a) over collusion a) pricing theory 21) It is difficult to maintain a cartel for a long period of time. A type of implicit understanding used by oligopolists to coordinate prices without engaging in outright collusion is known as ______. 5) Which one of the following characteristics applies to oligopolistic markets? c) The supply curve model E) none of the above. b) are less efficient because they are often regulated by the government 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) OPEC It encompasses several industries, including banking and investment, consumer finance, mortgage, money markets, real estate, insurance, retail, etc. d) both productive efficiency and allocative efficiency, b) neither productive efficiency nor allocative efficiency. a) Affect profits and influence the profits of rival firms View full document. b) price leadership; collusion a) low to receive a payout of $15 (Figure) summarizes the characteristics of each of these market structures. A) is; all other firms act as if they are perfectly competitive B) is not; other firms can enter, which increases supply, decreases the price, and drives economic profit down to zero d) cost leadership. Due to minimal competition, each of them influences the rest through their actions and decisions. Pure (Perfect) Competition 2. A Computer Science portal for geeks. c) allocative efficiency but not productive efficiency B) raise the price of their products. 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. 9) Which is not a characteristic of oligopoly? E) None of the above. Brand reputation, company size, and minimal completion make decision-making crucial and influential across the group. When firm X increases its price. B) monopolists. d) elastic, An oligopoly firm's demand curve will be kinked if ______. A) Strategic Independence However, firm B follows the leaders price and equilibrium quantity in order to avoid the uncertainty that can be arisen. Which of the following is not a characteristic of an oligopoly? $3. The factors that determine a market structure include the number of businesses, control over prices, and barriers to market entry. O B. attempts to raise $425 million to use to build apartments in a growing area of Tulsa. 1) A cartel is a group of firms which agree to 12) Because an oligopoly has a small number of firms *To obtain lower input prices Firms in the industry make price and output decisions with an eye to the decisions and policies of other firms in the industry. D) All of the above. Also, they rely on free-market forces to earn higher profits than a competitive market. a) The possibility of price wars diminishes and profits are maximized. 18) A market with a single firm but no barriers to entry is known as *world trade The demand curve will look kinked to reflect the fact that rivals will match price *decreases* but ignore price *increases*. a) payoff as the price increases, demand decreases keeping all other things equal. One of theoligopoly characteristicsis the focus of its members on improving the product quality or offering benefits to make their brand unique. C) Trick cheats, while Gear complies with the agreement. Though, it is rare to find pure oligopoly situation, yet, cement, steel, aluminum and chemicals producing industries approach pure oligopoly. If this game is nonrepeated, the Nash equilibrium is A) both firms cheat on the agreement. a) Dominant strategy D) Gear cheats, while Trick complies with the agreement. A market is considered to be a(n) ______ when the largest four firms in an industry control more than 40% or more of the market. A) the government will impose price controls. When there are two market leaders in any industry or service, this is referred to as a duopoly. A) "Gas prices in this town always go up and down together." *The firm's demand curve will shift further to the right. A) price. A) This game has no dominant strategies. They are single family housing and would be an attractive site for single family homes. d. It helps avoid the potential price war and price rigidity. *The firm is failing to produce at the profit-maximizing output. d) their profits and sales will rise. 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. Marginal revenue = Change in total revenue/Change in quantity sold. Even though the products of companies A and B are similar, there must be something that distinguishes them. For example, it has been found out that insulin and the electrical industry are highly oligopolist in the US. It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. c) All oligopolists' or imperfect competitors' demand curves are down-sloping because they are price makers. 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. 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. D) unit elastic demand. For an industry to be considered an oligopoly the four-firm concentration ratio must be ______. Save my name, email, and website in this browser for the next time I comment. There are just several sellers who control all or most of the sales in the industry. *Prohibit the entry of new rivals. complexes. *The game would eventually end in the Nash equilibrium (cell A). e) undefined, In the graph, the price elasticity of demand is highly ______ above the price of P0. *The game would temporarily move to either cell B or cell C. b) neither productive efficiency nor allocative efficiency Collusion becomes more difficult as the number of firms ____. Business Economics Consider a Cournot oligopoly with n = 2 firms. Lets identify the oligarchy before identifying the characteristics of an oligopoly. 6) Wal-Mart follows the kinked demand curve model of oligopoly. Marilyn is also aware that DTR issued$10 million of common stock to a long-time friend of the O D. Some barriers to entry. An oligopoly is a market state where there is a limited amount of competition available for consumers to consider. b) are few in number 8) Firm X is competing in an oligopolistic industry. Businesses in such a market collaborate to dominate the rest of the players and maximize joint revenue. 11) Because an oligopoly has a small number of firms, A) each firm can act like a monopoly. C) potential entrants entering and making zero economic profit. It is assumed that all of the sellers sellidentical or homogenous products.read more, monopoly, and monopolistic competition. In a(n) _____ game one firm moves first, committing to a strategy and then the rival firm responds. Firm A and Firm B are the only producers of soap powder. 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. A dominant-bank oligopoly confronting a competitive fringe There are two sets of banks: dominant banks and fringe banks. B) the courts. E) cheat on each other. Sweezy Oligopoly - based on a very specific assumption regarding how other firms will respond to price increases and price cuts. Oligopoly. b) Interindustry competition Oligopoly refers to a market situation or a type of market organisational in which a few firms control the supply of a commodity. 31) Refer to Table 15.3.7. The distinctive feature of an oligopoly is interdependence. A) potential entrants entering and making monopoly profit. B) rivalry among a large number of rivals leads to lower overall profit. If so, then the firm's demand curve will be ______. All right then. *increasing economies of scale, *providing misleading information C) a firm in monopolistic competition. c) The outcomes for all firms are positive. 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) It could be downward or upward sloping. they will make more pricing low than if they both price high. C) average total cost. C) the same as a monopoly. *It eliminates competition among firms. Keep its price constant and thus increase its market share B. d) are more efficient because cartels and collusion is always successful Firms are profit-maximizers. A Computer Science portal for geeks. *mutual interdependence A characteristic found only in oligopolies is A) break even level of profits. e) It could be downward sloping or kinked. A. The firms in the oligopolistic market are having full knowledge about the market particularly about their rival firms. b) are always less efficient 6) According to the kinked demand curve theory of oligopoly, at the quantity corresponding to the kink, the firm's A) a market where three dominant firms collude to decide the profit-maximizing price. Advertising can persuade consumers to pay higher prices for products that are well _____ (one word) instead of purchasing unadvertised products with lower prices. D) is not; to comply when the other firm complies and to cheat when the other firm cheats Some of its fundamental characteristics include the existence of a small number of firms, differentiated or homogeneous products, and barriers to entry. A) all members of the cartel have a strong incentive to abide by the agreed-upon price. 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. b) interindustry competition E) rules, strategies, payoffs, and outcome. ) C) is; to cheat regardless of the other firm's choice Consequently, each firm must condition its behavior on the behavior of the other firms. 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. 9) Which isnota characteristic of oligopoly? If the products of the firms are differentiated the degree of interdependence is then weakened. b) through pricing B) "Every time Sparrow's Donuts has a donut sale, so does Tim Horton's." Greater the number of firms, the higher the degree of interdependence. The other two share the rest (20%). These firms are large enough that their quantity influences the price and so impacts their rivals. d) its rivals match price decreases but ignore price increases, d) its rivals match price decreases but ignore price increases, Which of the following is true about the oligopolist if rivals match a price cut but ignore a price increase? 14) The kinked demand curve model But in practice, there are several barriers to entre which make it quite difficult for the new firms to join the industry or market. 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. You can calculate it by adding Direct Material cost, Direct Labor Cost, & Manufacturing Overhead Cost. c) The possibility of price wars increases, but profits are maximized. C) assumes that marginal revenue equals marginal cost only at the quantity at the "kink." d) The firms in the industry are interdependent. 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." c) is always downward sloping 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. 41) Refer to Table 15.3.12. c) through collusion 13) Complete the following sentence. The profit-maximizing price of firm B is PB(>PA) and the quantity is Xbe. B) This game has no Nash equilibrium. B. What would have been DTRs debt to equity ratio if the$10 million of stock had not been b) The possibility of price wars diminishes, but profits might be lower. d) The market contains a few large producers. D) the four-firm concentration ratio for the industry is small. 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.
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