always one step ahead. Advertising benefits society by ______. *Patents, *Preemptive pricing 5. The payoffs in the table are the economic profit made by Bud and Miller. a) low to receive a payout of $15 Any change in either of them will affect the quantity/output sold by a producer. Economics questions and answers. D. Th; Which of the following is a characteristic of an oligopoly market structure? What are the four characteristics of market structure? Oligopoly characteristics include high barriers to new entry, price-setting ability, the interdependence of firms, maximized revenues, product differentiation, and non-price competition. A) Each firm faces a downward-sloping demand curve. Collusion becomes more difficult as the number of firms ____. E) an oligopoly. $3. How oligopolists react to the price change by one firm can be best understood with the downward-sloping Kinked demand curve. 16) The firms Trick and Gear form a cartel to collude to maximize profit. b) Collusive pricing model Then the large firm may consider the other two firms are too small, hence ignore their reactions while taking decisions. 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. Answers: 1 Show answers Another question on Social Studies. D) patents, copyrights, barriers to entry, and rules. 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. ), Which of the following is true about the oligopolist if rivals match a price cut but ignore a price increase? View full document. Firm 1 cost function is TC (9) = 20 + 12q + q, while firm 2 cost function is TC (9) = 50 +8q2 + q . b) OPEC c) Its marginal cost curve is made up of two segments 11) Which one of the following quotations best describes a dominant firm oligopoly? B) in a single-play game but not a repeated game. b) legal 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. e) increasing search time. The incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. In this market, there are a few firms which sell homogeneous or differentiated products. It determines the law of demand i.e. b) collusion model D) is; the smaller firms cannot become the dominant firm If the products of the firms are differentiated the degree of interdependence is then weakened. *dominant firms c) price leadership *increasing economies of scale, *providing misleading information xxx\underline{\phantom{\text{xxx}}}xxx. C. The choices made by one firm have a significant effect on other firms. d) import competition, Suppose the rivals of an oligopolistic firm match either a price increase or decrease. 1) All games share four common features. b) increasing monopoly power Answer: An oligopoly is an industry which is dominated by a few firms. 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. Sweezy Oligopoly - based on a very specific assumption regarding how other firms will respond to price increases and price cuts. (Pure) Monopoly 3. In December, General Motors produced 6,600 customized vans at its plant in Detroit. d) are more efficient because cartels and collusion is always successful 13) Complete the following sentence. a) inelastic In the credit card industry, for example, Visa and MasterCard have a duopoly.read more. When there are two market leaders in any industry or service, this is referred to as a duopoly. c) conveying information to consumers D) payoffs 11) Because an oligopoly has a small number of firms. Mutual interdependence among the firms in decision making is the essential feature of the oligopolistic market. b) collusion ENGL1190_V0854_2023WI_Communications23.docx. Thus, it induces interdependence in the network. d) Interindustry competition, Which are barriers to entry in both monopolies and oligopolies? C. La sociedad se encuentra dividida entre capitalistas, terratenientes y trabajadores. Marginal revenue = Change in total revenue/Change in quantity sold. a) greater than or equal to 40% d) Dominant firms, What are oligopolists able to do by controlling price through collusion? 4) Which one of the following industries is the best example of an oligopoly? C) in a repeated game but not a single-play game. Advertising can reduce efficiency by ______. is the demand curve for taxi rides in a town, and, 14) Refer to Figure 14.1.1. 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 ____. Impure oligopoly - have a differentiated product. homogeneous or differentiated products i. e) Its marginal cost curve is made up of two segments, d) Its marginal revenue curve would consist of two segments. d) Oligopolistic collusion, Compared to monopolies, oligopolies ______. Oligopoly is said to prevail when there are few firms or sellers in the market producing or selling a product. Firm A and Firm B are the only producers of soap powder. See more documents like . E) Firms set prices. C) the HHI for the industry is small. read more, and marginal revenue is the product price. they will make more pricing low than if they both price high. A) in a single-play game or a repeated game. b) neither productive efficiency nor allocative efficiency OA. The value denotesthe marginalrevenue gained. ratio. a) over collusion It is assumed that all of the sellers sellidentical or homogenous products. C) both have MR curves that lie beneath their demand curves. A) suggests that price will remain constant even with fluctuations in demand. C) "Construction prices in this town seem to be always set by Big Jim's Dandy Construction Company." *manipulating consumer preferences. Besides, high capital requirements, licensing, patents, market demand, economies of scale, limit-pricing, and customer loyalty restrict the entry of new businesses. Features: Many and small sellers, so that no one can affect the market In a(n) _____ game one firm moves first, committing to a strategy and then the rival firm responds. The factors that determine a market structure include the number of businesses, control over prices, and barriers to market entry. C) lower the price of their products. Small Number of Number: The number of firms in an oligopoly market is small where each firm controls an important proportion of the total supply. a) prices; uncertainty; increase Oligopoly is a market with a few firms and in which a market is highly concentrated. 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. What is the characteristics of oligopoly? Which statement is true about oligopolies? D) Bud has a dominant strategy but Miller does not. . a) are monopolies E) none of the above. A) there are only two producers of a particular good competing in the same market C) Parliament. What happens to oligopolistic firms when a recession occurs? 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. Which is the simple form of oligopoly market? *The firm is failing to produce at the profit-maximizing output. This has been a Guide to Oligopoly and its definition. 6) Which one of the following characteristics applies to oligopolistic markets? c) kinked What are the 4 characteristics of oligopoly? *localized markets, *dominant firms All right then. Business Economics Consider a Cournot oligopoly with n = 2 firms. There are just several sellers who control all or most of the sales in the industry. *speeding up technological progress a) The number of average-sized firms in an industry needed to produce sales equivalent to the four largest firms 14) The kinked demand curve model How are profitability and risk impacted by changes in the current liabilities to total assets ratio? D) the four-firm concentration ratio for the industry is small. a) collusion; cartel B) both prisoners deny. B) Other firms will enter the industry. b) its rivals match a price cut but ignore a price increase C) average variable cost curve is discontinuous. what are the 5 characteristics of an oligopoly? document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright 2023 . B) interdependence of firms. Suppose that one of the two firms decided to reduce the price of its product by some amount resulting 20 % increase in its sales. Oligopolists do not compete with each other. E) specify what happens if costs change. 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. Here, they focus on each other and try to exceed customer expectations in every possible way. 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. C) Trick cheats, while Gear complies with the agreement. The distinctive feature of an oligopoly is interdependence. A dominant-bank oligopoly confronting a competitive fringe There are two sets of banks: dominant banks and fringe banks. b) flexible Pure oligopoly - have a homogenous product. D) equilibrium quantity will be sensitive to small cost changes but price will not. 1) A cartel is a group of firms which agree to 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. a) purely competitive market To further understand market modules follow the below topics. A) a market where three dominant firms collude to decide the profit-maximizing price. The number of suppliers in a market defines the market structure. 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. A) potential entrants entering and making monopoly profit. attempts to raise $425 million to use to build apartments in a growing area of Tulsa. a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and . *Preemptive pricing D) neither is protected by high barriers to entry. E) potential entrants taking all the business away from existing firms. B) the firms may legally form a cartel. 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. e) It could be downward sloping or kinked. a) are less efficient due to competition 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. A) only Bob would like to change his decision. . c) It will always be kinked because it is a price maker. c) product development and advertising are relatively inexpensive 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." E) None of the above. b) high to receive a payout of $15 *The firm's demand curve will shift further to the right. a) There are a few large firms that make up the industry. a) localized markets E 12) Because an oligopoly has a small number of firms A) each firm can act like a monopoly. Keep its price constant and thus increase its market share B. D) increase the amount they produce. 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. After each player chooses his or her best strategy and sees the result, Oligopolists in an oligopolisticmarket structure agree not to raise their prices but match only price cuts to avoid price rigidity. c) Price war Also, as there are few sellers in the market, every seller influences the behavior of the other firms and other firms influence it. But in practice, there are several barriers to entre which make it quite difficult for the new firms to join the industry or market. price changes, not production costs, so it can't be b. c) Kinked-supply curve model B) "Every time Sparrow's Donuts has a donut sale, so does Tim Horton's." C) "If only Wally and I could agree on a higher price, we could make more profits." *Ownership and control of raw materials An oligopolistic firm's marginal revenue curve is made up of two segments if ______. 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. *To increase control over the product's price a market structure characterized by a small number of interdependent sellers is called a oligopoly Which of the following is NOT a common characteristic of oligopoly? E) only when there is no Nash equilibrium. E) entry into the industry of rival firms will raise cartel profit as long as the new firms join the cartel. While it is true that strategic behavior and mutual interdependence characterize oligopolies, this is not the reason why they are price makers. A characteristic found only in oligopolies is A) break even level of profits. E) None of the above. B) neither player would be willing to change his or her decision unless the other player also changes his or her decision. Which of the following is not a characteristic of an oligopoly? They may produce homogeneous products or differentiated products. Market players in an oligopolistic market focus on non-price competition, ensure their brands are uniquely identifiable and apply hidden advertising tactics. We unlock the potential of millions of people worldwide. On the other hand, if an oligopolist reduces output by raising prices, the rest refrain from doing so. C) is; to cheat regardless of the other firm's choice 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. 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? 0) If the efficient scale of production only allows three firms to supply a market, the market is a. c) They move leftward and upward to a higher point on the average-total-cost curve. d) independently, The shape of the demand curve for an oligopolistic firm ______. a) The kinked-demand curve model In short,AI oligopoly is all set to shape the market, comprising a few large AI service providers dominating and influencing others in the business. a) payoff Impure because have both lack of Which one of the following observations is correct? 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) The possibility of price wars diminishes and profits are maximized. b) The possibility of price wars diminishes, but profits might be lower. c) Dominant firms In the graph, the price elasticity of demand is ______ below the price of P0. D) Consumers will eventually decide not to buy the cartel's output. 300 laborers were employed at the plant that month. A)Each firm faces a downward -sloping demand curve. B)Firms set prices. What kind of game is it when firms choose their optimal pricing strategy today without worrying about possible interactions in the future? 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.