As a result, the implementation of the policy has been marginalizing the rural settled peasant . 6) According to the kinked demand curve theory of oligopoly, at the quantity corresponding to the kink, the firm's Here, they focus on each other and try to exceed customer expectations in every possible way. D) assumes that competitors will match price cuts and ignore price increases. b) strengthens C)The sales of one firm will not have a significant effect on other firms. as the price increases, demand decreases keeping all other things equal.read more shifts. d) greater than or equal to 60%, How can oligopolistic firms influence their profits and the profits of their rivals? b) pure monopoly Mutual interdependence among the firms in decision making is the essential feature of the oligopolistic market. b) There are barriers to entry into the market. A) costs, prices, profit, and strategies. E) other firms will not raise theirs. If one firm is large enough to account, which is that 80% of sales in the industry. b) product development and advertising are relatively difficult to copy 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. 1) A cartel is a group of firms which agree to A) behave competitively. *The game would eventually end in the Nash equilibrium (cell B or C). c) A more efficient industry Have you a question about something that I covered. 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 dominant-bank oligopoly confronting a competitive fringe There are two sets of banks: dominant banks and fringe banks. When there are two market leaders in any industry or service, this is referred to as a duopoly. D) a firm in perfect competition. 2. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright 2023 . a) prices; uncertainty; increase Strategic independence. Price 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. When the negotiations began, DTR had debt of$80 million and equity of $50 million. 10) In the dominant firm model of oligopoly, the dominant firm produces the quantity at which marginal revenue equals 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. Strategic independence. Nokia, however, offers Android phones with the same features and almost similar prices. E) produce the efficient quantity. Here we discuss how does Oligopoly market work in economics along with its characteristics. B) there are two producers of two goods competing in an oligopoly market a) Firms have no control over their price. E) None of the above. The land is in an area zoned only for The main Characteristics of oligopoly are as follows: A few sellers There will be a few sellers in an oligopoly. Which of the following is not a characteristic of an oligopoly? View full document. An oligopoly is a market structure with a small number of firms, none of which can keep the others from having significant influence. I really hope you learned this article. Impure because have both lack of OA. A) the government will impose price controls. c) sales of the largest firms in an industry Which statement is true about 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. 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) each member will face the temptation to cheat on the cartel price to increase its sales and profit. A) 0. To further understand market modules follow the below topics. For an industry to be considered an oligopoly the four-firm concentration ratio must be ______. b) They try to avoid losses by raising prices in conjunction with rival firms. D) Dr. Smith advertises only if Dr. Jones advertises. 16) A monopolistically competitive firm is like an oligopolistic firm insofar as A) both face perfectly elastic demand. (Enter one word for each blank. land back or when DTRs debt to equity position improves, what should she do? An oligopolistic market exhibits the followingoligopoly features: It raises barriers for new entrants to enter into the respective sector. Furthermore, no restrictions apply in such markets, and there is no direct competition. 5) Which one of the following is not a feature common to all games? e) Firms may sell a differentiated product. B) 1. It includes decisions made in concentrated markets, such as product prices, quality standards, and production planning. E) downward-sloping demand curve with no kink. A) is; to comply regardless of the other firm's choice The characteristics of an oligopoly market or oligopolistic strategy are mentioned below: Interdependence . In third-degree price discrimination happens when customers are segregated by . a) greater than or equal to 40% A) a market where three dominant firms collude to decide the profit-maximizing price. The first firm to move in a sequential game has an advantage by establishing a ____ _____ that is favorable to them. a) They move downward and to the right to a lower operating point on the average-total-cost curve. E) the firms are interdependent. We unlock the potential of millions of people worldwide. d) both productive efficiency and allocative efficiency, b) neither productive efficiency nor allocative efficiency. What are the 4 characteristics of oligopoly? 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. If this occurs, then the firm's demand curve will look ______. See more documents like . D) All of the above. ratio. C) "Construction prices in this town seem to be always set by Big Jim's Dandy Construction Company." c) costs; uncertainty; increase While it is true that strategic behavior and mutual interdependence characterize oligopolies, this is not the reason why they are price makers. *interindustry competition Welcome to EconTips, your number one source for all things about economics. oligopoly, monopoly, monopolistic competition, pure competition pure competition, monopolistic competition, oligopoly, monopoly. 8) A weakness of the kinked demand curve theory of oligopoly is that it does not B) a market where two firms compete for profit and market share. D) the four-firm concentration ratio for the industry is small. 11) Which one of the following quotations best describes a dominant firm oligopoly? 8) 8)Which is not a characteristic of oligopoly? c) Firms' advertising decisions are interdependent. C) firms in monopolistic competition. Marginal costMarginal CostMarginal 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. Demand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. Over a long time period, cheating ______ collusive oligopolies . B) total revenue. a) over collusion Your email address will not be published. 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. B) rivalry among a large number of rivals leads to lower overall profit. D) unit elastic demand. c) harder A) Strategic Independence In the scenario above, the market is. *The game would temporarily move to either cell B or cell C. 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. A) price. Examples of oligopolies Car industry - economies of scale have caused mergers so big multinationals dominate the market. Following are the characteristics of oligopoly: Interdependence. 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. 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? D) products that are slightly different. Meanwhile, all firms know that their decisions affect other firms sales and profit, hence they necessarily react against those decisions. 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. 16) The firms Trick and Gear form a cartel to collude to maximize profit. C) other firms will raise their prices by an identical amount. What is the Nash equilibrium? Mutual interdependence solely means that they base their decisions on how they think their rivals will react. Besides, high capital requirements, licensing, patents, market demand, economies of scale, limit-pricing, and customer loyalty restrict the entry of new businesses. The incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. d) can set its price and output to maximize profits. b) it will lower the firm's costs Marketers highlight the distinguishing features in the product commonly through packaging or a good design, which helps communicate the benefitting factors to the shoppers.read more. b) are less efficient because they are often regulated by the government 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. D) Bud has a dominant strategy but Miller does not. An oligopoly is a market structure where a few large firms collude and dominate a particular market segment. Save my name, email, and website in this browser for the next time I comment. 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} e) It could be downward sloping or kinked. d) Cost leadership model E) none of the above. c) regulated monopoly $4. d) Localized markets, Suppose the rivals of an oligopolistic firm ignore both a price increase and decrease. A) only Bob would like to change his decision. What is the characteristics of oligopoly? It is an essential component of marketing strategy leading to brand recognition and business growth. Oligopoly is a market structure characterized by a few firms. *Prohibit the entry of new rivals. In the graph, the price elasticity of demand is ______ below the price of P0. a) its rivals do not respond to either a price cut or price increase The firms produce differentiated products. a) collusion; cartel 5.3.5 Apply Concepts of Oligopoly and Oligopoly Models .pdf. *world trade The labor productivity at this plant is known to have been 0.100.100.10 vans per labor-hour during that month. C) changes in the output of any member firms will have no impact on the market price. *Patents, *Preemptive pricing E) cheat on each other. In December, General Motors produced 6,600 customized vans at its plant in Detroit. The total market demand is P(Q) = 50 - 2Q, where Q is the total quantity produced by all (active) firms in the industry. E) Each firm has an incentive to cheat. Due to minimal competition, each of them influences the rest through their actions and decisions. c) through product development single family housing and would be an attractive site for single family homes. *Patents, Which are reasons that that firms merge? (Pure) Monopoly 3. The distinctive feature of an oligopoly is interdependence. b) competitively B) Dr. Smith does not advertise no matter what Dr. Jones does. 6) In the prisoners' dilemma with players Art and Bob, each prisoner would be best off if A) both prisoners confess. *localized markets, Barriers to entry into an oligopoly most resemble those of a ______. It is an essential component of marketing strategy leading to brand recognition and business growth. Which scenario describes a simultaneous game? When two major players dominate a sector, the market becomes a duopolyDuopolyWhen there are two market leaders in any industry or service, this is referred to as a duopoly. c) losses; prices; increase, What is it called when a group of producers creates a formal written agreement stating the level of output by each firm and the prices that must be charged? D) the one producer of two goods sells the goods in a monopoly market 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. What kind of problem does this represent with the four-firm concentration ratio? marginal cost pricing The joining of firms that are producing or selling a similar product is a horizontal merger Suppose an industry has total sales of $25 million per year. . B) the courts. Firm A and Firm B are the only producers of soap powder. *speeding up technological progress *Large capital investment 7) Why might only a few firms dominate an oligopolistic industry? a) often For example, when a government grants a patent for an invention to one firm, it may create a monopoly. e) low to receive a payout of $8. 1) A cartel is a group of firms which agree to If this game is nonrepeated, the Nash equilibrium is A) both firms cheat on the agreement. 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. d) By updating manufacturing equipment, What is the four-firm concentration ratio? E) None of the above. In a(n) _____ game one firm moves first, committing to a strategy and then the rival firm responds. c) Blue jean designer *It lowers search costs of information for consumers. B. a) Import competition It is the most important feature of an oligopolistic market. Pure (Perfect) Competition 2. CFA Institute Does Not Endorse, Promote, Or Warrant The Accuracy Or Quality Of WallStreetMojo. Lets identify the oligarchy before identifying the characteristics of an oligopoly. D. Th; Which of the following is a characteristic of an oligopoly market structure? 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. E) cheat on each other. They may produce homogeneous products or differentiated products. Consequently, each firm must condition its behavior on the behavior of the other firms. Which one of the following is the most important reason? A) potential entrants entering and making monopoly profit. B)Firms set prices. 18) A market with a single firm but no barriers to entry is known as For example, it has been found out that insulin and the electrical industry are highly oligopolist in the US. a. Answers: 1 Show answers Another question on Social Studies. b) By increasing recruiting expenses It also means that each firm must be aware of the reaction of others to their actions. The most important model of oligopoly is the Cournot model or the model of quantity competition. E) specify what happens if costs change. What kind of game is it if the firms must choose their pricing strategies at the same time? Libertyville has two optometrists, Dr. Smith and Dr. Jones. Demand and cost differences, the number of firms in the industry, and the potential for cheating all represent _____ (one word) to collusion. C) a firm in monopolistic competition. Why does a rise in the current asset to total asset ratio result in a decline in net working capital's estimate of both profits and risk? Pure oligopoly - have a homogenous product. E) marginal cost. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. 0. B. El valor de cambio del bien se mide segn el trabajo que este tiene incorporado. How oligopolists react to the price change by one firm can be best understood with the downward-sloping Kinked demand curve. Our assessments, publications and research spread knowledge, spark enquiry and aid understanding around the world. B) potential entrants entering and incurring economic loss. Select one: O a. there are a few firms that are mutually interdependent O b. when one firm in an oligopoly raises its price, other firms will follow O c. firms may collude in order to act like a monopoly O d. barriers to entry exist to limit the entrance of new firms a) are monopolies 14) A duopoly occurs when ________. Interdependence is the demand curve for taxi rides in a town, and, 14) Refer to Figure 14.1.1. 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. 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. However, at this price profit of firm B is not maximized.The profit-maximizing price of firm B isPB (>PA) and the quantity is Xbe (