2003-2023 Chegg Inc. All rights reserved. E) Bud and Miller each have a dominant strategy. 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. A Computer Science portal for geeks. Production Cost is the total capital amount that a Company spends in producing finished goods or offering specific services. 10) In the dominant firm model of oligopoly, the dominant firm produces the quantity at which marginal revenue equals b) collusion Raised barriers to entry, price-making power, non-price competition, the interdependence of firms, and product differentiation are alloligopoly characteristics. Required fields are marked *. *Cause price wars during business recessions When there are two firms, the market structure is called duopoly, The number of buyers will be quite large as in other market models, If the products of all firms are homogeneous, then it is called , If the products are differentiated, then it is called , The nature of products of the firms is crucial in making price and output decisions. b) increasing monopoly power B) it prevents or substantially lessens competition e) Firms may sell a differentiated product. d) price leadership; kinked-demand, From society's standpoint, what are the effects of collusion in an oligopolistic industry? a) prices; uncertainty; increase The distinctive feature of an oligopoly is interdependence. d) straight and steep In a(n) _____ game one firm moves first, committing to a strategy and then the rival firm responds. That means higher the price, lower the demand. 11) Because an oligopoly has a small number of firms. 6) Which one of the following characteristics applies to oligopolistic markets? 3) The Nash equilibrium for a sequential game in a contestable market with locked-in first stage prices results in If Marilyn believes that the $10 million stock issue was undertaken only to improve DTRs a) Kinked-demand curve model An oligopoly is a market structure where a few large firms collude and dominate a particular market segment. a) They move downward and to the right to a lower operating point on the average-total-cost curve. 5. The presidents friend constructs and sells single family homes. B) the firms may legally form a cartel. 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) total revenue. 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. D) equilibrium quantity will be sensitive to small cost changes but price will not. d) Affect costs and influence the products of rival firms, a) Affect profits and influence the profits of rival firms, Which of the following is a model used to examine oligopolistic pricing? 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 _____. b) They achieve productive efficiency because their marginal revenue equals marginal cost. c) conveying information to consumers b) Mutual interdependence c) through collusion D) if Bob does not change his decision, Jane would like to change hers. It determines the law of demand i.e. Such companies have complete control of the market, earning high profits and gains in a specific sector or service. 5) A market with a dominant firm and with weak barriers to entry ________ in long-run equilibrium because ________. D) firms in perfect competition. True or false: A cartel abides by a formally written agreement that specifies the output and price of each member firm and is a form of overt collusion. a. 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. But the other firms act considering the interdependence. The concept serves to be useful for companies focusing on multiple product lines and operating more than one business unit at a time. 1) All games share four common features. c) Dominant firms D) the four-firm concentration ratio for the industry is small. Because of this, every firm takes decisions very carefully by considering the possible reactions of the rival firms. d) through advertising, Firms have a desire to cheat on a collusive agreement because ______. Why do the elements of structure, such as work specialization, formalization, span of control, chain of command, and centralization, have a tendency to change together? Nokia, however, offers Android phones with the same features and almost similar prices. Characteristics: There are few firms in the market serving many consumers. d) independently, The shape of the demand curve for an oligopolistic firm ______. 6. Marketers highlight the distinguishing features in the product commonly through packaging or a good design, which helps communicate the benefitting factors to the shoppers. c) By changing pricing strategies C) perfectly elastic. at least $10 million. Furthermore, no restrictions apply in such markets, and there is no direct competition. E) an oligopoly. As in an oligopoly market, the decision of one firm influences the process and working of another firm. 0. 9) Which isnota characteristic of oligopoly? 4. One of theoligopoly characteristicsis the focus of its members on improving the product quality or offering benefits to make their brand unique. A. firms have no control over their price B. firms may sell a differentiated product C. firms have market power D. firms may sell a standardized product E. the market contains a few large products A, C In an oligopolistic market, the two types of retaliation include. It thus limits the competition to only those already in the group. Market players in an oligopolistic market focus on non-price competition, ensure their brands are uniquely identifiable and apply hidden advertising tactics. E) none of the above. A type of implicit understanding used by oligopolists to coordinate prices without engaging in outright collusion is known as ______. complexes. However, firm B will follow the leaders price and equilibrium quantity in order to avoid the uncertainty that can be arisen. d) Cost leadership model So when an oligopolist decreases prices to increase output, others follow the path. A) a market where three dominant firms collude to decide the profit-maximizing price. Either way, Id like to hear from you. a) There are a few large firms that make up the industry. The other two share the rest (20%). 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? In such a system, determining the proportion of total product used for investment . D) is not; to comply when the other firm complies and to cheat when the other firm cheats a) Import competition D) a prisoner has no incentive to confess to his crime, and stands a greater chance of not going to prison. Cost of firm A is lower than firm B Profit maximizing price and quantity of firm A is PA and XA respectively. O D. Some barriers to entry. c) Dominant firms What are examples of monopoly and oligopoly? a) are always more efficient ENGL1190_V0854_2023WI_Communications23.docx. D) increase the amount they produce. What are the 4 characteristics of oligopoly? 4. E) a competitive market produces two goods. 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. *manipulating consumer preferences. b) Interindustry competition 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). Marilyn ADVERTISEMENTS: This fact is recognized by all the firms in an oligopolistic industry. If a firm assumes that its rivals will match all price changes, but the firm's rivals actually charge a lower price what are the potential consequences? b) competitively A) each firm can act like a monopoly. It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. a) pricing theory D. Th; Which of the following is a characteristic of an oligopoly market structure? a) major firms in an industry ranked by employment c) The percentage of total industry sales accounted for by the four largest firms Oligopoly as a market structure is distinctly different from other market forms. O B. Any decision taken by a firm in order to increase its sales would adversely affect the sales and hence profit of the other firms. An oligopoly is a market state where there is a limited amount of competition available for consumers to consider. 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. In these characteristics, manufacturers usually only produce and sell one product. The market share of the firms is unequal. 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 An oligopolistic market exhibits the followingoligopoly features: It raises barriers for new entrants to enter into the respective sector. D) specify how average cost is determined. c) Firms' advertising decisions are interdependent. E) unknown. attempts to raise $425 million to use to build apartments in a growing area of Tulsa. 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. Oligopoly refers to a market situation or a type of market organisational in which a few firms control the supply of a commodity. The total market demand is P(Q) = 50 - 2Q, where Q is the total quantity produced by all (active) firms in the industry. d) strategic theory. b) Collusive pricing model b) depends on the firm's cost structure To further understand market modules follow the below topics. A small number of sellers. c) allocative efficiency but not productive efficiency D) entry into the industry of rival firms will have no impact on the profit of the cartel. View full document. D) the four-firm concentration ratio for the industry is small. 4) Which one of the following industries is the best example of an oligopoly? Some of its fundamental characteristics include the existence of a small number of firms, differentiated or homogeneous products, and barriers to entry. d) can set its price and output to maximize profits. b) are few in number 8) Firm X is competing in an oligopolistic industry. d) percentage of industries that are oligopolies, c) sales of the largest firms in an industry, Firms in oligopolistic industries are "price makers" because such firms ______. c) Blue jean designer A) there are only two producers of a particular good competing in the same market A) is; to comply regardless of the other firm's choice d) lowering the cost of production Businesses in such a market collaborate to dominate the rest of the players and maximize joint revenue. C) Art denies and Bob confesses. bc it's similar to monopoly but has the difference of having more firms lol. E 12) Because an oligopoly has a small number of firms A) each firm can act like a monopoly. Thus, each firm gains a considerable market share with minimal potential profits. believes that DTRs debt to equity ratio of 1.6 is probably the minimum that lenders will accept. 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Mutual interdependence among the firms in decision making is the essential feature of the oligopolistic market. Oligopolies are typically composed of a few large firms. I really hope you learned this article. What are the 4 characteristics of oligopoly? Monopolistic Competition 4. C) "If only Wally and I could agree on a higher price, we could make more profits." When firm X increases its price. $6. Social Studies, 22.06.2019 00:00. *Ownership and control of raw materials read more rather than lower prices to gain profits and market share. a) The number of average-sized firms in an industry needed to produce sales equivalent to the four largest firms c) through product development 1. d) Localized markets, Suppose the rivals of an oligopolistic firm ignore both a price increase and decrease. *Reduce inputs used in production a) It could be downward or upward sloping. Demand and cost differences, the number of firms in the industry, and the potential for cheating all represent _____ (one word) to collusion. found that the most prevalent disorder was 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. Their differences can range from. Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. *increasing economies of scale, *providing misleading information After each player chooses his or her best strategy and sees the result, Product differentiation refers to making a product look attractive and different from other products in the same class. Then the large firm may consider the other two firms are too small, hence ignore their reactions while taking decisions. Following are the characteristics of oligopoly: Interdependence. a) Import competition b) greater than or equal to 50% As their products seem visually identical, both the brands have to make sure they offer customers something that the other does not. B) raise the price of their products. E) downward-sloping demand curve with no kink. 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. b) are less efficient because they are often regulated by the government c) dominant firms Impure oligopoly - have a differentiated product. The marketers of Budweiser Light beer and Miller Lite beer must decide whether or not to offer new advertising campaigns promoting their products. homogeneous or differentiated products i. the students used balls . 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. C) if Jane does not change her decision, Bob would like to change his. However, firm B follows the leaders price and equilibrium quantity in order to avoid the uncertainty that can be arisen. C) lower the price of their products. D) "I have been spending extra on research and development of my new two-way widget." C)The sales of one firm will not have a significant effect on other firms. B) monopolists. D) monopolistic competition. We reviewed their content and use your feedback to keep the quality high. B) interdependence of firms. Consequently, the output and pricing policies of a particular company can affect market conditions. B) both prisoners deny. A. cutting prices D) payoffs 11) Once a cartel determines the profit-maximizing price, (Enter one word for each blank. E) a cartel. a) They may produce homogeneous or differentiated products. *interindustry competition *To increase control over the product's price They do it strategically so they do not lose their customers in what could be a price war. O B. *manipulating consumer preferences D) the industry is government regulated ), Oligopolists often compete through product development and advertising instead of price because ______. 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. D) There is more than one firm in the industry. Which of the following statements correctly describes Dr. Smith's strategy given what Dr. Jones may do? B) assumes marginal cost is constant. c) costs; uncertainty; increase A) a natural monopoly. Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. b) The number of employees in an industry who ever have or are currently working for one of the four largest firms *The game would eventually end in the Nash equilibrium (cell A). B) other firms will lower theirs. 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. c) game theory It is a reflection of quantity/output performance against cost/revenue performance. *Prohibit the entry of new rivals, *Reduce uncertainty Strategic independence. a) localized markets This has been a Guide to Oligopoly and its definition. b) OPEC C) is; to cheat regardless of the other firm's choice Any change in either of them will affect the quantity/output sold by a producer. Based on her experience with past negotiations, Marilyn knows that lenders are concerned about DTRs debt to equity 6) In the prisoners' dilemma with players Art and Bob, each prisoner would be best off if A) both prisoners confess. b) Collusive pricing model *world trade The amount of time (in seconds) needed to complete a critical task on an assembly line was measured for a sample of 50 assemblies. 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. c) The outcomes for all firms are positive. e) increasing search time. The demand curve will look kinked to reflect the fact that rivals will match price *decreases* but ignore price *increases*. What are the 4 characteristics of oligopoly? If productivity can be increased to $0.11 vans per labor hour, how many hours would the average laborer work that month? C) assumes that marginal revenue equals marginal cost only at the quantity at the "kink." If this occurs, then the firm's demand curve will look ______. *To obtain lower input prices D) Bob denies and Art confesses. d) are more efficient because cartels and collusion is always successful d) The market contains a few large producers. The characteristics of an oligopoly market or oligopolistic strategy are mentioned below: Interdependence . 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. These firms are large enough that their quantity influences the price and so impacts their rivals. (Figure) summarizes the characteristics of each of these market structures. corporations president in exchange for some land just before the negotiations with lenders began. B. d) does not influence. 1. e) straight. Updated: Aug 16, 2022. command economy, economic system in which the means of production are publicly owned and economic activity is controlled by a central authority that assigns quantitative production goals and allots raw materials to productive enterprises. Which of the following is NOT a characteristic of an oligopoly? Also, they rely on free-market forces to earn higher profits than a competitive market. *The firm's profits will be lower. a) Firms have no control over their price. a) Its demand curve is downward-sloping E) Dr. Smith does not advertise if Dr. Jones advertises. 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. E) rules, strategies, payoffs, and outcome. ) Answers: 1 Show answers Another question on Social Studies. It encompasses several industries, including banking and investment, consumer finance, mortgage, money markets, real estate, insurance, retail, etc. a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and . A) kinked demand curve. In an oligopoly, dominant market players are influential enough to decide on the price of products and services. Economies of scale are the cost advantage a business achieves due to large-scale production and higher efficiency. True or false: Firms in an oligopoly always produce a homogeneous product.
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