C) the HHI for the industry is small. a) Kinked-demand curve model Which of the following is not a characteristic of oligopoly? 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? d) Its marginal revenue curve would consist of two segments C) one prisoner has no chance to be acquitted since there is no other prisoner to support his testimony. d) Localized markets, Suppose the rivals of an oligopolistic firm ignore both a price increase and decrease. c) It will always be kinked because it is a price maker. The core competencies in business refer to its resources and unique fundamental capabilities that distinguish it from market competitors. The presence of a small number of companies in an oligopoly market structure makes it highly concentrated. *The game would eventually end in the Nash equilibrium (cell A). b) By increasing recruiting expenses 8) Firm X is competing in an oligopolistic industry. always one step ahead. It encompasses several industries, including banking and investment, consumer finance, mortgage, money markets, real estate, insurance, retail, etc. Perfect competition is a market in which there are a large number of buyers and sellers, all of whom initiate the buying and selling mechanism. Principles of Microeconomics Instructor: Sandhya Patlolla Assignment 7 1) In two firm oligopoly, if one firm increases its price, then the other firm can: A. OA. E) Bud and Miller each have a dominant strategy. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. Four characteristics of an . 13) A dominant firm oligopoly might be one for which the Herfindahl-Hirschman Index is B) the firms may legally form a cartel. After each player chooses his or her best strategy and sees the result, *Increase profits E) Firms set prices. 10) In the dominant firm model of oligopoly, the dominant firm produces the quantity at which marginal revenue equals In an oligopoly, a few dominant brands offer most of the products and services and make significant decisions on behalf of the rest. 16) A monopolistically competitive firm is like an oligopolistic firm insofar as A) both face perfectly elastic demand. b) are always less efficient The more concentrated a market is, the more likely it is to be oligopolistic. d) The same as a monopoly, By controlling ______ through collusion, oligopolists may be able to reduce ______, ______ profits and block the entry of new rivals. b) Mutual interdependence *Ownership and control of raw materials E) Each firm has an incentive to cheat. . Product differentiation refers to making a product look attractive and different from other products in the same class. b) demand; losses; increase Mutual interdependence solely means that they base their decisions on how they think their rivals will react. *Patents, *Preemptive pricing b) through pricing Which of the following represents the problem with the four-firm concentration ratio? In first-degree price discrimination, a monopolist charge each customer the highest price the customer is willing to pay. About us. a) The possibility of price wars diminishes and profits are maximized. As a result, each firm obligates to adhere to pre-determined price and quantity/output levels to maximize revenue. D) neither is protected by high barriers to entry. d) their profits and sales will rise The market share of the firms is unequal. e) Price leadership model, a) Kinked-demand curve model For example, when a government grants a patent for an invention to one firm, it may create a monopoly. *It lowers search costs of information for consumers. 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. Characteristics: There are few firms in the market serving many consumers. Managerial Economics - Oligopoly E) Dr. Smith does not advertise if Dr. Jones advertises. at least $10 million. 1. Required fields are marked *. *To decrease monopoly power 2) In the dominant firm model of oligopoly, the larger firm acts like d) Firms choose strategies at the same time. *It eliminates competition among firms. d) through advertising B) the firms may legally form a cartel. C) perfectly elastic. If one firm is large enough to account, which is that 80% of sales in the industry. E) unknown. a) The kinked-demand curve model Characteristics of Oligopoly - QS Study D) in neither a repeated game nor a single-play game. Demand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. Interdependence: The foremost characteristic of oligopoly is interdependence of the various firms in the decision making. Oligopolists do not compete with each other. It can be also called as one form. The total market demand is P(Q) = 50 - 2Q, where Q is the total quantity produced by all (active) firms in the industry. a) Dominant strategy What is the characteristics of oligopoly? command economy | Definition, Characteristics, Examples, & Facts *localized markets, *dominant firms C) changes in the output of any member firms will have no impact on the market price. 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. B) This game has no Nash equilibrium. PDF Market Structure: Oligopoly (Imperfect Competition) 5) Which one of the following characteristics applies to oligopolistic markets? b) are less efficient because they are often regulated by the government Raised barriers to entry, price-making power, non-price competition, the interdependence of firms, and product differentiation are alloligopoly characteristics. e) straight So when an oligopolist decreases prices to increase output, others follow the path. d) vertical It is assumed that all of the sellers sellidentical or homogenous products.read more, monopoly, and monopolistic competition. So here we can see a one-way interdependence pattern. *Large capital investment *The game would eventually end in the Nash equilibrium (cell A). a) low to receive a payout of $15 What are three models used to study pricing and output by oligopolies? D) All of the above. A. Essay on Oligopoly, Perfect Competition, Cournot's and Bertrand's E)Firms are profit -maximizers. It is an essential component of marketing strategy leading to brand recognition and business growth. We reviewed their content and use your feedback to keep the quality high. *To increase control over the product's price A) price. E) marginal revenue curve is upward sloping. They collude and agree to share the market equally. What is the difference between monopoly and oligopoly? 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. 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. B) each member will face the temptation to cheat on the cartel price to increase its sales and profit. b) Interindustry competition But in practice, there are several barriers to entre which make it quite difficult for the new firms to join the industry or market. C) the same as a monopoly. 15 Oligopoly Advantages and Disadvantages - ConnectUS d) monopolistically competitive market, The study of how one firm reacts to the actions taken by another firm or individual when implementing a strategy is called _____. e) It could be downward sloping or kinked. 13) Complete the following sentence. Oligopoly theory | Industrial economics | Cambridge University Press Each firm has a substantial share of the market supply. 8) A weakness of the kinked demand curve theory of oligopoly is that it does not Which of the following is not a characteristic of oligopoly? - Toppr Ask c) its rivals ignore price increases and price decreases The firms produce differentiated products. ECON 1001: Chapter 14 (Oligopoly and Strategic Behavior) - Quizlet A non-collusive oligopoly refers to a market situation where the firms compete with each other rather than cooperating. In second-degree price discrimination the monopolist offers a menu of quantity-based pricing options designed to induce customers to self-select based on how highly they value the product. 4) Which one of the following industries is the best example of an oligopoly? 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. A) kinked demand curve. Furthermore, no restrictions apply in such markets, and there is no direct competition. The firms comprise an oligopolistic market, making it possible for already-existing smaller businesses to operate in a market dominated by a few. *The game would temporarily move to either cell B or cell C. Chapter 14 Oligopoly and Strategic Behavior L, ECON 1001: Chapter 20 (Public Finance and Exp, Test Practice Questions (Exam 3), Chapter 10, ECON 1001: Chapter 23 (Income Inequality, Pov, Fundamentals of Engineering Economic Analysis, David Besanko, Mark Shanley, Scott Schaefer, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal, Alexander Holmes, Barbara Illowsky, Susan Dean. D) perfectly inelastic. c) may be less desirable because they are not regulated by government to protect consumers A few firms control most of the production and sale of a product. A) rules *world trade b) flexible In this market, there are a few firms which sell homogeneous or differentiated products. *increasing sales and output D) if Bob does not change his decision, Jane would like to change hers. E 12) Because an oligopoly has a small number of firms A) each firm can act like a monopoly. Pure or Perfect Oligopoly: If the firms produce homogeneous products, then it is called pure or perfect oligopoly. Which of the following is not a characteristic of oligopoly? 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 ____. *The firm is failing to produce at the profit-maximizing output. c) A more efficient industry a) The outcomes for all firms are negative. Based on the payoff matrix, if the two firms agreed to both follow national strategies there is an incentive for them to cheat. E) none of the above. Any change in either of them will affect the quantity/output sold by a producer. a) Import competition While it is true that strategic behavior and mutual interdependence characterize oligopolies, this is not the reason why they are price makers. c) By changing pricing strategies *Increase profits A) is; to comply regardless of the other firm's choice It is an essential component of marketing strategy leading to brand recognition and business growth. (Enter one word per blank. It determines the law of demand i.e. . You may also have a look at the following articles , Your email address will not be published. Oligopolists do not stress competing with each other on the pricing front. 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. And that is what turns out to be the unique selling proposition (USP) of the respective brands in the oligopolistic industry. what are the 5 characteristics of an oligopoly? B) a monopoly. C) strategies *The firm's profits will be lower. It helps avoid the potential price war and price rigidity. is the demand curve for taxi rides in a town, and, 14) Refer to Figure 14.1.1. *To increase market share 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. b) legal *The game would temporarily move to either cell B or cell C. c) inflexible a) its rivals collude *It helps reduce demand for material products. *The firm's profits will be higher. A small number of sellers. 1) In the dominant firm model of oligopoly, the smaller firms behave as Economists identify four types of market structures: (1) perfect competition, (2) pure monopoly, (3) monopolistic competition, and (4) oligopoly. 8) Which of the following quotes shows a contestable market in the widget industry? 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) the good produced in the market has been deemed a necessity How oligopoly cause market failure? Explained by Sharing Culture D) products that are slightly different. How oligopolists react to the price change by one firm can be best understood with the downward-sloping Kinked demand curve. 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. d) They do not achieve allocative efficiency because their price exceeds marginal cost. 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. d. 2. . a) kinked and steep As their products seem visually identical, both the brands have to make sure they offer customers something that the other does not. c) dominant firms b) its rivals match price increases and price decreases A) Dr. Smith advertises no matter what Dr. Jones does. 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. A) a market where three dominant firms collude to decide the profit-maximizing price. B) marginal cost curve is discontinuous. 1. Solved Which of the following is not a characteristic of an - Chegg 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. 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. If Marilyn believes that the $10 million stock issue was undertaken only to improve DTRs e) low to receive a payout of $8. A) a market where three dominant firms collude to decide the profit-maximizing price. a) pricing theory A) each firm can act like a monopoly. 14) A duopoly occurs when ________. A) a firm in an oligopoly market. e) Its marginal cost curve is made up of two segments, d) Its marginal revenue curve would consist of two segments. 5. 3) The Nash equilibrium for a sequential game in a contestable market with locked-in first stage prices results in Top 5 Characteristics of an Oligopoly - EconTips This represents what kind of problem with the four-firm concentration ratio? 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. Even though the products of companies A and B are similar, there must be something that distinguishes them. c) Dominant firms In oligopoly market there are? Explained by Sharing Culture Firms are more likely to cheat on a collusive agreement when the economy is experiencing a _____ (Enter one word). However, firm B follows the leaders price and equilibrium quantity in order to avoid the uncertainty that can be arisen. Our assessments, publications and research spread knowledge, spark enquiry and aid understanding around the world. b) Localized markets a) Import competition The characteristics of oligopoly include interdependence, product differentiation, high barriers to entry, uncertainty, price setters. Monopolistic Competition 4. 7) The kinked demand curve theory of oligopoly predicts that C. La sociedad se encuentra dividida entre capitalistas, terratenientes y trabajadores. b) its rivals match a price cut but ignore a price increase a) greater than or equal to 40% D) equilibrium quantity will be sensitive to small cost changes but price will not. There are just several sellers who control all or most of the sales in the industry. 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. b) Its demand curve is downward-sloping C) the HHI for the industry is small. . Patent rights or accessibility to technology may exclude potential competitors. . In such a system, determining the proportion of total product used for investment . Solved Which of the following is NOT a characteristic of an - Chegg ), Which of the following is true about the oligopolist if rivals match a price cut but ignore a price increase? What are examples of monopoly and oligopoly? D) patents, copyrights, barriers to entry, and rules. c) Firms earn zero economic profits in the long-run. In a monopoly, only one big brand influences the entire market without any competition. D)There is more than one firm in the industry. b) are few in number B) "Every time Sparrow's Donuts has a donut sale, so does Tim Horton's." What is Oligopoly? | Markets | Economics - Economics Discussion 12) Because an oligopoly has a small number of firms *The firm's demand curve will shift further to the left. (Enter one word for each blank. Oligopoly Models: 1. b) high to receive a payout of $15 E) marginal cost. A) 0. 3) Which one the following industries is the best example of an oligopoly? The distinctive feature of an oligopoly is interdependence. Based on the elasticity of demand and its response to the price change, the demand curveDemand CurveDemand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. B) the courts. Marilyn has been involved in negotiations between DTR and prospective lenders as DTR Such companies have complete control of the market, earning high profits and gains in a specific sector or service. When there are two market leaders in any industry or service, this is referred to as a duopoly. 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). Oligopolistic Market - Overivew, Examples, How an Oligopoly Works 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. b) OPEC C. Some market power. E) a competitive market produces two goods. Firm 1 cost function is TC (9) = 20 + 12q + q, while firm 2 cost function is TC (9) = 50 +8q2 + q . C) independence of firms. C) lower the price of their products. D) Bud has a dominant strategy but Miller does not. E) produce the efficient quantity. Nokia, however, offers Android phones with the same features and almost similar prices. *Prohibit the entry of new rivals, *Reduce uncertainty Instead, they try different approaches, such as rewarding customers for their loyalty, differentiating their product offerings, providing sales promotion schemes, acting as sponsors, etc. a) L-shaped Oligopolies are typically composed of a few large firms.