior a la renta de la tierra de segunda categora. . *Prohibit the entry of new rivals, *Reduce uncertainty b) Demand is highly elastic below the going price a) productive efficiency but not allocative efficiency Mr. mann's science students were experimenting with speed. Experts are tested by Chegg as specialists in their subject area. B) in a single-play game but not a repeated game. 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. A study based on over 9,0009,0009,000 U. S. residents C) independence of firms. c) its rivals match a price increase but ignore a price cut 7) The kinked demand curve theory of oligopoly predicts that E) cheat on each other. d) cheat, Which of the following represent shortcomings of the four-firm concentration ratio? c) They move leftward and upward to a higher point on the average-total-cost curve. E) None of the above. D) Dr. Smith advertises only if Dr. Jones advertises. What would have been DTRs debt to equity ratio if the$10 million of stock had not been b) They try to avoid losses by raising prices in conjunction with rival firms. The control of oligopolists over specialized inputs, such as resources, price, and production, makes it difficult for a new firm to survive. The number of suppliers in a market defines the market structure. Marketers highlight the distinguishing features in the product commonly through packaging or a good design, which helps communicate the benefitting factors to the shoppers. 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. All right then. e) It could be downward sloping or kinked. Economics questions and answers. A game that is played more than once between rivals is a ____ (Enter one word) game. As a result, monopolists produce less, at a higher average cost, and charge a higher price than would a combination of firms in a perfectly competitive industry. 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. c) The possibility of price wars increases, but profits are maximized. a) necessary These firms are large enough that their quantity influences the price and so impacts their rivals. Pure because the only source of market power is lack of competition. Barriers to entry. About us. However, at this price profit of firm B is not maximized. 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 ______. To further understand market modules follow the below topics. *It lowers search costs of information for consumers. they set up a 1 meter (100 cm) track. C) strategies On the other hand, if an oligopolist reduces output by raising prices, the rest refrain from doing so. The study of how people behave in strategic situations is called _____ theory. 13) A tit-for-tat strategy can be used Besides, high capital requirements, licensing, patents, market demand, economies of scale, limit-pricing, and customer loyalty restrict the entry of new businesses. d) their profits and sales will rise. a. small number of firms b. has some pricing power c. the firms are interdependent d. the good produced may be unique or not e. low barriers to entry; Which of the following is not a characteristic of an oligopolistic market structure? b) pure monopoly 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) potential entrants not entering the market. The policy implementation process has not taken in to account the life of rural peasants living in vicinity of cities. c) Dominant firms List the three steps followed under the gross profit method of estimating inventory. b) Localized markets D) the industry is government regulated C) there are numerous producers of two goods competing in a competitive market Products traded or traded homogeneously become the second characteristic of oligopoly. 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). A) 0. *The game would eventually end in the Nash equilibrium (cell A). Which of the following is not a characteristic of oligopoly? *The game would eventually end in the Nash equilibrium (cell B or C). characterized by the presence of a few large firms who produces 11) Because an oligopoly has a small number of firms. A) Each firm has an incentive to collude. 2) In the dominant firm model of oligopoly, the larger firm acts like The firms in the oligopolistic market are having full knowledge about the market particularly about their rival firms. E) potential entrants taking all the business away from existing firms. Oligopolies are typically composed of a few large firms. a) their prices will be unchanged Brand reputation, company size, and minimal completion make decision-making crucial and influential across the group. d) greater than or equal to 60%, How can oligopolistic firms influence their profits and the profits of their rivals? E) All of the above. Libertyville has two optometrists, Dr. Smith and Dr. Jones. But the other firms act considering the interdependence. a) Import competition Price 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. 8) A weakness of the kinked demand curve theory of oligopoly is that it does not a) are less efficient due to competition A monopoly occurs when. b) potential for mergers and acquisitions B) This game has no Nash equilibrium. 3) Which one the following industries is the best example of an oligopoly? B) potential entrants entering and incurring economic loss. Oligopoly is one of the four market structures and identified by a small number of big businesses operating in a particular industry. A single 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. The firms produce differentiated products. c) Price war The financial sector refers to businesses, firms, banks, and institutions providing financial services and supporting the economy. E) specify what happens if costs change. Advertising can reduce efficiency by ______. E) an outcome. A situation where firms meet to fix prices, divide markets, or restrict competition is called ______. d) through advertising, Firms have a desire to cheat on a collusive agreement because ______. B) both can earn an economic profit in the long run. In an oligopoly, dominant market players are influential enough to decide on the price of products and services. d. E) produce the efficient quantity. 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. Oligopoly is an important form of imperfect competition. They may produce homogeneous products or differentiated products. Marginal revenue = Change in total revenue/Change in quantity sold. 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. E)Firms are profit -maximizers. Such companies have complete control of the market, earning high profits and gains in a specific sector or service. In a(n) _____ game one firm moves first, committing to a strategy and then the rival firm responds. We unlock the potential of millions of people worldwide. D) There is more than one firm in the industry. B. B) collusion C)The sales of one firm will not have a significant effect on other firms. The first firm to move in a sequential game has an advantage by establishing a ____ _____ that is favorable to them. Types of Market Structure Economists group industries into four distinct market structures: 1. A Computer Science portal for geeks. $4. Many firms b. d) does not influence. D) the one producer of two goods sells the goods in a monopoly market b) It will always be downward sloping because it is a price maker. 8) Which of the following quotes shows a contestable market in the widget industry? The factors that determine a market structure include the number of businesses, control over prices, and barriers to market entry. b) price leadership; collusion When this structure is in place for an economy, then only a small number of producers, distributors, and sellers interact with the customer base to distribute items. 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. Companies often merge to ______ monopoly power. c) inflexible Marilyn a) increasing firm profits Oligopoly. E) is; to comply when the other firm cheats and to cheat when the other firm complies. B) both prisoners deny. 1. B) assumes marginal cost is constant. 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. *The firm's profits will be higher. C) perfectly elastic demand. Interdependence 13) Complete the following sentence. A) a Competition Tribunal. a) price leadership However, firm B will follow the leaders price and equilibrium quantity in order to avoid the uncertainty that can be arisen. It is an essential component of marketing strategy leading to brand recognition and business growth. The urban land lease policy is not very friendly to rural households land in general and the poor land holders in particular. 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. a) depends on the actions of rivals to price changes B) marginal cost curve is discontinuous. b) are few in number A) collusion of the participants leads to the best solution from their point of view. D) the four-firm concentration ratio for the industry is small. 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. 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) dominant firms If Marilyn believes that the $10 million stock issue was undertaken only to improve DTRs c. Competing firms can enter the industry easily. Nokia, however, offers Android phones with the same features and almost similar prices. b) u-shaped A) a market where three dominant firms collude to decide the profit-maximizing price. *It lowers search costs of information for consumers. read more rather than lower prices to gain profits and market share. Which of the following is characteristic of oligopoly, but not of monopolistic competition? Have you a question about something that I covered. It can be also called as one form. e) through cartels, c) through product development East Asian regimes tend to have similar characteristics First they are orien. *world trade Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. 12) Because an oligopoly has a small number of firms C) potential entrants entering and making zero economic profit. D) equilibrium quantity will be sensitive to small cost changes but price will not. 12) Which one of the following quotations best describes the kinked demand curve model of oliogopoly? d) Its marginal revenue curve would consist of two segments, d) Its marginal revenue curve would consist of two segments $3. Given the emergence and expected evolution of AI-driven services in various niches, it is likely that there will be a highly concentrated market devoted explicitly to the AI needs of consumers. The total market demand is P(Q) = 50 - 2Q, where Q is the total quantity produced by all (active) firms in the industry. Answer: An oligopoly is an industry which is dominated by a few firms. Mutual interdependence among the firms in decision making is the essential feature of the oligopolistic market. C) one prisoner has no chance to be acquitted since there is no other prisoner to support his testimony. 5) According to the kinked demand curve theory of oligopoly, each firm believes that if it raises its price, The more concentrated a market is, the more likely it is to be oligopolistic. You can calculate it by adding Direct Material cost, Direct Labor Cost, & Manufacturing Overhead Cost. (Pure) Monopoly 3. a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and . B) a contestable market. 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. 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. A) is; to comply regardless of the other firm's choice Why is collusion desirable to oligopolistic firms? Firms in the industry make price and output decisions with an eye to the decisions and policies of other firms in the industry. 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 ____. C) the same as a monopoly. Oligopolies are typically composed of a few large firms. d) independently, The shape of the demand curve for an oligopolistic firm ______. E) a cartel. 5) Which one of the following is not a feature common to all games? 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. D) 2,750. c) less than or equal to 40% One of theoligopoly characteristicsis the focus of its members on improving the product quality or offering benefits to make their brand unique. E) unknown. b) it will lower the firm's costs Suppose that one of the two firms decided to reduce the price of its product by some amount resulting 20 % increase in its sales. D) All of the above. OA. b) Collusive pricing model D) products that are slightly different. 26) Refer to Table 15.3.4. d) They do not achieve allocative efficiency because their price exceeds marginal cost. We can conclude that industry A is. C) lower the price of their products. b) its rivals match price increases and price decreases 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. d) game theory. a) pricing theory B) both firms comply with the agreement. 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. 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. 0. Which statement is true about oligopolies? Oligopoly. B) raise the price of their products. However, firm B follows the leaders price and equilibrium quantity in order to avoid the uncertainty that can be arisen. a) payoff Typically, this means that at least 40% of the market is controlled by a few firms. B. El valor de cambio del bien se mide segn el trabajo que este tiene incorporado. Consider a simple case of three firm oligopoly. Impure because have both lack of What are the 4 characteristics of oligopoly? C) Miller has a dominant strategy but Bud does not. 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? It is the most important feature of an oligopolistic market. A(n) _______ (Enter one word) is a market dominated by a few large producers of a homogeneous or differentiated product. See more documents like . If so, then the firm's demand curve will be ______. If one firm is large enough to account, which is that 80% of sales in the industry. d) straight and steep c) Affect costs and influence the supply of rival firms ), Oligopolists often compete through product development and advertising instead of price because ______. 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. Monopolists are not allocatively efficient, because they do not produce at the quantity where P = MC. Pure or Perfect Oligopoly: If the firms produce homogeneous products, then it is called pure or perfect oligopoly. 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. c) They achieve allocative efficiency because they produce at minimum average total cost. b) collusion model In the scenario above, the market is. d) are more efficient because cartels and collusion is always successful They do it strategically so they do not lose their customers in what could be a price war. d) Firms choose strategies at the same time. a) fewer firms than monopolistic competition. a) The possibility of price wars diminishes and profits are maximized. price changes, not production costs, so it can't be b. *world trade a) There are a few large firms that make up the industry. 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. 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. a) They do not achieve allocative efficiency because their average total cost exceeds price. It is assumed that all of the sellers sellidentical or homogenous products. Firms in anoligopoly marketfocus on non-price competition and less innovation but ensure their brands are uniquely identifiable. 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. You can calculate it by adding Direct Material cost, Direct Labor Cost, & Manufacturing Overhead Cost. It helps avoid the potential price war and price rigidity. Social Studies, 22.06.2019 00:00. Raised barriers to entry, price-making power, non-price competition, the interdependence of firms, and product differentiation are alloligopoly characteristics. c) price leadership If this occurs, then the firm's demand curve will look ______. Strategic independence. Based on the figure, if one firm cheats on the collusive agreement it can increase its payoff by Interdependence: The foremost characteristic of oligopoly is interdependence of the various firms in the decision making. c) All oligopolists' or imperfect competitors' demand curves are down-sloping because they are price makers. Such companies have complete control of the market, earning high profits and gains in a specific sector or service. 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." 16) A monopolistically competitive firm is like an oligopolistic firm insofar as A) both face perfectly elastic demand. 18) A market with a single firm but no barriers to entry is known as . For example, when a government grants a patent for an invention to one firm, it may create a monopoly. *providing misleading information E) is not; frequently one of the smaller firms becomes the dominant firm, and the original dominant firm becomes less important. *The firm's demand curve will shift further to the left. *Prohibit the entry of new rivals. d) ow to receive a payout of $12 D) in neither a repeated game nor a single-play game. The core competencies in business refer to its resources and unique fundamental capabilities that distinguish it from market competitors. It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. An oligopolistic market exhibits the followingoligopoly features: It raises barriers for new entrants to enter into the respective sector. Question: Which of the following is NOT a characteristic of an oligopoly?