d) easier. A) oligopolists. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright 2023 . Which of the following is not a characteristic of an oligopoly? *To decrease monopoly power b. 1) A cartel is a group of firms which agree to Is Microsoft an oligopoly Do you want to know Click Here. E) marginal cost. Economics questions and answers. It encompasses several industries, including banking and investment, consumer finance, mortgage, money markets, real estate, insurance, retail, etc. The firms produce differentiated products. Answers: 1 Show answers Another question on Social Studies. b) increasing monopoly power c) allocative efficiency but not productive efficiency E 12) Because an oligopoly has a small number of firms A) each firm can act like a monopoly. b) upward-sloping The distinctive feature of an oligopoly is interdependence. 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. 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. c) Nash equilibrium a) They move downward and to the right to a lower operating point on the average-total-cost curve. a) are always more efficient Thus, it induces interdependence in the network. 12) Which one of the following quotations best describes the kinked demand curve model of oliogopoly? 9) Which isnota characteristic of oligopoly? d) have interdependent pricing. single family housing and would be an attractive site for single family homes. What is it called when firms reach a verbal or tacit agreement with rivals about price in a social setting like the golf course? Assignment 7.pdf - Principles of Microeconomics Instructor: View full document. Therefore, necessarily they tend to react. Marilyn is also aware that DTR issued$10 million of common stock to a long-time friend of the b) Collusive pricing model Which of the following is not a characteristic of an oligopoly? d) cost leadership. complexes. B) collusion Given the emergence and expected evolution of AI-driven services in various niches, it is likely that there will be a highly concentrated market devoted explicitly to the AI needs of consumers. a) their prices will be unchanged In a monopoly, only one big brand influences the entire market without any competition. d) The firms in the industry are interdependent. E) unknown. Why is collusion desirable to oligopolistic firms? c) through collusion c) The possibility of price wars increases, but profits are maximized. It is an essential component of marketing strategy leading to brand recognition and business growth. C) is; the dominant firm is making an economic profit 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. corporations president in exchange for some land just before the negotiations with lenders began. It determines the law of demand i.e. *To increase economies of scale. b) The number of employees in an industry who ever have or are currently working for one of the four largest firms While it is true that strategic behavior and mutual interdependence characterize oligopolies, this is not the reason why they are price makers. Pure because the only source of market power is lack of competition. debt to equity ratio and that it will be reversed whenever the presidents friend wants the d) their profits and sales will rise 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. The firm and market structures - My Conquest Is the Sea of Stars E) none of the above is done. B) Firms are profit-maximizers.C) The sales of one firm will not have a significant effect on other firms. E) marginal revenue curve is upward sloping. $3. D) products that are slightly different. A) average total cost curve is discontinuous. A monopoly occurs when. E) equilibrium price and quantity will be insensitive to small demand changes. A) rules *The firm is failing to produce at the profit-maximizing output. B) the firms may legally form a cartel. C) Parliament. c) The percentage of total industry sales accounted for by the four largest firms C) strategies b) its rivals match a price cut but ignore a price increase a) are less efficient due to competition Following are the characteristics of oligopoly: Interdependence. Monopolistic Competition and Economic Efficiency, Monopolistic Competition Equilibrium| Long-run, Short-run, What is Inflation Mean | Definitions, Types, Causes, How to Calculate the GDP [Definition & Formula], Main Theories of Inflation (With Diagram), Indifference Curve Q&A [Download Indifference Curve Pdf]. *The firm's demand curve will shift further to the left. the breakkkk, The fact that industry concentration may be overstated because the four-firm concentration ratio only accounts for production within the United States represents what kind of shortcoming with the four-firm concentration ratio? Oligopolistic Market - Overivew, Examples, How an Oligopoly Works 16) A monopolistically competitive firm is like an oligopolistic firm insofar as A) both face perfectly elastic demand. C) perfectly elastic demand. a) often 5) Which one of the following is not a feature common to all games? Based on the figure, if one firm cheats on the collusive agreement it can increase its payoff by c) Dominant firms *The game would eventually end in the Nash equilibrium (cell B or C). Also, they rely on free-market forces to earn higher profits than a competitive market. 0. Cost of firm A is lower than firm B Profit maximizing price and quantity of firm A is PA and XA respectively. b) By increasing recruiting expenses It is used as one of the strategies to increase the business firm's revenue and increase the market share. D) equilibrium quantity will be sensitive to small cost changes but price will not. Advertising can reduce efficiency by ______. A) Each firm has an incentive to collude. C) Firms in the cartel will want to raise the price. C) perfectly elastic. Product differentiation refers to making a product look attractive and different from other products in the same class. On the other hand, if an oligopolist reduces output by raising prices, the rest refrain from doing so. B) "Every time Sparrow's Donuts has a donut sale, so does Tim Horton's." Click the card to flip Definition 1 / 84 B) monopolists. D) Dr. Smith advertises only if Dr. Jones advertises. *Large capital investment b) collusion Oligopolies exist and do not attract new rivals because A) of competition. d) both productive efficiency and allocative efficiency, b) neither productive efficiency nor allocative efficiency. b) Collusive pricing model An oligopoly is a market structure where a few large firms collude and dominate a particular market segment. D) not an oligopoly. The urban land lease policy is not very friendly to rural households land in general and the poor land holders in particular. c) Firms earn zero economic profits in the long-run. The value denotesthe marginalrevenue gained. Businesses in such a market collaborate to dominate the rest of the players and maximize joint revenue. $15. When members of an oligopoly react to price changes by a ____ _____ dominant firm, the model is most applicable. c) harder *speeding up technological progress Then the large firm may consider the other two firms are too small, hence ignore their reactions while taking decisions. b) depends on the firm's cost structure How oligopoly cause market failure? Explained by Sharing Culture A small number of sellers. EconTips 2022 - All Right Reserved, Designed and Developed by Harshasoft, Perfect Competition: Definition, Graphs, short run, long run, Monopoly Price discrimination: Types, Degrees, Graphs, Examples, Monopolistic Competition Equilibrium| Long-run| Short-run. b) strengthens b) its rivals match price increases and price decreases A small number of sellers. 300 laborers were employed at the plant that month. Prisoners' dilemma describes a case where A) collusion of the participants leads to the best solution from their point of view. ECO-FINALS_LESSON-1 - Read online for free. An oligopolistic firm's marginal revenue curve is made up of two segments if ______. E) potential entrants taking all the business away from existing firms. c) The supply curve model a) is needed in Its main characteristics are discussed as follows: 1. ratio. Market players in an oligopolistic market focus on non-price competition, ensure their brands are uniquely identifiable and apply hidden advertising tactics. B) raise the price of their products. $6. Oligopoly Models: 1. Answer: An oligopoly is an industry which is dominated by a few firms. read more curve results in a convex bend, known as kink. a) They may produce homogeneous or differentiated products. Which of the following are characteristics of oligopolistic markets . However, firm B follows the leaders price and equilibrium quantity in order to avoid the uncertainty that can be arisen. Have you a question about something that I covered. It includes decisions made in concentrated markets, such as product prices, quality standards, and production planning. Distinction between the four Forms of Market(Perfect Competition B) Other firms will enter the industry. d) its rivals match both a price cut and price increase, b) its rivals match a price cut but ignore a price increase, When members of an oligopoly meet to set prices to maximize profits it demonstrates the ______ and/or the ______ model. C) a perfectly competitive market. d) The market contains a few large producers. 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 . About us. In the credit card industry, for example, Visa and MasterCard have a duopoly. D) payoffs 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. C) there are numerous producers of two goods competing in a competitive market Marketers highlight the distinguishing features in the product commonly through packaging or a good design, which helps communicate the benefitting factors to the shoppers. a) The number of average-sized firms in an industry needed to produce sales equivalent to the four largest firms A) Each firm faces a downward-sloping demand curve. b) Strategies are chosen for a single time period. Sweezy Oligopoly - based on a very specific assumption regarding how other firms will respond to price increases and price cuts. B) 1. B) This game has no Nash equilibrium. E) cheat on each other. D) "I have been spending extra on research and development of my new two-way widget." Oligopolistic behavior implies that oligopolists prefer competition ______. The distinctive feature of an oligopoly is interdependence. 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. Impure oligopoly - have a differentiated product. D) increase the amount they produce. Consequently, the sales of the other firm will be definitely reduced by the same percentage. We are dedicated to providing you with the very best in economics knowledge, with an emphasis on microeconomics and macroeconomics.