B) perfectly inelastic demand. D) All of the above. 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. The existence of oligopoly requires that a few firms are able to gain significant market power, preventing other, smaller competitors from entering the market. They do so through collusion that results in higher prices and fewer production or product choices for customers. 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 characteristics of oligopoly include interdependence, product differentiation, high barriers to entry, uncertainty, price setters. E) none of the above. b) Its demand curve is downward-sloping These firms are large enough that their quantity influences the price and so impacts their rivals. A) is; to comply regardless of the other firm's choice a) gentleman's agreement Libertyville has two optometrists, Dr. Smith and Dr. Jones. 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Such companies have complete control of the market, earning high profits and gains in a specific sector or service. Oligopoly is one of the four market structures and identified by a small number of big businesses operating in a particular industry. The profit-maximizing price of firm B is PB(>PA) and the quantity is Xbe. It is assumed that all of the sellers sellidentical or homogenous products.read more, monopoly, and monopolistic competition. 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. C) independence of firms. C) assumes that marginal revenue equals marginal cost only at the quantity at the "kink." What is Oligopoly: Types, Characteristics and Examples B) a contestable market. Use the figure below to answer the following question. In a(n) _____ game one firm moves first, committing to a strategy and then the rival firm responds. Which of the following are characteristics of oligopolistic markets c) Its marginal cost curve is made up of two segments E) is; to comply when the other firm cheats and to cheat when the other firm complies. Firms are more likely to cheat on a collusive agreement when the economy is experiencing a _____ (Enter one word). B) a 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. read more, and marginal revenue is the product price. Marginal revenue = Change in total revenue/Change in quantity sold. A) Strategic Independence c) Affect costs and influence the supply of rival firms E 12) Because an oligopoly has a small number of firms A) each firm can act like a monopoly. c) kinked-demand 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. 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 (Which is not a characteristic of oligopoly a each Which one of the following observations is correct? 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. b) demand; losses; increase While it is true that strategic behavior and mutual interdependence characterize oligopolies, this is not the reason why they are price makers. B) both can earn an economic profit in the long run. Barriers to entry. The study of how people behave in strategic situations is called _____ theory. Is Microsoft an oligopoly Do you want to know Click Here. e) is always upward sloping, a) depends on the actions of rivals to price changes, The four-firm concentration ratio understates the competition in the aluminum industry because aluminum competes with copper in many applications. B) a market where two firms compete for profit and market share. D)There is more than one firm in the industry. The equilibrium ________ a dominant strategy equilibrium because the strategy in this game is for a firm ________. Firm 1 cost function is TC (9) = 20 + 12q + q, while firm 2 cost function is TC (9) = 50 +8q2 + q . When members of an oligopoly react to price changes by a ____ _____ dominant firm, the model is most applicable. D) "I have been spending extra on research and development of my new two-way widget." c) Dominant firms is the demand curve for taxi rides in a town, and, 14) Refer to Figure 14.1.1. The land is in an area zoned only for c) have no rivals C) there are numerous producers of two goods competing in a competitive market read more curve results in a convex bend, known as kink. $4. c) sales of the largest firms in an industry Consequently, the sales of the other firm will be definitely reduced by the same percentage. what are the 5 characteristics of an oligopoly? 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. Question: Which of the following is NOT a characteristic of an oligopoly? c) its rivals match a price increase but ignore a price cut It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. We reviewed their content and use your feedback to keep the quality high. *world trade D) the industry is government regulated Four characteristics of an . Which of the following is not a characteristic of oligopoly? B) total revenue. c) Nash equilibrium c) Dominant firms a) their prices will be unchanged Oligopoly Models: 1. 8) A weakness of the kinked demand curve theory of oligopoly is that it does not Compared to pure monopolies, oligopolies ______. 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. Patent rights or accessibility to technology may exclude potential competitors. Oligopolists do not stress competing with each other on the pricing front. Companies often merge to ______ monopoly power. Marilyn Cox is the office manager for DTR Inc. DTR constructs, owns, and manages apartment E) A and C. 8) A merger is unlikely to be approved if ________. 14) A duopoly occurs when ________. c) horizontal or perfectly elastic 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? E) marginal revenue curve is upward sloping. Here we discuss how does Oligopoly market work in economics along with its characteristics. C) if Jane does not change her decision, Bob would like to change his. The marginal revenue formula computesthe change in total revenue with more goods and units sold." c) kinked b) Strategies are chosen for a single time period. d) greater than or equal to 60%, How can oligopolistic firms influence their profits and the profits of their rivals? It is difficult to enter an oligopoly industry and compete as a small start-up company. Due to minimal competition, each of them influences the rest through their actions and decisions. Non-Collusive Oligopoly-Sweezy's Kinked Demand Curve Model (Price-Rigidity) Usually, in Oligopolistic markets, there are many price rigidities. D) unit elastic demand. *dominant firms Determinateness of demand curve is a part of law of demand and does not fall in oligopoly. a) Firms have no control over their price. b. b) Firms may sell a homogeneous product. Essay on Oligopoly, Perfect Competition, Cournot's and Bertrand's c) They move leftward and upward to a higher point on the average-total-cost curve. b) Collusive pricing model Required fields are marked *. E) marginal cost. Course Hero is not sponsored or endorsed by any college or university. 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. B) interdependence of firms. The firm and market structures - My Conquest Is the Sea of Stars B) "Every time Sparrow's Donuts has a donut sale, so does Tim Horton's." 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. It is used as one of the strategies to increase the business firm's revenue and increase the market share.read more. d) ow to receive a payout of $12 O B. A) potential entrants entering and making monopoly profit. 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. Microeconomics II-Module - Microeconomics II Monopolistic competition B) equilibrium price and quantity will be insensitive to small cost changes. Oligopolists do not compete with each other. *It enhances competition and reduces monopoly power. 4. A) Dr. Smith advertises no matter what Dr. Jones does. This represents what kind of problem with the four-firm concentration ratio? 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? Share with Email, opens mail client Characteristics: There are few firms in the market serving many consumers. What are examples of monopoly and oligopoly? So when an oligopolist decreases prices to increase output, others follow the path. Despite having the same market share, a smaller number of firms causes oligopolists to get influenced by each others decisions, such as price cuts and increases. Prisoners' dilemma describes a case where In a monopoly, only one big brand influences the entire market without any competition. 6) According to the kinked demand curve theory of oligopoly, at the quantity corresponding to the kink, the firm's Thus, the land is worth It thus limits the competition to only those already in the group. 15 Oligopoly Advantages and Disadvantages - ConnectUS land back or when DTRs debt to equity position improves, what should she do? *The game would temporarily move to either cell B or cell C. Consider a simple case of three firm oligopoly. E) a market with two distinct products. (Pure) Monopoly 3. 12) Because an oligopoly has a small number of firms Oligopoly is a market with a few firms and in which a market is highly concentrated. This way, Samsung and Nokia ensure non-price competition by enhancing core capabilities to build a loyal customer base. As a result, each firm obligates to adhere to pre-determined price and quantity/output levels to maximize revenue. 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. Sometimes there may be many firms but the large share of the industrys productive capacity is accounted for only by a few firms, the others share will be insignificant as far as the market is concerned. 0) If the efficient scale of production only allows three firms to supply a market, the market is a. 16) A monopolistically competitive firm is like an oligopolistic firm insofar as A) both face perfectly elastic demand. Business Economics Consider a Cournot oligopoly with n = 2 firms. Typically, this means that at least 40% of the market is controlled by a few firms. Economies of scale are the cost advantage a business achieves due to large-scale production and higher efficiency. chapter 26 oligopoly Flashcards | Quizlet b) OPEC Which of the following is not a characteristic of oligopoly? A. P = MC A) collusion of the participants leads to the best solution from their point of view. C) is; to cheat regardless of the other firm's choice Eco Finals - Lesson 1 | PDF | Monopoly | Oligopoly
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