b) They achieve productive efficiency because their marginal revenue equals marginal cost. What is Oligopoly? | Markets | Economics - Economics Discussion Patent rights or accessibility to technology may exclude potential competitors. Four characteristics of an . b) upward-sloping Which of the following statements correctly describes Dr. Smith's strategy given what Dr. Jones may do? O B. So when an oligopolist decreases prices to increase output, others follow the path. a) low to receive a payout of $15 a) Import competition C) strategies C) potential entrants entering and making zero economic profit. What are the positive effects of large oligopolists advertising? *The firm's demand curve will shift further to the right. c) Dominant firms B) Firms are profit-maximizers.C) The sales of one firm will not have a significant effect on other firms. d) Oligopolistic collusion, Compared to monopolies, oligopolies ______. Artificial intelligence (AI) services are on the rise, with every industry readying to integrate the technology sooner or later. C) independence of firms. The policy implementation process has not taken in to account the life of rural peasants living in vicinity of cities. Oligopoly: Definition, Characteristics and Concepts - Toppr-guides Instead, they try different approaches, such as rewarding customers for their loyalty, differentiating their product offerings, providing sales promotion schemes, acting as sponsors, etc. A) This game has no dominant strategies. c) Blue jean designer These firms are large enough that their quantity influences the price and so impacts their rivals. The market share of the firms is unequal. d) They do not achieve allocative efficiency because their price exceeds marginal cost. Have you a question about something that I covered. Determinants of Price Elasticity of Supply. A(n) _______ (Enter one word) is a market dominated by a few large producers of a homogeneous or differentiated product. A)Each firm faces a downward -sloping demand curve. c) high to receive a payout of $12 It determines the law of demand i.e. Answers: 1 Show answers Another question on Social Studies. For example, an industry with a five-firm concentration ratio of greater than 50% is considered an oligopoly. A) costs, prices, profit, and strategies. E) None of the above. Oligopoly Models: 1. Which of the following is not a characteristic of oligopoly? A. P = MC Keep its price constant and thus decrease its market share C. Increase its price and thus increase its market share D. Decrease its price and thus decrease its market share b) pure monopoly D) increase the amount they produce. c. Competing firms can enter the industry easily. Oligopolists do not stress competing with each other on the pricing front. In the graph, the price elasticity of demand is ______ below the price of P0. ratio. a) Import competition d) cost leadership. 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? d) are more efficient because cartels and collusion is always successful c) price leadership; cartel B) a contestable market. B. *manipulating consumer preferences. In the credit card industry, for example, Visa and MasterCard have a duopoly. B) both firms comply with the agreement. Managerial Economics - Oligopoly d) independently, The shape of the demand curve for an oligopolistic firm ______. Product differentiation refers to making a product look attractive and different from other products in the same class. Oligopoly - Economics Help *The firm's profits will be lower. *manipulating consumer preferences *The firm is failing to produce at the profit-maximizing output. C) firms in monopolistic competition. 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. 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) kinked demand E) other firms will not raise theirs. b) depends on the firm's cost structure which of the following is a characteristic of monopolistic competition A) a Competition Tribunal. It includes decisions made in concentrated markets, such as product prices, quality standards, and production planning. *Increase profits a) are less efficient due to competition This represents what kind of problem with the four-firm concentration ratio? from chapter 12 ^-^, What is the only stable outcome in a payoff matrix? 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. C) the good produced in the market has been deemed a necessity 21) It is difficult to maintain a cartel for a long period of time. How are profitability and risk impacted by changes in the current liabilities to total assets ratio? *dominant firms Small Number of Number: The number of firms in an oligopoly market is small where each firm controls an important proportion of the total supply. A) oligopolists. *To increase market share Distinction between the four Forms of Market(Perfect Competition A game that is played more than once between rivals is a ____ (Enter one word) game. B) it prevents or substantially lessens competition b) The possibility of price wars diminishes, but profits might be lower. Types of Market Structure Economists group industries into four distinct market structures: 1. It is difficult to enter an oligopoly industry and compete as a small start-up company. There are just several sellers who control all or most of the sales in the industry. c) The percentage of total industry sales accounted for by the four largest firms In an oligopoly, dominant market players are influential enough to decide on the price of products and services. It is an essential component of marketing strategy leading to brand recognition and business growth. So here we can see a one-way interdependence pattern. *Preemptive pricing C) equilibrium price will be sensitive to small cost changes but quantity will not. 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. d) straight and steep A) a natural monopoly. e) Firms may sell a differentiated product. d) easier. *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. 1) A cartel is a group of firms which agree to 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 (What is duopoly and its characteristics? Explained by FAQ Blog c) price leadership C) if Jane does not change her decision, Bob would like to change his. found that the most prevalent disorder was e) straight. A) rules While AI integration in the medical, legal, and financial sectorsFinancial SectorsThe financial sector refers to businesses, firms, banks, and institutions providing financial services and supporting the economy. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright 2023 . Determinateness of demand curve is a part of law of demand and does not fall in oligopoly. a) The same as monopolistic competition *Increase profits c) harder *To increase economies of scale. Because of their large size and minimal competition, each firm in an oligopoly market structure influences the others. A non-collusive oligopoly refers to a market situation where the firms compete with each other rather than cooperating. e) may be no more efficient due to a lack of firm interdependence, c) may be less desirable because they are not regulated by government to protect consumers. Thus, it induces interdependence in the network. b) collusion It determines the law of demand i.e. As their products seem visually identical, both the brands have to make sure they offer customers something that the other does not. e) Its marginal cost curve is made up of two segments, d) Its marginal revenue curve would consist of two segments. A. *Ownership and control of raw materials In third-degree price discrimination happens when customers are segregated by . Due to minimal competition, each of them influences the rest through their actions and decisions. B) collusion 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. The distinctive feature of an oligopoly is interdependence. D) in neither a repeated game nor a single-play game. I really hope you learned this article. What are the four characteristics of market structure? C) the same as a monopoly. B) both prisoners deny. Some of its fundamental characteristics include the existence of a small number of firms, differentiated or homogeneous products, and barriers to entry. Which is not a characteristic of oligopoly a each Four characteristics of an oligopoly industry are: Few sellers. It is one of the four market structures that include perfect competition, monopoly, and monopolistic competition. E) Dr. Smith does not advertise if Dr. Jones advertises. C) "If only Wally and I could agree on a higher price, we could make more profits." Barriers to entry. What does a demand curve look like for an oligopolistic firm? That means higher the price, lower the demand. Essay on Oligopoly, Perfect Competition, Cournot's and Bertrand's b) are always less efficient c) through product development Which of the following are characteristics of oligopolistic markets? c) The possibility of price wars increases, but profits are maximized. *interindustry competition 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. d) monopolistically competitive market, The study of how one firm reacts to the actions taken by another firm or individual when implementing a strategy is called _____. c) They achieve allocative efficiency because they produce at minimum average total cost. D) the one producer of two goods sells the goods in a monopoly market In doing so, they reduce production and increase prices, a phenomenon called collusion. Sweezy Oligopoly - based on a very specific assumption regarding how other firms will respond to price increases and price cuts. 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. 1) The market structure in which natural or legal barriers prevent the entry of new firms and a small number of firms compete is, 2) Suppose that industry A consists of four firms who collectively control 96 percent of total sales in the market. e) It could be downward sloping or kinked. D) is; the smaller firms cannot become the dominant firm What kind of problem does this represent with the four-firm concentration ratio? ADVERTISEMENTS: This fact is recognized by all the firms in an oligopolistic industry. Pure oligopoly - have a homogenous product. Oligopolistic firms do which of the following when they change their pricing strategies? 3) Canada's anti-combine law is enforced by 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. What are examples of monopoly and oligopoly? c) may be less desirable because they are not regulated by government to protect consumers 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?" The control of oligopolists over specialized inputs, such as resources, price, and production, makes it difficult for a new firm to survive. A monopoly occurs when. single family housing and would be an attractive site for single family homes. Either way, Id like to hear from you. Typically, this means that at least 40% of the market is controlled by a few firms. Are oligopolies dynamically efficient? Explained by Sharing Culture Oligopoly as a market structure is distinctly different from other market forms. When the negotiations began, DTR had debt of$80 million and equity of $50 million. D) increase the amount they produce. Firm B adopts this price and sells XB(