Wal-Mart's marginal cost of a flat panel TV has fallen, and as a result Wal-Mart will ________. Oligopolists do not compete with each other. a) L-shaped Oligopoly. The key characteristics of an oligopoly market structure include: Few firms : There are only a few firms in the market, which makes it easy for the firms to coordinate their behavior and to reach . The marketers of Budweiser Light beer and Miller Lite beer must decide whether or not to offer new advertising campaigns promoting their products. Examples of oligopolies Car industry - economies of scale have caused mergers so big multinationals dominate the market. 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? a) collusion; cartel a) their prices will be unchanged A) zero economic profits in the long-run. Also, they rely on free-market forces to earn higher profits than a competitive market. oligopoly, monopoly, monopolistic competition, pure competition pure competition, monopolistic competition, oligopoly, monopoly. Oligopolies are typically composed of a few large firms. 5) According to the kinked demand curve theory of oligopoly, each firm believes that if it raises its price, For example, the existing firms might threaten to reduce the price drastically if entry occurs. If one firm is large enough to account, which is that 80% of sales in the industry. c) high to receive a payout of $12 C. Some market power. e) may be no more efficient due to a lack of firm interdependence, c) may be less desirable because they are not regulated by government to protect consumers. That means higher the price, lower the demand. d) cheat, Which of the following represent shortcomings of the four-firm concentration ratio? D) the industry is government regulated Answer: An oligopoly is an industry which is dominated by a few firms. 7) Why might only a few firms dominate an oligopolistic industry? d) Firms choose strategies at the same time. E) entry into the industry of rival firms will raise cartel profit as long as the new firms join the cartel. It encourages existing brands to improve product quality and originality by instilling a sense of rivalry. *Prohibit the entry of new rivals, *Reduce uncertainty B) total revenue. b) u-shaped D. Th; Which of the following is a characteristic of an oligopoly market structure? 3) Which one the following industries is the best example of an oligopoly? . See more documents like . If productivity can be increased to $0.11 vans per labor hour, how many hours would the average laborer work that month? E) none of the above. The control of oligopolists over specialized inputs, such as resources, price, and production, makes it difficult for a new firm to survive. B) both can earn an economic profit in the long run. a) greater than or equal to 40% The most important model of oligopoly is the Cournot model or the model of quantity competition. Then the large firm may consider the other two firms are too small, hence ignore their reactions while taking decisions. B) Other firms will enter the industry. 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. complexes. Because of this, every firm takes decisions very carefully by considering the possible reactions of the rival firms. a) are less efficient due to competition Thus, it induces interdependence in the network. $6. For example, it has been found out that insulin and the electrical industry are highly oligopolist in the US. A) rules C) lower the price of their products. a) are always more efficient *To decrease monopoly power b) price leadership; collusion believes that DTRs debt to equity ratio of 1.6 is probably the minimum that lenders will accept. a) Firms have no control over their price. You are free to use this image on your website, templates, etc., Please provide us with an attribution link. 36) Refer to Table 15.3.10. E) the firms are interdependent. E) rules, strategies, payoffs, and outcome. ) Monopolists are not allocatively efficient, because they do not produce at the quantity where P = MC. *To increase control over the product's price As their products seem visually identical, both the brands have to make sure they offer customers something that the other does not. D) the four-firm concentration ratio for the industry is small. $1. d) easier. C) perfectly elastic demand. b) Its demand curve is downward-sloping a. A few firms control most of the production and sale of a product. D) entry into the industry of rival firms will have no impact on the profit of the cartel. In first-degree price discrimination, a monopolist charge each customer the highest price the customer is willing to pay. 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 ______. It is difficult to enter an oligopoly industry and compete as a small start-up company. 4. A) 0. a) necessary Raised barriers to entry, price-making power, non-price competition, the interdependence of firms, and product differentiation are alloligopoly characteristics. *It enhances competition and reduces monopoly power. b) Mutual interdependence It is an essential component of marketing strategy leading to brand recognition and business growth. d) Interindustry competition, Which are barriers to entry in both monopolies and oligopolies? So here we can see a one-way interdependence pattern. A) a market where three dominant firms collude to decide the profit-maximizing price. B) a market where two firms compete for profit and market share. 1. d) their profits and sales will rise. In this market, there are a few firms which sell homogeneous or differentiated products. c) it will prevent a price war a) inelastic E) a market with two distinct products. C) Dr. Smith advertises only if Dr. Jones doesn't advertise. d) does not influence. 16) A monopolistically competitive firm is like an oligopolistic firm insofar as A) both face perfectly elastic demand. a) are monopolies 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). The firms comprise an oligopolistic market, making it possible for already-existing smaller businesses to operate in a market dominated by a few. C) changes in the output of any member firms will have no impact on the market price. 1) A cartel is a group of firms which agree to Monopolistic Competition 4. 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. Marilyn is also aware that DTR issued$10 million of common stock to a long-time friend of the d) The market contains a few large producers. Mutual interdependence among the firms in decision making is the essential feature of the oligopolistic market. A non-collusive oligopoly refers to a market situation where the firms compete with each other rather than cooperating. a) price leadership C) is; to cheat regardless of the other firm's choice Save my name, email, and website in this browser for the next time I comment. . Besides, high capital requirements, licensing, patents, market demand, economies of scale, limit-pricing, and customer loyalty restrict the entry of new businesses. Which of the following is not a characteristic of oligopoly? The concentration ratio measures the market share of the. E) is; to comply when the other firm cheats and to cheat when the other firm complies. 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. 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) a Competition Tribunal. B) there are two producers of two goods competing in an oligopoly market In December, General Motors produced 6,600 customized vans at its plant in Detroit. 12) Because an oligopoly has a small number of firms 0) If the efficient scale of production only allows three firms to supply a market, the market is a. View full document. B) the firms may legally form a cartel. When members of an oligopoly react to price changes by a ____ _____ dominant firm, the model is most applicable. B) the courts. Share with Email, opens mail client Mutual interdependence solely means that they base their decisions on how they think their rivals will react. Let us consider the followingexamplesto understand the concept better: Samsung and Nokia are two big players in the Android smartphones industry, with the former trying to capture the market by keeping the price lenient. 0. The four-firm concentration ratio is based on the ___. Oligopolistic behavior implies that oligopolists prefer competition ______. *The firm is failing to produce at the profit-maximizing output. 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?" 12) Which one of the following quotations best describes the kinked demand curve model of oliogopoly? O B. Four characteristics of an . D) payoffs E) A and C. 8) A merger is unlikely to be approved if ________. B) revenues, elasticity, profit, and payoffs. This is different compared to the perfectly competitive market and the monopolistic market that consist of a large number of sellers whereas there is only one sole seller in the monopoly market. d) elastic, An oligopoly firm's demand curve will be kinked if ______. The factors that determine a market structure include the number of businesses, control over prices, and barriers to market entry. B) raise the price of their products. It is an essential component of marketing strategy leading to brand recognition and business growth. A) Each firm faces a downward-sloping demand curve. d. 2. 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) Localized markets Its main characteristics are discussed as follows: 1. An oligopoly is a market structure with a small number of firms, none of which can keep the others from having significant influence. La renta de la tierra de primera calidad ser siempre superior a la renta de la tierra de segunda categora. A study based on over 9,0009,0009,000 U. S. residents Either way, Id like to hear from you. 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. D) perfectly inelastic. Which of the following is not a characteristic of an oligopoly? a) There are a few large firms that make up the industry. Demand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. Use the figure below to answer the following question. Determinateness of demand curve is a part of law of demand and does not fall in oligopoly. *Reduce inputs used in production And that is what turns out to be the unique selling proposition (USP) of the respective brands in the oligopolistic industry. 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. Advertising benefits society by ______. List the three steps followed under the gross profit method of estimating inventory. *providing misleading information as the price increases, demand decreases keeping all other things equal. as the price increases, demand decreases keeping all other things equal.read more shifts. It is calculated by dividing the change in the costs by the change in quantity. c) harder How oligopolists react to the price change by one firm can be best understood with the downward-sloping Kinked demand curve. A single D) specify how average cost is determined. d) their profits and sales will rise Advertising can reduce efficiency by ______. b) Demand is highly elastic below the going price An oligopoly is a market structure where a few large firms collude and dominate a particular market segment. C) the HHI for the industry is small. a) They may produce homogeneous or differentiated products. Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. Oligopolyis a market structure b) Collusive pricing model b) are few in number Characteristics of an oligopoly The market has been shared equally by firms A and B The cost of firm A is lower than firm B Profit maximizing the output of firms A is XA and the price is PA Firm B adopts this price and sells XB (=XA) amount. East Asian regimes tend to have similar characteristics First they are orien. CFA Institute Does Not Endorse, Promote, Or Warrant The Accuracy Or Quality Of WallStreetMojo. Oligopolies are typically composed of a few large firms. B) "I am producing more widgets than Wally and I agreed to in our talk last week." The firms in the oligopolistic market are having full knowledge about the market particularly about their rival firms. What are three models used to study pricing and output by oligopolies? But the other firms act considering the interdependence. 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? Compared to pure monopolies, oligopolies ______. b) Localized markets A) Strategic Independence B) it prevents or substantially lessens competition The policy implementation process has not taken in to account the life of rural peasants living in vicinity of cities. homogeneous or differentiated products i. A) "Gas prices in this town always go up and down together." We reviewed their content and use your feedback to keep the quality high. It determines the law of demand i.e. Four characteristics of an oligopoly industry are: Few sellers. d) its rivals match price decreases but ignore price increases, d) its rivals match price decreases but ignore price increases, Which of the following is true about the oligopolist if rivals match a price cut but ignore a price increase? D) potential entrants not entering the market. 0. A monopoly occurs when. 11) Because an oligopoly has a small number of firms, A) each firm can act like a monopoly. 9) In the dominant firm model of oligopoly, the dominant firm faces a B. Oligopolies are typically composed of a few large firms. a) purely competitive market How are profitability and risk impacted by changes in the current liabilities to total assets ratio? a) low to receive a payout of $15 a) They do not achieve allocative efficiency because their average total cost exceeds price. Prisoners' dilemma describes a case where C) specify how marginal cost is determined. a) fewer firms than monopolistic competition. Oligopolists do not stress competing with each other on the pricing front. 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. What are the 4 characteristics of oligopoly? D) Consumers will eventually decide not to buy the cartel's output. 1. c) inflexible It determines the law of demand i.e. Our assessments, publications and research spread knowledge, spark enquiry and aid understanding around the world. E) equilibrium price and quantity will be insensitive to small demand changes. a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and . D) the one producer of two goods sells the goods in a monopoly market . B) predict that an increase in price by one firm is accompanied by price increases of other firms if every firm experiences a large enough increase in marginal cost. E) none of the above. B) the firms may legally form a cartel. (Pure) Monopoly 3. Pure or Perfect Oligopoly: If the firms produce homogeneous products, then it is called pure or perfect oligopoly. Firms in the industry make price and output decisions with an eye to the decisions and policies of other firms in the industry. 6) Wal-Mart follows the kinked demand curve model of oligopoly. b) neither productive efficiency nor allocative efficiency B) a contestable market. d) through advertising A) kinked demand curve. The main Characteristics of oligopoly are as follows: A few sellers There will be a few sellers in an oligopoly. 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) is; to comply regardless of the other firm's choice ), Which of the following is true about the oligopolist if rivals match a price cut but ignore a price increase? d) lowering the cost of production The existence of oligopoly requires that a few firms are able to gain significant market power, preventing other, smaller competitors from entering the market. Even though the products of companies A and B are similar, there must be something that distinguishes them. It is a reflection of quantity/output performance against cost/revenue performance. Based on the figure, if one firm cheats on the collusive agreement it can increase its payoff by It is one of the four market structures that include perfect competition, monopoly, and monopolistic competition. *To obtain lower input prices b) high to receive a payout of $15 C) perfectly elastic. D) is not; to comply when the other firm complies and to cheat when the other firm cheats A) equilibrium price and quantity will be sensitive to small cost changes. An oligopolistic firm's marginal revenue curve is made up of two segments if ______. E) 10,000. *mutual interdependence Which of the following represents the problem with the four-firm concentration ratio? In third-degree price discrimination happens when customers are segregated by . In doing so, they reduce production and increase prices, a phenomenon called collusion. Product differentiation refers to making a product look attractive and different from other products in the same class. Any decision taken by a firm in order to increase its sales would adversely affect the sales and hence profit of the other firms. d) independently, The shape of the demand curve for an oligopolistic firm ______. c) Nash equilibrium Mr. mann's science students were experimenting with speed. E) potential entrants taking all the business away from existing firms. E) produce the efficient quantity. A) there are only two producers of a particular good competing in the same market b) Strategies are chosen for a single time period. Impure oligopoly - have a differentiated product. a) Import competition E) None of the above. The concentration ratio is a tool that measures the market share leading companies have in an industry. Pure (Perfect) Competition. *Ownership and control of raw materials 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. d) Its marginal revenue curve would consist of two segments ENGL1190_V0854_2023WI_Communications23.docx. *It lowers search costs of information for consumers. Interdependence: The foremost characteristic of oligopoly is interdependence of the various firms in the decision making. b) They try to avoid losses by raising prices in conjunction with rival firms. D) marginal revenue curve is discontinuous. 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. b) upward-sloping Gentleman's agreements are a type of covert collusion, occurring in social settings where a product's _____ is agreed upon and market shares are determined by _____ competition. Pure because the only source of market power is lack of competition. c) Price war b) Affect profits without influencing the profits of rival firms b) potential for mergers and acquisitions C) both have MR curves that lie beneath their demand curves. a) The outcomes for all firms are negative. Which one of the following observations is correct? However, firm B follows the leaders price and equilibrium quantity in order to avoid the uncertainty that can be arisen. However, firm B will follow the leaders price and equilibrium quantity in order to avoid the uncertainty that can be arisen. 11) Once a cartel determines the profit-maximizing price, 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.
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