which is not a characteristic of oligopoly

a) They do not achieve allocative efficiency because their average total cost exceeds price. always one step ahead. As in an oligopoly market, the decision of one firm influences the process and working of another firm. Course Hero is not sponsored or endorsed by any college or university. Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. C) perfectly elastic demand. b) flexible Here we discuss how does Oligopoly market work in economics along with its characteristics. Each firm is so large that its actions affect market conditions. Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. ratio. d) Oligopolistic collusion, Compared to monopolies, oligopolies ______. *To increase economies of scale, *To increase market share a) Affect profits and influence the profits of rival firms Which one of the following is the most important reason? Wal-Mart's marginal cost of a flat panel TV has fallen, and as a result Wal-Mart will ________. 0. Furthermore, no restrictions apply in such markets, and there is no direct competition. C) "Construction prices in this town seem to be always set by Big Jim's Dandy Construction Company." 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. Libertyville has two optometrists, Dr. Smith and Dr. Jones. Some of its fundamental characteristics include the existence of a small number of firms, differentiated or homogeneous products, and barriers to entry. d) does not influence. Non-Collusive Oligopoly-Sweezy's Kinked Demand Curve Model (Price-Rigidity) Usually, in Oligopolistic markets, there are many price rigidities. It is an essential component of marketing strategy leading to brand recognition and business growth. If this game is nonrepeated, the Nash equilibrium is A) both firms cheat on the agreement. CFA And Chartered Financial Analyst Are Registered Trademarks Owned By CFA Institute. The factors that determine a market structure include the number of businesses, control over prices, and barriers to market entry. *Ownership and control of raw materials 14) The kinked demand curve model C) both have MR curves that lie beneath their demand curves. D) the four-firm concentration ratio for the industry is small. When firm X increases its price. 3) Which one the following industries is the best example of an oligopoly? D) monopolistic competition. So when an oligopolist decreases prices to increase output, others follow the path. The total market demand is P(Q) = 50 - 2Q, where Q is the total quantity produced by all (active) firms in the industry. In an oligopoly, a few dominant brands offer most of the products and services and make significant decisions on behalf of the rest. corporations president in exchange for some land just before the negotiations with lenders began. Oligopolies are typically composed of a few large firms. *It lowers search costs of information for consumers. *The game would eventually end in the Nash equilibrium (cell A). E) produce the efficient quantity. 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. b) Lower prices, but greater output The incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. Strategic independence. 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. What are the positive effects of large oligopolists advertising? D) Gear cheats, while Trick complies with the agreement. *The game would temporarily move to either cell B or cell C. Chapter 14 Oligopoly and Strategic Behavior L, ECON 1001: Chapter 20 (Public Finance and Exp, Test Practice Questions (Exam 3), Chapter 10, ECON 1001: Chapter 23 (Income Inequality, Pov, Fundamentals of Engineering Economic Analysis, David Besanko, Mark Shanley, Scott Schaefer, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal, Alexander Holmes, Barbara Illowsky, Susan Dean. Interdependence A Computer Science portal for geeks. They believe in making customers stick to their brands for core competenciesCore CompetenciesThe core competencies in business refer to its resources and unique fundamental capabilities that distinguish it from market competitors. $4. d) can set its price and output to maximize profits. 11) Once a cartel determines the profit-maximizing price, D) specify how average cost is determined. c) The possibility of price wars increases, but profits are maximized. b) product development and advertising are relatively difficult to copy Compared to pure monopolies, oligopolies ______. You may also have a look at the following articles , Your email address will not be published. C) Trick cheats, while Gear complies with the agreement. Either way, Id like to hear from you. b) are few in number This represents what kind of problem with the four-firm concentration ratio? *Increase profits d) easier. C) assumes that marginal revenue equals marginal cost only at the quantity at the "kink." C) 2. a) prices; uncertainty; increase Oligopolists do not stress competing with each other on the pricing front. *manipulating consumer preferences a) L-shaped A Which of the following is not a characteristic of oligopoly? Mutual interdependence among the firms in decision making is the essential feature of the oligopolistic market. C) a perfectly competitive market. they will make more pricing low than if they both price high. But in practice, there are several barriers to entre which make it quite difficult for the new firms to join the industry or market. D) the four-firm concentration ratio for the industry is small. Advertising can reduce efficiency by ______. B) perfectly inelastic demand. When this structure is in place for an economy, then only a small number of producers, distributors, and sellers interact with the customer base to distribute items. d) ow to receive a payout of $12 We are dedicated to providing you with the very best in economics knowledge, with an emphasis on microeconomics and macroeconomics. Oligopoly characteristics include high barriers to new entry, price-setting ability, the interdependence of firms, maximized revenues, product differentiation, and non-price competition. 5.3.5 Apply Concepts of Oligopoly and Oligopoly Models .pdf. 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) All of the above. Economies of scale are the cost advantage a business achieves due to large-scale production and higher efficiency. They do it strategically so they do not lose their customers in what could be a price war. E) both are price takers. b) competitively D) equilibrium quantity will be sensitive to small cost changes but price will not. Raised barriers to entry, price-making power, non-price competition, the interdependence of firms, and product differentiation are alloligopoly characteristics. c) allocative efficiency but not productive efficiency at least $10 million. B) raise the price of their products. 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. 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. attempts to raise $425 million to use to build apartments in a growing area of Tulsa. 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. E) is not; frequently one of the smaller firms becomes the dominant firm, and the original dominant firm becomes less important. A) specify the technology of production. When members of an oligopoly react to price changes by a ____ _____ dominant firm, the model is most applicable. OA. B) a market where two firms compete for profit and market share. a) low to receive a payout of $15 So here we can see a one-way interdependence pattern. In December, General Motors produced 6,600 customized vans at its plant in Detroit. Click the card to flip Definition 1 / 84 price rigidity Element of monopoly. 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. Therefore, necessarily they tend to react. a) collusion; cartel 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. d) game theory. E)Firms are profit -maximizers. d) Firms choose strategies at the same time. 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? 6) Which one of the following characteristics applies to oligopolistic markets? 8) Which of the following quotes shows a contestable market in the widget industry? d) have interdependent pricing. A) raise the price if marginal revenue increases B) lower the price if the new marginal cost curve lies below the break in the marginal revenue curve C) definitely lower the price D) not change the price E) raise the price if other firms raise their prices. 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. *Ownership and control of raw materials a) localized markets The four-firm concentration ratio is based on the ___. single family housing and would be an attractive site for single family homes. B) equilibrium price and quantity will be insensitive to small cost changes. . 18) A market with a single firm but no barriers to entry is known as A) "Gas prices in this town always go up and down together." *To increase control over the product's price Thus, it induces interdependence in the network. Why is collusion desirable to oligopolistic firms? c) competition c) By changing pricing strategies These firms are large enough that their quantity influences the price and so impacts their rivals. C) specify how marginal cost is determined. 6) In the prisoners' dilemma with players Art and Bob, each prisoner would be best off if A) both prisoners confess. b) greater than or equal to 50% Question: Which of the following is NOT a characteristic of an oligopoly? C. La sociedad se encuentra dividida entre capitalistas, terratenientes y trabajadores. a) Cartel a) By decreasing total suppliers 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. 31) Refer to Table 15.3.7. 12) Because an oligopoly has a small number of firms d) Dominant firms, What are oligopolists able to do by controlling price through collusion? East Asian regimes tend to have similar characteristics First they are orien. If productivity can be increased to $0.11 vans per labor hour, how many hours would the average laborer work that month? The land is in an area zoned only for 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. *To increase economies of scale. characterized by the presence of a few large firms who produces 26) Refer to Table 15.3.4. e) increasing search time. B) Firms are profit-maximizers.C) The sales of one firm will not have a significant effect on other firms. 5. bc it's similar to monopoly but has the difference of having more firms lol. Based on the payoff matrix, if the two firms agreed to both follow national strategies there is an incentive for them to cheat. Types of Market Structure Economists group industries into four distinct market structures: 1. E) specify what happens if costs change. C) potential entrants entering and making zero economic profit. a) their prices will be unchanged View full document. a) Its demand curve is downward-sloping An oligopoly is a market structure where a few large firms collude and dominate a particular market segment. 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. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright 2023 . D) Bob denies and Art confesses. A) a natural monopoly. Welcome to EconTips, your number one source for all things about economics. (Enter one word per blank. 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) They move downward and to the right to a lower operating point on the average-total-cost curve. Have you a question about something that I covered. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. A) average total cost curve is discontinuous. Pure (Perfect) Competition. 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? 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. On the other hand, if an oligopolist reduces output by raising prices, the rest refrain from doing so. xxx\underline{\phantom{\text{xxx}}}xxx. Interdependence: The foremost characteristic of oligopoly is interdependence of the various firms in the decision making. a) greater than or equal to 40% a) are monopolies A) Each firm has an incentive to collude. a) Firms have no control over their price. A) each firm can act like a monopoly. *To decrease monopoly power b) kinked demand C) average total cost. B) Dr. Smith does not advertise no matter what Dr. Jones does. A) potential entrants entering and making monopoly profit. E) cheat on each other. d) Firms choose strategies at the same time. a) price changes occur slowly Answers: 1 Show answers Another question on Social Studies. a) Demand is highly elastic below the going price 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). E) only when there is no Nash equilibrium. 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} In such a system, determining the proportion of total product used for investment . Consequently, each firm must condition its behavior on the behavior of the other firms. A) Dr. Smith advertises no matter what Dr. Jones does. A monopoly occurs when. Which of the following is not a characteristic of an oligopoly? 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. $3. A) collusion of the participants leads to the best solution from their point of view. The group that colludes is referred to as a cartelCartelA cartel is a group of producers of goods or suppliers of services formed through an agreement amongst themselves to regulate the supply of goods or services with the basic intent to illegally regulate the prices or restrict competition regarding the said goods or services.read more. B. d) their profits and sales will rise. 13) A dominant firm oligopoly might be one for which the Herfindahl-Hirschman Index is Which of the following represents the problem with the four-firm concentration ratio? If one of the firms cheats on this agreement, what will happen? Impure because have both lack of You'll get a detailed solution from a subject matter expert that helps you learn core concepts. C) "If only Wally and I could agree on a higher price, we could make more profits." c) through collusion a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and . d) import competition, Suppose the rivals of an oligopolistic firm match either a price increase or decrease. 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. They may produce homogeneous products or differentiated products. The presidents friend constructs and sells single family homes. E) the firms are interdependent. C) Firms in the cartel will want to raise the price. E) A and C. 8) A merger is unlikely to be approved if ________. 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. c) price leadership All firms stick to what has been decided, thereby ensuring price stability in the sector. E) Bud and Miller each have a dominant strategy. 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.

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