E) more elastic than the demand just above the price at the kink. b) Collusive pricing model 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? 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) other firms will lower theirs. A) in a single-play game or a repeated game. ADVERTISEMENTS: This fact is recognized by all the firms in an oligopolistic industry. D. Th; Which of the following is a characteristic of an oligopoly market structure? Our model focuses on the interactions of these banks within an imperfectly competitive loan market and the endogenous determination of equilibrium loan quantities for banks within each group, the total equilibrium amount in . Four characteristics of an oligopoly industry are: Few sellers. It is used as one of the strategies to increase the business firm's revenue and increase the market share.read more. D) zero. b) increasing monopoly power 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. The financial sector refers to businesses, firms, banks, and institutions providing financial services and supporting the economy. The control of oligopolists over specialized inputs, such as resources, price, and production, makes it difficult for a new firm to survive. D)There is more than one firm in the industry. b) its rivals match a price cut but ignore a price increase 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. 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 Pure (Perfect) Competition. Oligopolies are typically composed of a few large firms. Oligopoly is a market structure characterized by a few firms. 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 ____. E) Firms set prices. All right then. The presence of a small number of companies in an oligopoly market structure makes it highly concentrated. E) an outcome. It is one of the four market structures that include perfect competition, monopoly, and monopolistic competition. C) Trick cheats, while Gear complies with the agreement. Furthermore, no restrictions apply in such markets, and there is no direct competition. 6) According to the kinked demand curve theory of oligopoly, at the quantity corresponding to the kink, the firm's b) Demand is highly elastic below the going price We can conclude that industry A is. What are the 4 characteristics of oligopoly? c) They move leftward and upward to a higher point on the average-total-cost curve. B) monopolists. In the credit card industry, for example, Visa and MasterCard have a duopoly.read more. Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. Instead, they try different approaches, such as rewarding customers for their loyalty, differentiating their product offerings, providing sales promotion schemes, acting as sponsors, etc. 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. d) are more efficient because cartels and collusion is always successful A dominant-bank oligopoly confronting a competitive fringe There are two sets of banks: dominant banks and fringe banks. *The firm is failing to produce at the profit-maximizing output. The presidents friend constructs and sells single family homes. e) Firms may sell a differentiated product. The incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. The marketers of Budweiser Light beer and Miller Lite beer must decide whether or not to offer new advertising campaigns promoting their products. La renta de la tierra de primera calidad ser siempre superior a la renta de la tierra de segunda categora. d) price changes are often difficult to match And that is what turns out to be the unique selling proposition (USP) of the respective brands in the oligopolistic industry. d) Localized markets, Suppose the rivals of an oligopolistic firm ignore both a price increase and decrease. E) none of the above is done. *Prohibit the entry of new rivals. B) a monopoly. A. C) other firms will raise their prices by an identical amount. *interindustry competition B) is not; to comply when the other firm cheats and to cheat when the other firm complies C) there are numerous producers of two goods competing in a competitive market Mr. mann's science students were experimenting with speed. It determines the law of demand i.e. b) There are barriers to entry into the market. d) Firms choose strategies at the same time. As in an oligopoly market, the decision of one firm influences the process and working of another firm. A game that is played more than once between rivals is a ____ (Enter one word) game. 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. e) through cartels, c) through product development a) The same as monopolistic competition c) it will prevent a price war A) "I am producing extra widgets, even though it costs me short-run profits, to stop Wally's Widgets from expanding into my market." C) lower the price of their products. However, firm B will follow the leaders price and equilibrium quantity in order to avoid the uncertainty that can be arisen. 5) Which one of the following is not a feature common to all games? c) price leadership; cartel b) are less efficient because they are often regulated by the government It is assumed that all of the sellers sellidentical or homogenous products.read more, monopoly, and monopolistic competition. Barriers to entry into an oligopoly most resemble those of a ______. Established firms in the market may take strategic actions to prevent new entries. Oligopolistic behavior implies that oligopolists prefer competition ______. Market players in an oligopolistic market focus on non-price competition, ensure their brands are uniquely identifiable and apply hidden advertising tactics. An oligopoly is a market structure that involves few producers and suppliers (www.oecd.org). Businesses in such a market collaborate to dominate the rest of the players and maximize joint revenue. For example, the existing firms might threaten to reduce the price drastically if entry occurs. a. A) 0. 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. issued for the land? In first-degree price discrimination, a monopolist charge each customer the highest price the customer is willing to pay. 1) A cartel is a group of firms which agree to A) behave competitively. b) collusion model B) equilibrium price and quantity will be insensitive to small cost changes. 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. 1) A cartel is a group of firms which agree to *It enhances competition and reduces monopoly power. *manipulating consumer preferences. a) are always more efficient 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. (Pure) Monopoly 3. In a(n) _____ game one firm moves first, committing to a strategy and then the rival firm responds. C) Miller has a dominant strategy but Bud does not. b) upward-sloping D) payoffs 11) Because an oligopoly has a small number of firms, A) each firm can act like a monopoly. 11) Because an oligopoly has a small number of firms. Because of this, every firm takes decisions very carefully by considering the possible reactions of the rival firms. An oligopolistic firm's marginal revenue curve is made up of two segments if ______. e) low to receive a payout of $8. B) 1. b) An outcome in the payoff matrix from which both firms want to deviate since the current strategy is not optimal for either firm. Save my name, email, and website in this browser for the next time I comment. complexes. What are the 4 characteristics of oligopoly? OA. They are The firms produce differentiated products. C) rules, strategies, profit, and outcome. There are just several sellers who control all or most of the sales in the industry. d) They do not achieve allocative efficiency because their price exceeds marginal cost. Economies of scale are the cost advantage a business achieves due to large-scale production and higher efficiency. (Enter one word for each blank. 5) Which one of the following characteristics applies to oligopolistic markets? E) cheat on each other. B) Dr. Smith does not advertise no matter what Dr. Jones does. 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. D) is; the smaller firms cannot become the dominant firm Firm 1 cost function is TC (9) = 20 + 12q + q, while firm 2 cost function is TC (9) = 50 +8q2 + q . Demand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. View full document. c) its rivals match a price increase but ignore a price cut c) The percentage of total industry sales accounted for by the four largest firms D) the industry is government regulated E) a competitive market produces two goods. *The game would eventually end in the Nash equilibrium (cell B or C). 1. D) marginal revenue curve is discontinuous. A) Strategic Independence b) By increasing recruiting expenses e) undefined, In the graph, the price elasticity of demand is highly ______ above the price of P0. d) can set its price and output to maximize profits. a) Kinked-demand curve model This market structure can be competitive and sometimes less competitive. When firm X increases its price. c) Kinked-supply curve model Artificial intelligence (AI) services are on the rise, with every industry readying to integrate the technology sooner or later. D) not an oligopoly. A) costs, prices, profit, and strategies. A) all members of the cartel have a strong incentive to abide by the agreed-upon price. A) a natural monopoly. 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. a) They may produce homogeneous or differentiated products. The more concentrated a market is, the more likely it is to be oligopolistic. A single b) demand theory a) prices; uncertainty; increase E) a cartel. Marilyn Cox is the office manager for DTR Inc. DTR constructs, owns, and manages apartment When the government grants patents to, for example, three different pharmaceutical companies that each has its own drug for reducing high blood pressure, those three firms may become an oligopoly. The factors that determine a market structure include the number of businesses, control over prices, and barriers to market entry. Economics questions and answers. C) assumes that marginal revenue equals marginal cost only at the quantity at the "kink." 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. Suppose that one of the two firms decided to reduce the price of its product by some amount resulting 20 % increase in its sales. *The firm's demand curve will shift further to the left. E) the firms are interdependent. e) straight. c) have no rivals c) Its marginal cost curve is made up of two segments If this game is nonrepeated, the Nash equilibrium is A) both firms cheat on the agreement. Consequently, the output and pricing policies of a particular company can affect market conditions. D) assumes that competitors will match price cuts and ignore price increases. Marilyn is also aware that DTR issued$10 million of common stock to a long-time friend of the d) both productive efficiency and allocative efficiency, b) neither productive efficiency nor allocative efficiency. C) Firms in the cartel will want to raise the price. You can calculate it by adding Direct Material cost, Direct Labor Cost, & Manufacturing Overhead Cost. b) its rivals match price increases and price decreases *Large capital investment The policy implementation process has not taken in to account the life of rural peasants living in vicinity of cities. . 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. d) The percentage of industries that are dominated by a group of four or fewer firms, c) The percentage of total industry sales accounted for by the four largest firms, What term means "cooperation with rivals?" C) both have MR curves that lie beneath their demand curves. *dominant firms D) Bob denies and Art confesses. What happens to oligopolistic firms when a recession occurs? . B) the firms may legally form a cartel. D) the four-firm concentration ratio for the industry is small. *To increase economies of scale. b) Its demand curve is downward-sloping b) through pricing 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. Each firm is so large that its actions affect market conditions. Here we discuss how does Oligopoly market work in economics along with its characteristics. As their products seem visually identical, both the brands have to make sure they offer customers something that the other does not. C) a perfectly competitive market. A) Dr. Smith advertises no matter what Dr. Jones does. It is assumed that all of the sellers sellidentical or homogenous products. Firms in the industry make price and output decisions with an eye to the decisions and policies of other firms in the industry. Businesses or firms operating across a broad range of industries like the airline industry, electrical industry, automobile industry, wireless telecommunication services, petroleum industry, smartphone industry, steel industry, supermarkets, the tobacco industry, and railroads industry are commonly considered oligopolistic in different jurisdictions. A) a market where three dominant firms collude to decide the profit-maximizing price. As a result, each firm obligates to adhere to pre-determined price and quantity/output levels to maximize revenue. b) demand; losses; increase Oligopoly as a market structure is distinctly different from other market forms. Lets identify the oligarchy before identifying the characteristics of an oligopoly. A(n) _______ (Enter one word) is a market dominated by a few large producers of a homogeneous or differentiated product. Over a long time period, cheating ______ collusive oligopolies The market has been shared equally by firms A and B, The cost of firm A is lower than firm BProfit maximizing the output of firms A is XA and the price is PA. Firm B adopts this price and sells XB(=XA) amount. Impure oligopoly - have a differentiated product. Prisoners' dilemma describes a case where d) Oligopolistic collusion, Compared to monopolies, oligopolies ______. 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. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. c) Nash equilibrium C. Some market power. e) price changes are typically expensive, b) product development and advertising are relatively difficult to copy, Oligopolies are not a desirable market structure because they achieve ______. C) the HHI for the industry is small. Here, they focus on each other and try to exceed customer expectations in every possible way. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. An oligopoly (from Greek , oligos "few" and , polein "to sell") is a market form wherein a market or industry is dominated by a small group of large sellers (oligopolists). 4) Which one of the following industries is the best example of an oligopoly? 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) have interdependent pricing. price rigidity Element of monopoly. $6. Oligopolists do not compete with each other. Oligopoly Models: 1. *speeding up technological progress To further understand market modules follow the below topics. Use the figure below to answer the following question. Firm A and Firm B are the only producers of soap powder. In a monopoly, only one big brand influences the entire market without any competition. E) entry into the industry of rival firms will raise cartel profit as long as the new firms join the cartel. d) strategic theory. D) firms in perfect competition. c) Localized markets B) potential entrants entering and incurring economic loss. CFA Institute Does Not Endorse, Promote, Or Warrant The Accuracy Or Quality Of WallStreetMojo. a) Its demand curve is downward-sloping *localized markets, *dominant firms *The game would eventually end in the Nash equilibrium (cell A). E) an oligopoly. *Preemptive pricing B. C) average total cost. a) Cartel b) strengthens Imperfect or Differentiated Oligopoly: ADVERTISEMENTS: Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. The value denotesthe marginalrevenue gained. 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. *The firm's profits will be lower. It encompasses several industries, including banking and investment, consumer finance, mortgage, money markets, real estate, insurance, retail, etc. A 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. b) The possibility of price wars diminishes, but profits might be lower. a) Demand is highly elastic below the going price Firms are more likely to cheat on a collusive agreement when the economy is experiencing a _____ (Enter one word). *Increase profits C) specify how marginal cost is determined. 31) Refer to Table 15.3.7. a) They do not achieve allocative efficiency because their average total cost exceeds price. A) oligopolists. Compared to pure monopolies, oligopolies ______. This way, Samsung and Nokia ensure non-price competition by enhancing core capabilities to build a loyal customer base. 3) Canada's anti-combine law is enforced by Some of its fundamental characteristics include the existence of a small number of firms, differentiated or homogeneous products, and barriers to entry. e) increasing search time. B. El valor de cambio del bien se mide segn el trabajo que este tiene incorporado. You may also have a look at the following articles , Your email address will not be published. D) monopolistic competition. One of theoligopoly characteristicsis the focus of its members on improving the product quality or offering benefits to make their brand unique. 14) A duopoly occurs when ________. If productivity can be increased to $0.11 vans per labor hour, how many hours would the average laborer work that month? C. Some market power. O B. A)Each firm faces a downward -sloping demand curve. c) high to receive a payout of $12 The distinctive feature of an oligopoly is interdependence. 12) Because an oligopoly has a small number of firms These data are as follows: 30.334.531.130.933.731.933.131.130.032.734.430.134.631.632.432.831.030.230.232.831.130.733.134.431.032.230.932.134.230.730.730.730.630.233.436.830.231.530.135.730.530.630.231.430.730.637.930.334.130.4\begin{array}{lllll}30.3 & 34.5 & 31.1 & 30.9 & 33.7 \\ 31.9 & 33.1 & 31.1 & 30.0 & 32.7 \\ 34.4 & 30.1 & 34.6 & 31.6 & 32.4 \\ 32.8 & 31.0 & 30.2 & 30.2 & 32.8 \\ 31.1 & 30.7 & 33.1 & 34.4 & 31.0 \\ 32.2 & 30.9 & 32.1 & 34.2 & 30.7 \\ 30.7 & 30.7 & 30.6 & 30.2 & 33.4 \\ 36.8 & 30.2 & 31.5 & 30.1 & 35.7 \\ 30.5 & 30.6 & 30.2 & 31.4 & 30.7 \\ 30.6 & 37.9 & 30.3 & 34.1 & 30.4\end{array}

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