6) In the prisoners' dilemma with players Art and Bob, each prisoner would be best off if A) both prisoners confess. ENGL1190_V0854_2023WI_Communications23.docx. c) give the appearance of increased competition 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? 8 8 which is not a characteristic of oligopoly a each - Course Hero b) price leadership; collusion The other two share the rest (20%). C) in a repeated game but not a single-play game. ECON 1001: Chapter 14 (Oligopoly and Strategic Behavior) - Quizlet 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. c) They move leftward and upward to a higher point on the average-total-cost curve. b) through pricing always one step ahead. 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. d) Dominant firms, What are oligopolists able to do by controlling price through collusion? 31) Refer to Table 15.3.7. Economists identify four types of market structures: (1) perfect competition, (2) pure monopoly, (3) monopolistic competition, and (4) oligopoly. $3. Which of the five do you feel is the most important? Monopolistic Competition 4. D. 2021. Imperfect or Differentiated Oligopoly: ADVERTISEMENTS: Impure because have both lack of It encourages existing brands to improve product quality and originality by instilling a sense of rivalry. D) specify how average cost is determined. C) average variable cost curve is discontinuous. Firms in the industry make price and output decisions with an eye to the decisions and policies of other firms in the industry. ECON Chapter 11: Imperfect Competition and Factor Markets - Quizlet Which of the following is not a characteristic of oligopoly? In other words, when there are two or more than two, but not many, producers or sellers of a product, oligopoly is said to exist. Answer: An oligopoly is an industry which is dominated by a few firms. *The firm's profits will be lower. Which of the following represents the problem with the four-firm concentration ratio? 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. 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? Artificial intelligence (AI) services are on the rise, with every industry readying to integrate the technology sooner or later. Barriers to entry into an oligopoly most resemble those of a ______. A) Each firm faces a downward-sloping demand curve. B) monopolists. D) There is more than one firm in the industry. E) marginal cost. B) revenues, elasticity, profit, and payoffs. All firms stick to what has been decided, thereby ensuring price stability in the sector. So when an oligopolist decreases prices to increase output, others follow the path. Managerial Economics - Oligopoly For example, when a government grants a patent for an invention to one firm, it may create a monopoly. c) They move leftward and upward to a higher point on the average-total-cost curve. Also, they rely on free-market forces to earn higher profits than a competitive market. The total market demand is P(Q) = 50 - 2Q, where Q is the total quantity produced by all (active) firms in the industry. However, firm B follows the leaders price and equilibrium quantity in order to avoid the uncertainty that can be arisen. B) a market where two firms compete for profit and market share. What are the positive effects of large oligopolists advertising? The Oligopoly Market: Example, Types and Features | Micro Economics Oligopoly: Definition, Characteristics & Examples | StudySmarter Instead, they try different approaches, such as rewarding customers for their loyalty, differentiating their product offerings, providing sales promotion schemes, acting as sponsors, etc. 2) In the dominant firm model of oligopoly, the larger firm acts like Products traded or traded homogeneously become the second characteristic of oligopoly. A monopoly occurs when. It is the most important feature of an oligopolistic market. 13) A dominant firm oligopoly might be one for which the Herfindahl-Hirschman Index is Based on the payoff matrix, if the two firms agreed to both follow national strategies there is an incentive for them to cheat. Greater the number of firms, the higher the degree of interdependence. 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} B) 1. A single Which of the following is NOT a characteristic of an oligopoly? E) equilibrium price and quantity will be insensitive to small demand changes. *To obtain lower input prices a) low to receive a payout of $15 ADVERTISEMENTS: This fact is recognized by all the firms in an oligopolistic industry. Oligopolists do not stress competing with each other on the pricing front. e) Its marginal cost curve is made up of two segments, d) Its marginal revenue curve would consist of two segments. c) Kinked-supply curve model Any change in either of them will affect the quantity/output sold by a producer. If the products of the firms are differentiated the degree of interdependence is then weakened. They are Save my name, email, and website in this browser for the next time I comment. Distinction between the four Forms of Market(Perfect Competition Wal-Mart's marginal cost of a flat panel TV has fallen, and as a result Wal-Mart will ________. C) perfectly elastic demand. b) potential for mergers and acquisitions The existence of oligopoly requires that a few firms are able to gain significant market power, preventing other, smaller competitors from entering the market. And that is what turns out to be the unique selling proposition (USP) of the respective brands in the oligopolistic industry. Which statement is true about oligopolies? Oligopoly is a market structure characterized by a few firms. CFA And Chartered Financial Analyst Are Registered Trademarks Owned By CFA Institute. A) Dr. Smith advertises no matter what Dr. Jones does. What are examples of monopoly and oligopoly? c) Dominant firms B. Non-Collusive Oligopoly-Sweezy's Kinked Demand Curve Model (Price-Rigidity) Usually, in Oligopolistic markets, there are many price rigidities. In this market, there are a few firms which sell homogeneous or differentiated products. An oligopolistic market exhibits the followingoligopoly features: It raises barriers for new entrants to enter into the respective sector. e) low to receive a payout of $8. c) threatens C) a perfectly competitive market. Determinants of Price Elasticity of Supply. a) major firms in an industry ranked by employment a) Affect profits and influence the profits of rival firms What are the 4 characteristics of oligopoly? D) products that are slightly different. B)Firms set prices. c) through collusion A) oligopolists. A firm in an oligopolistic market ______. On the other hand, if an oligopolist reduces output by raising prices, the rest refrain from doing so. E) None of the above. d) They do not achieve allocative efficiency because their price exceeds marginal cost. d) through advertising, Firms have a desire to cheat on a collusive agreement because ______. 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. Hence, undoubtedly it will react to the price reduction decision. b) are few in number b) Lower prices, but greater output A) only Bob would like to change his decision. 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. O B. That is, the large firm acts independently. A small number of sellers. D) entry into the industry of rival firms will have no impact on the profit of the cartel. 4. I really hope you learned this article. B) the courts. Solved Which of the following is NOT a characteristic of an - Chegg Solved Which of the following is not a characteristic of an - Chegg Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. Oligopolists in an oligopolisticmarket structure agree not to raise their prices but match only price cuts to avoid price rigidity. A) in a single-play game or a repeated game. Which one of the following is the most important reason? a) Cartel b) It will always be downward sloping because it is a price maker. 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. The value denotesthe marginalrevenue gained. However, firm B will follow the leaders price and equilibrium quantity in order to avoid the uncertainty that can be arisen. a) The number of average-sized firms in an industry needed to produce sales equivalent to the four largest firms D) neither is protected by high barriers to entry. C) firms in monopolistic competition. *Large capital investment b) Its demand curve is downward-sloping Interdependence: The foremost characteristic of oligopoly is interdependence of the various firms in the decision making. a) They do not achieve allocative efficiency because their average total cost exceeds price. C) the good produced in the market has been deemed a necessity D) patents, copyrights, barriers to entry, and rules. In doing so, they reduce production and increase prices, a phenomenon called collusion. . (Enter one word for each blank. E) the firms are interdependent. d) By updating manufacturing equipment, What is the four-firm concentration ratio? *To increase control over the product's price 12) Which one of the following quotations best describes the kinked demand curve model of oliogopoly? A) behave competitively. If this occurs, then the firm's demand curve will look ______. The policy implementation process has not taken in to account the life of rural peasants living in vicinity of cities. Types of Market Structure Economists group industries into four distinct market structures: 1. C) both have MR curves that lie beneath their demand curves. They collude and agree to share the market equally. *manipulating consumer preferences Consequently, each firm must condition its behavior on the behavior of the other firms. D) the four-firm concentration ratio for the industry is small. D) is; the smaller firms cannot become the dominant firm A) equilibrium price and quantity will be sensitive to small cost changes. b) The Herfindahl model After each player chooses his or her best strategy and sees the result, a) is needed in E) a cartel. We are dedicated to providing you with the very best in economics knowledge, with an emphasis on microeconomics and macroeconomics. e) straight. 15 Oligopoly Advantages and Disadvantages - ConnectUS CFA Institute Does Not Endorse, Promote, Or Warrant The Accuracy Or Quality Of WallStreetMojo. A. a) kinked and steep D) All of the above. a) There are a few large firms that make up the industry. D) increase the amount they produce. issued for the land? B) a market where two firms compete for profit and market share. 5) Which one of the following is not a feature common to all games? Marginal revenue = Change in total revenue/Change in quantity sold. 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. c) They achieve allocative efficiency because they produce at minimum average total cost. It thus limits the competition to only those already in the group. A)Each firm faces a downward -sloping demand curve. c) product development and advertising are relatively inexpensive When there are two market leaders in any industry or service, this is referred to as a duopoly. Why is collusion desirable to oligopolistic firms? Examples of oligopolies Car industry - economies of scale have caused mergers so big multinationals dominate the market. c) harder 6) According to the kinked demand curve theory of oligopoly, at the quantity corresponding to the kink, the firm's B) both can earn an economic profit in the long run. b) They try to avoid losses by raising prices in conjunction with rival firms. 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. We unlock the potential of millions of people worldwide. PDF Market Structure: Oligopoly (Imperfect Competition) Market Structures - Market Structures Characteristics of the market However, DTR does not intend to build any single family homes. Pure or Perfect Oligopoly: If the firms produce homogeneous products, then it is called pure or perfect oligopoly. A) Strategic Independence *It eliminates competition among firms. Which of the following are characteristics of oligopolistic markets In the scenario above, the market is. The concept serves to be useful for companies focusing on multiple product lines and operating more than one business unit at a time. Which of the following is not a characteristic of an oligopoly? The number of suppliers in a market defines the market structure. A game that is played more than once between rivals is a ____ (Enter one word) game. A) a market where three dominant firms collude to decide the profit-maximizing price. Typically, this means that at least 40% of the market is controlled by a few firms. Characteristics: There are few firms in the market serving many consumers. Which of the following is not a characteristic of oligopoly? A. P = MC Suppose that one of the two firms decided to reduce the price of its product by some amount resulting 20 % increase in its sales. 1. b) They achieve productive efficiency because their marginal revenue equals marginal cost. Demand and cost differences, the number of firms in the industry, and the potential for cheating all represent _____ (one word) to collusion. Either way, Id like to hear from you. 6. It is used as one of the strategies to increase the business firm's revenue and increase the market share.read more. The presence of a small number of companies in an oligopoly market structure makes it highly concentrated. E) both are price takers. Because of this, every firm takes decisions very carefully by considering the possible reactions of the rival firms. The distinctive feature of an oligopoly is interdependence. In an oligopoly, a few dominant brands offer most of the products and services and make significant decisions on behalf of the rest. *Prohibit the entry of new rivals. For example, the existing firms might threaten to reduce the price drastically if entry occurs. E) Firms set prices. a) price changes occur slowly E) rivalry of the participants leads to the worst solution from their point of view. Even though the products of companies A and B are similar, there must be something that distinguishes them. It includes decisions made in concentrated markets, such as product prices, quality standards, and production planning. C) one prisoner has no chance to be acquitted since there is no other prisoner to support his testimony. d) The market contains a few large producers. Firms in anoligopoly marketfocus on non-price competition and less innovation but ensure their brands are uniquely identifiable. e) It could be downward sloping or kinked. Oligopoly - Economics Help Patent rights or accessibility to technology may exclude potential competitors. A) costs, prices, profit, and strategies. If Marilyn believes that the $10 million stock issue was undertaken only to improve DTRs It is an essential component of marketing strategy leading to brand recognition and business growth. Required fields are marked *. c) The outcomes for all firms are positive. *It enhances competition and reduces monopoly power. 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?" document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright 2023 . 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. Why Developing Countries Should Focus on International Trade? What kind of game is it when firms choose their optimal pricing strategy today without worrying about possible interactions in the future? Businesses in such a market collaborate to dominate the rest of the players and maximize joint revenue. C. Some market power. B) both firms comply with the agreement. B) a contestable market. c) Price war D) in neither a repeated game nor a single-play game. The control of oligopolists over specialized inputs, such as resources, price, and production, makes it difficult for a new firm to survive. B) assumes marginal cost is constant. d) The advertising model, To reduce uncertainty or increase profits, oligopolists may change their prices ______. B) collusion Which of the following statements correctly describes Dr. Smith's strategy given what Dr. Jones may do? 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. B) neither player would be willing to change his or her decision unless the other player also changes his or her decision. A study based on over 9,0009,0009,000 U. S. residents Oligopolies are typically composed of a few large firms. d) Interindustry competition, Which are barriers to entry in both monopolies and oligopolies? at least $10 million. a) inelastic When the number of firms in an oligopolistic industry increases from 3 to 10, it is ______ to collude. Which of the following are characteristics of oligopolistic markets? Oligopoly. A Which of the following is not a characteristic of oligopoly? In an oligopoly, dominant market players are influential enough to decide on the price of products and services. C) changes in the output of any member firms will have no impact on the market price. *Preemptive pricing *To decrease monopoly power *localized markets, *dominant firms C) the firms keep profits and prices so low that no rivals are . b) pure monopoly Share with Email, opens mail client Four characteristics of an . C) is; to cheat regardless of the other firm's choice 3) Which one the following industries is the best example of an oligopoly? a) fewer firms than monopolistic competition. E) potential entrants taking all the business away from existing firms. E) is not; frequently one of the smaller firms becomes the dominant firm, and the original dominant firm becomes less important. Following are the characteristics of oligopoly: Interdependence. 6) Wal-Mart follows the kinked demand curve model of oligopoly. D) marginal revenue curve is discontinuous. 4. C) specify how marginal cost is determined. 7) The kinked demand curve theory of oligopoly predicts that Which helps an oligopoly to form within a market? Meanwhile, all firms know that their decisions affect other firms sales and profit, hence they necessarily react against those decisions. d) The same as a monopoly, By controlling ______ through collusion, oligopolists may be able to reduce ______, ______ profits and block the entry of new rivals. b) are less efficient because they are often regulated by the government E) other firms will not raise theirs. C. The choices made by one firm have a significant effect on other firms. Top 5 Characteristics of an Oligopoly - EconTips E) an outcome. Firms are profit-maximizers. 4) Which one of the following industries is the best example of an oligopoly? b) are always less efficient Based on the figure, if one firm cheats on the collusive agreement it can increase its payoff by D) There is more than one firm in the industry. 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). D) zero. And rest of the businesses or minor players follow the same. *interindustry competition d) is always kinked D) potential entrants not entering the market. E) none of the above is done. *It lowers search costs of information for consumers. What is Oligopoly: Types, Characteristics and Examples b) Firms may sell a homogeneous product. Marginal revenue = Change in total revenue/Change in quantity sold. 1) In the dominant firm model of oligopoly, the smaller firms behave as D) Bud has a dominant strategy but Miller does not. bc it's similar to monopoly but has the difference of having more firms lol. d) Firms choose strategies at the same time. a) Import competition b) neither productive efficiency nor allocative efficiency *The firm is failing to produce at the profit-maximizing output. xxx\underline{\phantom{\text{xxx}}}xxx. a) The possibility of price wars diminishes and profits are maximized. single family housing and would be an attractive site for single family homes. a) The same as monopolistic competition A) potential entrants entering and making monopoly profit. The firms comprise an oligopolistic market, making it possible for already-existing smaller businesses to operate in a market dominated by a few. So here we can see a one-way interdependence pattern. The concentration ratio is a tool that measures the market share leading companies have in an industry. It determines the law of demand i.e. Oligopoly as a market structure is distinctly different from other market forms. B) potential entrants entering and incurring economic loss. Question: Which of the following is NOT a characteristic of an oligopoly? 11) Which one of the following quotations best describes a dominant firm oligopoly? *Increase profits ratio. c) horizontal or perfectly elastic D) Bob denies and Art confesses. Product differentiation refers to making a product look attractive and different from other products in the same class. 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? c) They lose most of their excess-production capability. d) their profits and sales will rise. The equilibrium ________ a dominant strategy equilibrium because the strategy in this game is for a firm ________. D) A and B. D) Gear cheats, while Trick complies with the agreement. d) Mutual interdependence. This market structure can be competitive and sometimes less competitive. *Ownership and control of raw materials A) the government will impose price controls. Microeconomics II-Module - Microeconomics II Monopolistic competition A dominant-bank oligopoly confronting a competitive fringe There are two sets of banks: dominant banks and fringe banks. True or false: A cartel abides by a formally written agreement that specifies the output and price of each member firm and is a form of overt collusion. East Asian regimes tend to have similar characteristics First they are orien. Business Economics Consider a Cournot oligopoly with n = 2 firms. A) there are only two producers of a particular good competing in the same market d) elastic, An oligopoly firm's demand curve will be kinked if ______. 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. Chapter 15: Monopolistic Competition and Olig, Pesticide Applicator Certification Core Manual, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal. 11) Once a cartel determines the profit-maximizing price, a) The kinked-demand curve model The concentration ratio measures the market share of the. b) Collusive pricing model C) Dr. Smith advertises only if Dr. Jones doesn't advertise. ENGL1190_V0854_2023WI_Communications23.docx. A 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. We reviewed their content and use your feedback to keep the quality high. c) less than or equal to 40% $4. c) high to receive a payout of $12 . D)There is more than one firm in the industry. We can conclude that industry A is. Click the card to flip Definition 1 / 84 c) All oligopolists' or imperfect competitors' demand curves are down-sloping because they are price makers. b) The number of employees in an industry who ever have or are currently working for one of the four largest firms a. small number of firms b. has some pricing power c. the firms are interdependent d. the good produced may be unique or not e. low barriers to entry; Which of the following is not a characteristic of an oligopolistic market structure? A. b) By increasing recruiting expenses a) Import competition An oligopoly in economics refers to a market structure comprising multiple big companies that dominate a particular sector through restrictive trade practices, such as collusion and market sharing. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. However, at this price profit of firm B is not maximized. E) an oligopoly. B) equilibrium price and quantity will be insensitive to small cost changes. Pure because the only source of market power is lack of competition. The core competencies in business refer to its resources and unique fundamental capabilities that distinguish it from market competitors. *Large capital investment A market is deemed oligopolistic or extremely concentrated when it is shared between a few common companies. which of the following is a characteristic of monopolistic competition a) The outcomes for all firms are negative. What are the 4 characteristics of oligopoly? D) the one producer of two goods sells the goods in a monopoly market *The firm's profits will be higher. In the credit card industry, for example, Visa and MasterCard have a duopoly. It is an essential component of marketing strategy leading to brand recognition and business growth. E) a competitive market produces two goods. a) their prices will be unchanged . In a monopoly, only one big brand influences the entire market without any competition.