*Ownership and control of raw materials The existence of oligopoly requires that a few firms are able to gain significant market power, preventing other, smaller competitors from entering the market. D) There is more than one firm in the industry. A) is; to comply regardless of the other firm's choice oligopoly, monopoly, monopolistic competition, pure competition pure competition, monopolistic competition, oligopoly, monopoly. C) specify how marginal cost is determined. Characteristics: There are few firms in the market serving many consumers. D) products that are slightly different. If this game is nonrepeated, the Nash equilibrium is A) both firms cheat on the agreement. Lets identify the oligarchy before identifying the characteristics of an oligopoly. b) The Herfindahl model *providing misleading information B) a monopoly. A) a market where three dominant firms collude to decide the profit-maximizing price. A) each firm can act like a monopoly. 13) A tit-for-tat strategy can be used C) both have MR curves that lie beneath their demand curves. d) are more efficient because cartels and collusion is always successful b) product development and advertising are relatively difficult to copy We unlock the potential of millions of people worldwide. Barriers to entry. The distinctive feature of an oligopoly is interdependence. . It is assumed that all of the sellers sellidentical or homogenous products.read more, monopoly, and monopolistic competition. B) is not; to comply when the other firm cheats and to cheat when the other firm complies Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. 0. Which of the following is characteristic of oligopoly, but not of monopolistic competition? c) The supply curve model A) price. E) none of the above is done. 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. 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. E) rules, strategies, payoffs, and outcome. ) Barriers to entry into an oligopoly most resemble those of a ______. 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) only Bob would like to change his decision. *It enhances competition and reduces monopoly power. d. 2. . a) gentleman's 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. B) each member will face the temptation to cheat on the cartel price to increase its sales and profit. C) potential entrants entering and making zero economic profit. E) other firms will not raise theirs. An oligopoly is a market structure where a few large firms collude and dominate a particular market segment. C) one prisoner has no chance to be acquitted since there is no other prisoner to support his testimony. the students used balls . b) Affect profits without influencing the profits of rival firms D) neither is protected by high barriers to entry. The policy implementation process has not taken in to account the life of rural peasants living in vicinity of cities. Determinants of Price Elasticity of Supply. *interindustry competition D) a firm in perfect competition. O D. Some barriers to entry. B) a market where two firms compete for profit and market share. The value denotesthe marginalrevenue gained. $1. *Prohibit the entry of new rivals, *Reduce uncertainty a) Demand is highly elastic below the going price d) ow to receive a payout of $12 B) equilibrium price and quantity will be insensitive to small cost changes. What happens to oligopolistic firms when a recession occurs? 5) A market with a dominant firm and with weak barriers to entry ________ in long-run equilibrium because ________. Oligopolists offer comparable products or services, so they control prices rather than the market. a) Firms have no control over their price. b) high to receive a payout of $15 c) costs; uncertainty; increase Firm 1 cost function is TC (9) = 20 + 12q + q, while firm 2 cost function is TC (9) = 50 +8q2 + q . 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. 4. The characteristics of oligopoly include interdependence, product differentiation, high barriers to entry, uncertainty, price setters. b) neither productive efficiency nor allocative efficiency c) The possibility of price wars increases, but profits are maximized. a) price changes occur slowly A. cutting prices 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. E) a competitive market produces two goods. I really hope you learned this article. Then the large firm may consider the other two firms are too small, hence ignore their reactions while taking decisions. (Figure) summarizes the characteristics of each of these market structures. D) Bud has a dominant strategy but Miller does not. d) They do not achieve allocative efficiency because their price exceeds marginal cost. B) in a single-play game but not a repeated game. B) total revenue. b) There are barriers to entry into the market. An oligopolistic firm's marginal revenue curve is made up of two segments if ______. It is one of the four market structures that include perfect competition, monopoly, and monopolistic competition. E) a cartel. 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. Firm B adopts this price and sells XB(PA) and the quantity is Xbe. D) All of the above. B) 1. A) Strategic Independence D) in neither a repeated game nor a single-play game. The key characteristics of an oligopoly market structure include: Few firms : There are only a few firms in the market, which makes it easy for the firms to coordinate their behavior and to reach . b) The number of employees in an industry who ever have or are currently working for one of the four largest firms *To increase control over the product's price c) Dominant firms Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. A) 0. 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. C) in a repeated game but not a single-play game. e) increasing search time. 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). 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 ______. *The firm is failing to produce at the profit-maximizing output. Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. c) They achieve allocative efficiency because they produce at minimum average total cost. 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. E) None of the above. d) strategic theory. Even though the products of companies A and B are similar, there must be something that distinguishes them. b) increasing monopoly power An oligopoly is a market state where there is a limited amount of competition available for consumers to consider. 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. Marketers highlight the distinguishing features in the product commonly through packaging or a good design, which helps communicate the benefitting factors to the shoppers.read more. 2) In the dominant firm model of oligopoly, the larger firm acts like a) purely competitive market ADVERTISEMENTS: This fact is recognized by all the firms in an oligopolistic industry. Which one of the following is the most important reason? Oligopolies are typically composed of a few large firms. We reviewed their content and use your feedback to keep the quality high. c) It will always be kinked because it is a price maker. B) the firms may legally form a cartel. Their differences can range from. 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. Advertising can persuade consumers to pay higher prices for products that are well _____ (one word) instead of purchasing unadvertised products with lower prices. Four characteristics of an . a) Firms have no control over their price. C) there are numerous producers of two goods competing in a competitive market As their products seem visually identical, both the brands have to make sure they offer customers something that the other does not. 10) In the dominant firm model of oligopoly, the dominant firm produces the quantity at which marginal revenue equals 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? *The firm's profits will be lower. C) Firms in the cartel will want to raise the price. d) import competition, Suppose the rivals of an oligopolistic firm match either a price increase or decrease. Products traded or traded homogeneously become the second characteristic of oligopoly. The land is in an area zoned only for b) it will lower the firm's costs 1) A cartel is a group of firms which agree to A) behave competitively. *Diseconomies of scale In the credit card industry, for example, Visa and MasterCard have a duopoly.read more. B) Other firms will enter the industry. C) the HHI for the industry is small. a) low to receive a payout of $15 All right then. B) there are two producers of two goods competing in an oligopoly market *localized markets, Barriers to entry into an oligopoly most resemble those of a ______. they set up a 1 meter (100 cm) track. c) harder A) there are only two producers of a particular good competing in the same market Experts are tested by Chegg as specialists in their subject area. e) It could be downward sloping or kinked. Economies of scale are the cost advantage a business achieves due to large-scale production and higher efficiency. B) a market where two firms compete for profit and market share. A) Each firm has an incentive to collude. E) None of the above. A dominant-bank oligopoly confronting a competitive fringe There are two sets of banks: dominant banks and fringe banks. Oligopolists do not compete with each other. Mr. mann's science students were experimenting with speed. An oligopoly is a market structure with a small number of firms, none of which can keep the others from having significant influence. You are free to use this image on your website, templates, etc., Please provide us with an attribution link. *Ownership and control of raw materials b) strengthens Brand reputation, company size, and minimal completion make decision-making crucial and influential across the group. . Interdependence b) collusion model You can calculate it by adding Direct Material cost, Direct Labor Cost, & Manufacturing Overhead Cost. For an industry to be considered an oligopoly the four-firm concentration ratio must be ______. b) its rivals match a price cut but ignore a price increase 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. All firms stick to what has been decided, thereby ensuring price stability in the sector. Pure (Perfect) Competition 2. ECO-FINALS_LESSON-1 - Read online for free. c) have no rivals On the other hand, if an oligopolist reduces output by raising prices, the rest refrain from doing so. B) potential entrants entering and incurring economic loss. O B. 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. Marilyn d) easier. d) does not influence. A) Each firm faces a downward-sloping demand curve. Also, as there are few sellers in the market, every seller influences the behavior of the other firms and other firms influence it. Have you a question about something that I covered. Its main characteristics are discussed as follows: 1. *The game would eventually end in either cell B or cell C. Your email address will not be published. ratio. D) assumes that competitors will match price cuts and ignore price increases. C) Trick cheats, while Gear complies with the agreement. *Cause price wars during business recessions b) demand theory The first firm to move in a sequential game has an advantage by establishing a ____ _____ that is favorable to them. c) A more efficient industry 5.3.5 Apply Concepts of Oligopoly and Oligopoly Models .pdf. *The firm's profits will be lower. In such a system, determining the proportion of total product used for investment . Is Microsoft an oligopoly Do you want to know Click Here. Based on the payoff matrix, if the two firms agreed to both follow national strategies there is an incentive for them to cheat. b) They try to avoid losses by raising prices in conjunction with rival firms. E) marginal cost. *The firm is failing to produce at the profit-maximizing output. A characteristic found only in oligopolies is A) break even level of profits. d) achieve greater allocative efficiency but lesser productive efficiency, c) give the appearance of increased competition D) zero. For example, it has been found out that insulin and the electrical industry are highly oligopolist in the US. In doing so, they reduce production and increase prices, a phenomenon called collusion. In the graph, the price elasticity of demand is ______ below the price of P0. A small number of sellers. A study based on over 9,0009,0009,000 U. S. residents Oligopoly refers to a market situation or a type of market organisational in which a few firms control the supply of a commodity. 2003-2023 Chegg Inc. All rights reserved. d) have interdependent pricing. Welcome to EconTips, your number one source for all things about economics. d) They do not achieve allocative efficiency because their price exceeds marginal cost. Features: Many and small sellers, so that no one can affect the market a) The possibility of price wars diminishes and profits are maximized. 6. (Enter one word per blank. 18) A market with a single firm but no barriers to entry is known as e) Its marginal cost curve is made up of two segments, d) Its marginal revenue curve would consist of two segments. A) the government will impose price controls. 7) The kinked demand curve theory of oligopoly predicts that c) horizontal or perfectly elastic 300 laborers were employed at the plant that month. c) Nash equilibrium d) Its marginal revenue curve would consist of two segments *To increase market share d) Mutual interdependence. b) interindustry competition One of theoligopoly characteristicsis the focus of its members on improving the product quality or offering benefits to make their brand unique. c) Price war a) necessary 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. A) average total cost curve is discontinuous. C) "Construction prices in this town seem to be always set by Big Jim's Dandy Construction Company." Such companies have complete control of the market, earning high profits and gains in a specific sector or service. 9) Which is not a characteristic of oligopoly? *To increase control over the product's price a) Kinked-demand curve model d) Localized markets, Suppose the rivals of an oligopolistic firm ignore both a price increase and decrease. . B) monopolists. 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) equilibrium price and quantity will be sensitive to small cost changes. *Reduce uncertainty B) a contestable market. a) They may produce homogeneous or differentiated products. . B) perfectly inelastic demand. b) its rivals match price increases and price decreases Because of their large size and minimal competition, each firm in an oligopoly market structure influences the others. b) demand; losses; increase a) Dominant strategy A) This game has no dominant strategies. The study of how people behave in strategic situations is called _____ theory. c) inflexible What does a demand curve look like for an oligopolistic firm? b) OPEC C) independence of firms. A. a) They move downward and to the right to a lower operating point on the average-total-cost curve. C) the same as a monopoly. C) strategies E) produce the efficient quantity. single family housing and would be an attractive site for single family homes. A. Collusion becomes more difficult as the number of firms ____. a) major firms in an industry ranked by employment 6) According to the kinked demand curve theory of oligopoly, at the quantity corresponding to the kink, the firm's b) Mutual interdependence 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? e) Firms may sell a differentiated product. In first-degree price discrimination, a monopolist charge each customer the highest price the customer is willing to pay. Meanwhile, all firms know that their decisions affect other firms sales and profit, hence they necessarily react against those decisions. B) interdependence of firms. 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. *It eliminates competition among firms. Raised barriers to entry, price-making power, non-price competition, the interdependence of firms, and product differentiation are alloligopoly characteristics. e) undefined, In the graph, the price elasticity of demand is highly ______ above the price of P0. Mutual interdependence solely means that they base their decisions on how they think their rivals will react. How are profitability and risk impacted by changes in the current liabilities to total assets ratio? a) their prices will be unchanged b) pure monopoly a) are monopolies D) entry into the industry of rival firms will have no impact on the profit of the cartel. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. The control of oligopolists over specialized inputs, such as resources, price, and production, makes it difficult for a new firm to survive. d) Firms choose strategies at the same time. They are Market players in an oligopolistic market focus on non-price competition, ensure their brands are uniquely identifiable and apply hidden advertising tactics. d) lowering the cost of production 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. Which statement is true about oligopolies? *increasing economies of scale, *providing misleading information d) Firms choose strategies at the same time.

Texas High School Track Order Of Events, Who Owns Synergy Equipment, Articles W