which is not a characteristic of oligopoly23 Apr which is not a characteristic of oligopoly
18) A market with a single firm but no barriers to entry is known as CFA And Chartered Financial Analyst Are Registered Trademarks Owned By CFA Institute. 7) Why might only a few firms dominate an oligopolistic industry? There are just several sellers who control all or most of the sales in the industry. Oligopoly is an important form of imperfect competition. D) is; the smaller firms cannot become the dominant firm Also, they rely on free-market forces to earn higher profits than a competitive market. Demand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. Businesses in such a market collaborate to dominate the rest of the players and maximize joint revenue. Oligopoly is a market with a few firms and in which a market is highly concentrated. It is assumed that all of the sellers sellidentical or homogenous products.read more, monopoly, and monopolistic competition. *To increase market share Firms are profit-maximizers. It thus limits the competition to only those already in the group. C) Parliament. The value denotesthe marginalrevenue gained. attempts to raise $425 million to use to build apartments in a growing area of Tulsa. 10) In the dominant firm model of oligopoly, the dominant firm produces the quantity at which marginal revenue equals Perfect competition is a market in which there are a large number of buyers and sellers, all of whom initiate the buying and selling mechanism. B) in a single-play game but not a repeated game. 300 laborers were employed at the plant that month. E) equilibrium price and quantity will be insensitive to small demand changes. 3) Canada's anti-combine law is enforced by a) localized markets b) There are barriers to entry into the market. E) A and C. 8) A merger is unlikely to be approved if ________. 12) Because an oligopoly has a small number of firms Because of this, every firm takes decisions very carefully by considering the possible reactions of the rival firms. That is, the large firm acts independently. E) Bud and Miller each have a dominant strategy. If productivity can be increased to $0.11 vans per labor hour, how many hours would the average laborer work that month? what are the 5 characteristics of an oligopoly? It encompasses several industries, including banking and investment, consumer finance, mortgage, money markets, real estate, insurance, retail, etc. Marginal revenue = Change in total revenue/Change in quantity sold. Market players in an oligopolistic market focus on non-price competition, ensure their brands are uniquely identifiable and apply hidden advertising tactics. 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. If so, then the firm's demand curve will be ______. a) The kinked-demand curve model The four-firm concentration ratio is based on the ___. B) other firms will lower theirs. An oligopoly is a market structure where a few large firms collude and dominate a particular market segment. oligopoly, monopoly, monopolistic competition, pure competition pure competition, monopolistic competition, oligopoly, monopoly. c) may be less desirable because they are not regulated by government to protect consumers When there are two market leaders in any industry or service, this is referred to as a duopoly. b) Affect profits without influencing the profits of rival firms The profit-maximizing price of firm B is PB(>PA) and the quantity is Xbe. The demand curve will look kinked to reflect the fact that rivals will match price *decreases* but ignore price *increases*. 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. O B. B) 1. *To decrease monopoly power If one firm is large enough to account, which is that 80% of sales in the industry. a) fewer firms than monopolistic competition. b) price leadership; collusion d) is always kinked a) pricing theory Economists identify four types of market structures: (1) perfect competition, (2) pure monopoly, (3) monopolistic competition, and (4) oligopoly. c) Dominant firms Why Developing Countries Should Focus on International Trade? d) cheat, Which of the following represent shortcomings of the four-firm concentration ratio? 1) A cartel is a group of firms which agree to a) its rivals do not respond to either a price cut or price increase 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? *interindustry competition Each firm is so large that its actions affect market conditions. E) only when there is no Nash equilibrium. c) kinked-demand 21) It is difficult to maintain a cartel for a long period of time. A small number of sellers. c) have no rivals A) in a single-play game or a repeated game. d) price leadership; kinked-demand, From society's standpoint, what are the effects of collusion in an oligopolistic industry? D) entry into the industry of rival firms will have no impact on the profit of the cartel. Pure (Perfect) Competition. Oligopolists do not stress competing with each other on the pricing front. D) its profit will rise by the same percentage. For example, the existing firms might threaten to reduce the price drastically if entry occurs. E) none of the above. C) "Construction prices in this town seem to be always set by Big Jim's Dandy Construction Company." A) only Bob would like to change his decision. a) are always more efficient An example of a pure oligopoly would be the steel industry, which has only a few producers but who produce exactly the same product. 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} Interdependence Many firms b. 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. C) average variable cost curve is discontinuous. 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. D) neither is protected by high barriers to entry. Thus, it induces interdependence in the network. 8) 8)Which is not a characteristic of oligopoly? C) a firm in monopolistic competition. ratio. Oligopoly as a market structure is distinctly different from other market forms. b) collusion It is one of the four market structures that include perfect competition, monopoly, and monopolistic competition. c) The possibility of price wars increases, but profits are maximized. In first-degree price discrimination, a monopolist charge each customer the highest price the customer is willing to pay. Such companies have complete control of the market, earning high profits and gains in a specific sector or service. Advertising can persuade consumers to pay higher prices for products that are well _____ (one word) instead of purchasing unadvertised products with lower prices. A) suggests that price will remain constant even with fluctuations in demand. It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. b) The possibility of price wars diminishes, but profits might be lower. D. Th; Which of the following is a characteristic of an oligopoly market structure? Marilyn is also aware that DTR issued$10 million of common stock to a long-time friend of the As their products seem visually identical, both the brands have to make sure they offer customers something that the other does not. a. An oligopoly is a market structure that involves few producers and suppliers (www.oecd.org). In the credit card industry, for example, Visa and MasterCard have a duopoly. 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. a) The possibility of price wars diminishes and profits are maximized. d) The firms in the industry are interdependent. A Which of the following is not a characteristic of oligopoly? C) is; to cheat regardless of the other firm's choice c. Competing firms can enter the industry easily. Welcome to EconTips, your number one source for all things about economics. 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. B) Dr. Smith does not advertise no matter what Dr. Jones does. A characteristic found only in oligopolies is A) break even level of profits. Oligopoly is one of the four market structures and identified by a small number of big businesses operating in a particular industry. d) easier. b) pure monopoly b) Demand is highly elastic below the going price c) Kinked-supply curve model The distinctive feature of an oligopoly is interdependence. they will make more pricing low than if they both price high. Oligopolies exist and do not attract new rivals because A) of competition. What are the 4 characteristics of oligopoly? b) through pricing In a monopoly, only one big brand influences the entire market without any competition. What are examples of monopoly and oligopoly? Lets identify the oligarchy before identifying the characteristics of an oligopoly. A non-collusive oligopoly refers to a market situation where the firms compete with each other rather than cooperating. Any decision taken by a firm in order to increase its sales would adversely affect the sales and hence profit of the other firms. b) Collusive pricing model c) All oligopolists' or imperfect competitors' demand curves are down-sloping because they are price makers. Firms are more likely to cheat on a collusive agreement when the economy is experiencing a _____ (Enter one word). A single Each optometrist can choose to advertise his service or not. D)There is more than one firm in the industry. B) rivalry among a large number of rivals leads to lower overall profit. Instead, they try different approaches, such as rewarding customers for their loyalty, differentiating their product offerings, providing sales promotion schemes, acting as sponsors, etc. We are dedicated to providing you with the very best in economics knowledge, with an emphasis on microeconomics and macroeconomics. 11) Because an oligopoly has a small number of firms, A) each firm can act like a monopoly. The presence of a small number of companies in an oligopoly market structure makes it highly concentrated. B) This game has no Nash equilibrium. A duopoly is 4. What are the 4 characteristics of oligopoly? debt to equity ratio and that it will be reversed whenever the presidents friend wants the e) Price leadership model, a) Kinked-demand curve model We can conclude that industry A is. E) both are price takers. *Patents, Which are reasons that that firms merge? Consider a simple case of three firm oligopoly. c) They achieve allocative efficiency because they produce at minimum average total cost. b) The Herfindahl model a) price leadership c) threatens The existence of oligopoly requires that a few firms are able to gain significant market power, preventing other, smaller competitors from entering the market. . B) a monopoly. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. The concentration ratio is a tool that measures the market share leading companies have in an industry. Cost of firm A is lower than firm B Profit maximizing price and quantity of firm A is PA and XA respectively. b) Its demand curve is downward-sloping Patent rights or accessibility to technology may exclude potential competitors. A) there are fewer than 6 firms in a market A dominant-bank oligopoly confronting a competitive fringe There are two sets of banks: dominant banks and fringe banks. Oligopolies are typically composed of a few large firms. *price elasticity of demand View full document. e) straight When the number of firms in an oligopolistic industry increases from 3 to 10, it is ______ to collude. *Ownership and control of raw materials d) import competition, Suppose the rivals of an oligopolistic firm match either a price increase or decrease. 8) Which of the following quotes shows a contestable market in the widget industry? Since there are few dominating firms which are having full knowledge about the market, the decisions on the price and output of a firm depend on the reactions of other firms. A Computer Science portal for geeks. Interdependence: The foremost characteristic of oligopoly is interdependence of the various firms in the decision making. Each firm faces a downward-sloping demand curve. A) average total cost curve is discontinuous. C) in a repeated game but not a single-play game. Which of the following is not a characteristic of an oligopoly? What are the four characteristics of market structure? D) the four-firm concentration ratio for the industry is small. b) They achieve productive efficiency because their marginal revenue equals marginal cost. It continues to behave on the assumption that its new demand (d 1 d' 1 ) will not shift further because the effect of its own decisions on other sellers' demand would be negligible. A) price. D) if Bob does not change his decision, Jane would like to change hers. E) Dr. Smith does not advertise if Dr. Jones advertises. Based on the figure, if one firm cheats on the collusive agreement it can increase its payoff by The point at which an upward-sloping marginal cost curve intersects a downward-sloping marginal revenueMarginal RevenueThe marginal revenue formula computesthe change in total revenue with more goods and units sold." $1. Types of Market Structure Economists group industries into four distinct market structures: 1. complexes. $6. a) They may produce homogeneous or differentiated products. An oligopolistic firm's marginal revenue curve is made up of two segments if ______. A) rules D) monopolistic competition. The core competencies in business refer to its resources and unique fundamental capabilities that distinguish it from market competitors. C) the firms keep profits and prices so low that no rivals are . c) costs; uncertainty; increase c) product development and advertising are relatively inexpensive OA. a) The possibility of price wars diminishes and profits are maximized. How are profitability and risk impacted by changes in the current liabilities to total assets ratio? a) their prices will be unchanged c) By changing pricing strategies a) kinked and steep Oligopolists do not compete with each other. Which one of the following observations is correct? b) demand; losses; increase *The firm's demand curve will shift further to the left. It is assumed that all of the sellers sellidentical or homogenous products. B) unit elastic. E) is not; frequently one of the smaller firms becomes the dominant firm, and the original dominant firm becomes less important. c) harder b) The number of employees in an industry who ever have or are currently working for one of the four largest firms But in practice, there are several barriers to entre which make it quite difficult for the new firms to join the industry or market. If this game is nonrepeated, the Nash equilibrium is A) both firms cheat on the agreement. B) neither player would be willing to change his or her decision unless the other player also changes his or her decision. In the credit card industry, for example, Visa and MasterCard have a duopoly.read more. Pure (Perfect) Competition 2. b. 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?" A market is considered to be a(n) ______ when the largest four firms in an industry control more than 40% or more of the market. Which of the following is not a characteristic of oligopoly? document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright 2023 . c) They move leftward and upward to a higher point on the average-total-cost curve. read more rather than lower prices to gain profits and market share. Social Studies, 22.06.2019 00:00. They do it strategically so they do not lose their customers in what could be a price war. ECO-FINALS_LESSON-1 - Read online for free. The incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. What kind of problem does this represent with the four-firm concentration ratio? *increasing economies of scale, *providing misleading information Based on the payoff matrix, if the two firms agreed to both follow national strategies there is an incentive for them to cheat. Your email address will not be published. b) Interindustry competition believes that DTRs debt to equity ratio of 1.6 is probably the minimum that lenders will accept. e) straight. A) potential entrants entering and making monopoly profit. a) There are a few large firms that make up the industry. Marginal revenue = Change in total revenue/Change in quantity sold. C)The sales of one firm will not have a significant effect on other firms. Barriers to entry. 4. Firm A and Firm B are the only producers of soap powder. e) It could be downward sloping or kinked. 13) Complete the following sentence. The distinguishing characteristics of oligopoly are briefly explained below: 1. a) low to receive a payout of $15 a) Import competition Consequently, the output and pricing policies of a particular company can affect market conditions. (Figure) summarizes the characteristics of each of these market structures. The distinctive feature of an oligopoly is interdependence. xxx\underline{\phantom{\text{xxx}}}xxx. d) Interindustry competition, Which are barriers to entry in both monopolies and oligopolies? The more concentrated a market is, the more likely it is to be oligopolistic. 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. *It helps reduce demand for material products. 0. *Large capital investment C) "If only Wally and I could agree on a higher price, we could make more profits." Suppose that one of the two firms decided to reduce the price of its product by some amount resulting 20 % increase in its sales. b) Mutual interdependence Which of the following statements correctly describes Dr. Smith's strategy given what Dr. Jones may do? d) straight and steep What are the 4 characteristics of oligopoly? e) Price leadership model, In the _______ model of oligopoly, firms react to price decreases but ignore price increases by other firms. An oligopoly exists when a market is dominated by a small number of suppliers or firms. B) total revenue. bc it's similar to monopoly but has the difference of having more firms lol. What are three models used to study pricing and output by oligopolies? e) price changes are typically expensive, b) product development and advertising are relatively difficult to copy, Oligopolies are not a desirable market structure because they achieve ______. 14) The kinked demand curve model Short run equilibrium in monopolyPerfect Competition: Definition, Graphs, short run, long runTop 5 characteristics of an oligopolyMonopoly Price discrimination: Types, Degrees, Graphs, ExamplesDifferent Types of Monopolies| 7 TypesMonopolistic competition assumptionsMonopolistic Competition Equilibrium| Long-run| Short-runMonopolistic Competition and Economic Efficiency. 26) Refer to Table 15.3.4. Economies of scale are the cost advantage a business achieves due to large-scale production and higher efficiency. b) are less efficient because they are often regulated by the government d) Its marginal revenue curve would consist of two segments, d) Its marginal revenue curve would consist of two segments Our model focuses on the interactions of these banks within an imperfectly competitive loan market and the endogenous determination of equilibrium loan quantities for banks within each group, the total equilibrium amount in . A)Each firm faces a downward -sloping demand curve. A) a Competition Tribunal. E) Firms set prices. Demand and cost differences, the number of firms in the industry, and the potential for cheating all represent _____ (one word) to collusion. 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. Monopolistic Competition 4. B) there are two producers of two goods competing in an oligopoly market 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. 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. Have you a question about something that I covered. Oligopolists offer comparable products or services, so they control prices rather than the market. The urban land lease policy is not very friendly to rural households land in general and the poor land holders in particular. Experts are tested by Chegg as specialists in their subject area. C) independence of firms. d) By updating manufacturing equipment, What is the four-firm concentration ratio? An oligopoly is a market structure with a small number of firms, none of which can keep the others from having significant influence. A) a firm in an oligopoly market. You may also have a look at the following articles , Your email address will not be published. *Increase profits Which statement is true about oligopolies? So here we can see a one-way interdependence pattern. 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. 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. 30.331.934.432.831.132.230.736.830.530.634.533.130.131.030.730.930.730.230.637.931.131.134.630.233.132.130.631.530.230.330.930.031.630.234.434.230.230.131.434.133.732.732.432.831.030.733.435.730.730.4. Save my name, email, and website in this browser for the next time I comment. 14) A duopoly occurs when ________. Then the large firm may consider the other two firms are too small, hence ignore their reactions while taking decisions. Some of its fundamental characteristics include the existence of a small number of firms, differentiated or homogeneous products, and barriers to entry. 5) Which one of the following is not a feature common to all games? 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. Based on her experience with past negotiations, Marilyn knows that lenders are concerned about DTRs debt to equity *To increase control over the product's price Here, they focus on each other and try to exceed customer expectations in every possible way.
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