Cost of firm A is lower than firm B Profit maximizing price and quantity of firm A is PA and XA respectively. Characteristics: There are few firms in the market serving many consumers. d) elastic, An oligopoly firm's demand curve will be kinked if ______. A) the government will impose price controls. And rest of the businesses or minor players follow the same. Have you a question about something that I covered. 10) In the dominant firm model of oligopoly, the dominant firm produces the quantity at which marginal revenue equals c) Blue jean designer The incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. 16) A monopolistically competitive firm is like an oligopolistic firm insofar as A) both face perfectly elastic demand. D) the four-firm concentration ratio for the industry is small. a) Import competition *Increase profits d. 2. . C) the firms keep profits and prices so low that no rivals are . Each firm has a substantial share of the market supply. In doing so, they reduce production and increase prices, a phenomenon called collusion. *To increase market share A. 0. It is an essential component of marketing strategy leading to brand recognition and business growth. And that is what turns out to be the unique selling proposition (USP) of the respective brands in the oligopolistic industry. A duopoly is 18) A market with a single firm but no barriers to entry is known as 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} A) average total cost curve is discontinuous. Marginal revenue = Change in total revenue/Change in quantity sold. If so, then the firm's demand curve will be ______. a) They move downward and to the right to a lower operating point on the average-total-cost curve. Why is collusion desirable to oligopolistic firms? Oligopoly Models: 1. C. Some market power. a) The kinked-demand curve model C) Firms in the cartel will want to raise the price. 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. 4. It is assumed that all of the sellers sellidentical or homogenous products. e) through cartels, c) through product development C) Art denies and Bob confesses. d) Firms choose strategies at the same time. It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. c) The percentage of total industry sales accounted for by the four largest firms Established firms in the market may take strategic actions to prevent new entries. E) a market with two distinct products. 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. B) "Every time Sparrow's Donuts has a donut sale, so does Tim Horton's." d. read more rather than lower prices to gain profits and market share. An example of a pure oligopoly would be the steel industry, which has only a few producers but who produce exactly the same product. To further understand market modules follow the below topics. 6) Which one of the following characteristics applies to oligopolistic markets? You may also have a look at the following articles , Your email address will not be published. E) None of the above. This has been a Guide to Oligopoly and its definition. The four-firm concentration ratio is based on the ___. Social Studies, 22.06.2019 00:00. E) is; to comply when the other firm cheats and to cheat when the other firm complies. Course Hero is not sponsored or endorsed by any college or university. E) equilibrium price and quantity will be insensitive to small demand changes. The distinctive feature of an oligopoly is interdependence. 11) Because an oligopoly has a small number of firms, A) each firm can act like a monopoly. b) collusion c) inflexible A) is; to comply regardless of the other firm's choice E) a competitive market produces two goods. b) They achieve productive efficiency because their marginal revenue equals marginal cost. B) a contestable market. A)Each firm faces a downward -sloping demand curve. 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. c) conveying information to consumers E) cheat on each other. c) give the appearance of increased competition *The game would eventually end in the Nash equilibrium (cell A). C) average total cost. D) 2,750. 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? Examples of oligopolies Car industry - economies of scale have caused mergers so big multinationals dominate the market. A) in a single-play game or a repeated game. 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? D) entry into the industry of rival firms will have no impact on the profit of the cartel. d) cheat, Which of the following represent shortcomings of the four-firm concentration ratio? However, DTR does not intend to build any single family homes. *Preemptive pricing 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. Which statement is true about oligopolies? E) more elastic than the demand just above the price at the kink. What is it called when firms reach a verbal or tacit agreement with rivals about price in a social setting like the golf course? ), Oligopolists often compete through product development and advertising instead of price because ______. Economies of scale are the cost advantage a business achieves due to large-scale production and higher efficiency. a) productive efficiency but not allocative efficiency a) The number of average-sized firms in an industry needed to produce sales equivalent to the four largest firms A small number of sellers. . c) allocative efficiency but not productive efficiency For an industry to be considered an oligopoly the four-firm concentration ratio must be ______. c) Dominant firms Nokia, however, offers Android phones with the same features and almost similar prices. b) demand; losses; increase A) Each firm faces a downward-sloping demand curve. 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. D) is not; to comply when the other firm complies and to cheat when the other firm cheats Strategic independence. A) zero economic profits in the long-run. In second-degree price discrimination the monopolist offers a menu of quantity-based pricing options designed to induce customers to self-select based on how highly they value the product. d) The market contains a few large producers. The most important model of oligopoly is the Cournot model or the model of quantity competition. b) Demand is highly elastic below the going price A) Each firm has an incentive to collude. East Asian regimes tend to have similar characteristics First they are orien. If this game is nonrepeated, the Nash equilibrium is A) both firms cheat on the agreement. b) Mutual interdependence They do it strategically so they do not lose their customers in what could be a price war. c) kinked 11) Which one of the following quotations best describes a dominant firm oligopoly? 6) According to the kinked demand curve theory of oligopoly, at the quantity corresponding to the kink, the firm's Compared to pure monopolies, oligopolies ______. D) patents, copyrights, barriers to entry, and rules. as the price increases, demand decreases keeping all other things equal.read more shifts. a) depends on the actions of rivals to price changes 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 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. If one of the firms cheats on this agreement, what will happen? Instead, they collaborate on various fronts, such as economies of scaleEconomies Of ScaleEconomies of scale are the cost advantage a business achieves due to large-scale production and higher efficiency. The amount of time (in seconds) needed to complete a critical task on an assembly line was measured for a sample of 50 assemblies. Use the figure below to answer the following question. issued for the land? 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. a) often a) Cartel The financial sector refers to businesses, firms, banks, and institutions providing financial services and supporting the economy. Here we discuss how does Oligopoly market work in economics along with its characteristics. D) All of the above. *The firm's profits will be higher. d) They do not achieve allocative efficiency because their price exceeds marginal cost. *dominant firms Question: Which of the following is NOT a characteristic of an oligopoly? Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. 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) Dominant firms, What are oligopolists able to do by controlling price through collusion? C) the HHI for the industry is small. What are the positive effects of large oligopolists advertising?