*The game would eventually end in the Nash equilibrium (cell A). e) through cartels, c) through product development A duopoly is 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. d) They do not achieve allocative efficiency because their price exceeds marginal cost. a) Firms have no control over their price. A) Each firm faces a downward-sloping demand curve. C) Parliament. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. D) marginal revenue curve is discontinuous. 16) A monopolistically competitive firm is like an oligopolistic firm insofar as A) both face perfectly elastic demand. a) depends on the actions of rivals to price changes a) It could be downward or upward sloping. D) assumes that competitors will match price cuts and ignore price increases. In this market, there are a few firms which sell homogeneous or differentiated products. B) raise the price of their products. c) Price war 4) According to the kinked demand curve theory of oligopoly, each firm thinks that demand just below the price at the kink is A) less elastic than the demand just above the price at the kink. b) The Herfindahl model Marilyn is also aware that DTR issued$10 million of common stock to a long-time friend of the What are the four characteristics of market structure? Because of their large size and minimal competition, each firm in an oligopoly market structure influences the others. B) the firms may legally form a cartel. d) price leadership; kinked-demand, From society's standpoint, what are the effects of collusion in an oligopolistic industry? marginal cost pricing The joining of firms that are producing or selling a similar product is a horizontal merger Suppose an industry has total sales of $25 million per year. The number of suppliers in a market defines the market structure. Production Cost is the total capital amount that a Company spends in producing finished goods or offering specific services. a) By decreasing total suppliers c) high to receive a payout of $12 It is used as one of the strategies to increase the business firm's revenue and increase the market share.read more. Your email address will not be published. If so, then the firm's demand curve will be ______. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright 2023 . A Computer Science portal for geeks. A)Each firm faces a downward -sloping demand curve. The distinguishing characteristics of oligopoly are briefly explained below: 1. what are the 5 characteristics of an oligopoly? Marketers highlight the distinguishing features in the product commonly through packaging or a good design, which helps communicate the benefitting factors to the shoppers. Oligopoly. A) potential entrants entering and making monopoly profit. Oligopoly is a market with a few firms and in which a market is highly concentrated. Oligopoly is a market structure characterized by a few firms. 1) In the dominant firm model of oligopoly, the smaller firms behave as d) their profits and sales will rise. Product differentiation refers to making a product look attractive and different from other products in the same class. Their differences can range from. b) Strategies are chosen for a single time period. $15. D) There is more than one firm in the industry. a) over collusion What kind of problem does this represent with the four-firm concentration ratio? a) major firms in an industry ranked by employment C) equilibrium price will be sensitive to small cost changes but quantity will not. Either way, Id like to hear from you. Which statement is true about oligopolies? A) 0. B) assumes marginal cost is constant. The financial sector refers to businesses, firms, banks, and institutions providing financial services and supporting the economy. read more rather than lower prices to gain profits and market share. *providing misleading information E) a cartel. B) a monopoly. d) their profits and sales will rise 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) The possibility of price wars increases, but profits are maximized. *To increase control over the product's price Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. The four-firm concentration ratio is based on the ___. *The firm's demand curve will shift further to the left. . c) its rivals match a price increase but ignore a price cut C) Miller has a dominant strategy but Bud does not. What are three models used to study pricing and output by oligopolies? I really hope you learned this article. C. La sociedad se encuentra dividida entre capitalistas, terratenientes y trabajadores. If one of the firms cheats on this agreement, what will happen? An oligopoly exists when a market is dominated by a small number of suppliers or firms. 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) a contestable market. Which one of the following observations is correct? 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. It determines the law of demand i.e. They may produce homogeneous products or differentiated products. d) Firms choose strategies at the same time. b) legal d) have interdependent pricing. b) pure monopoly You can calculate it by adding Direct Material cost, Direct Labor Cost, & Manufacturing Overhead Cost. they set up a 1 meter (100 cm) track. 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? E) downward-sloping demand curve with no kink. *The firm's demand curve will shift further to the right. E) Firms set prices. the students used balls . a) Demand is highly elastic below the going price (Pure) Monopoly 3. A single d) The market contains a few large producers. *It helps reduce demand for material products. C. Some market power. Which of the following is characteristic of oligopoly, but not of monopolistic competition? The other two share the rest (20%). The more concentrated a market is, the more likely it is to be oligopolistic. a) The outcomes for all firms are negative. c) inflexible D) monopolistic competition. E) more elastic than the demand just above the price at the kink. Mr. mann's science students were experimenting with speed. E)Firms are profit -maximizers. 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. read more, and marginal revenue is the product price. It is used as one of the strategies to increase the business firm's revenue and increase the market share. Which of the five do you feel is the most important? Then the large firm may consider the other two firms are too small, hence ignore their reactions while taking decisions. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. What would have been DTRs debt to equity ratio if the$10 million of stock had not been East Asian regimes tend to have similar characteristics First they are orien. Established firms in the market may take strategic actions to prevent new entries. In a(n) _____ game one firm moves first, committing to a strategy and then the rival firm responds. Keep its price constant and thus increase its market share B. A) there are only two producers of a particular good competing in the same market A) "Gas prices in this town always go up and down together." read more curve results in a convex bend, known as kink. 5.3.5 Apply Concepts of Oligopoly and Oligopoly Models .pdf. See more documents like . c) Affect costs and influence the supply of rival firms b) its rivals match price increases and price decreases Oligopolistic behavior implies that oligopolists prefer competition ______. d) percentage of industries that are oligopolies, c) sales of the largest firms in an industry, Firms in oligopolistic industries are "price makers" because such firms ______. a) payoff d) The advertising model, To reduce uncertainty or increase profits, oligopolists may change their prices ______. Demand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. (Enter one word per blank. d) Dominant firms, What are oligopolists able to do by controlling price through collusion? Monopolistic Competition 4. In an oligopoly, a few dominant brands offer most of the products and services and make significant decisions on behalf of the rest. If this occurs, then the firm's demand curve will look ______. E) an outcome. Click the card to flip Definition 1 / 84 e) increasing search time. D) a prisoner has no incentive to confess to his crime, and stands a greater chance of not going to prison. 7) Why might only a few firms dominate an oligopolistic industry? Oligopoly is said to prevail when there are few firms or sellers in the market producing or selling a product. D) increase the amount they produce. believes that DTRs debt to equity ratio of 1.6 is probably the minimum that lenders will accept. c) Nash equilibrium from chapter 12 ^-^, What is the only stable outcome in a payoff matrix? If Marilyn believes that the $10 million stock issue was undertaken only to improve DTRs Based on the elasticity of demand and its response to the price change, the demand curveDemand CurveDemand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. Monopolists are not allocatively efficient, because they do not produce at the quantity where P = MC. D) There is more than one firm in the industry. b) are few in number When there are two firms, the market structure is called duopoly, The number of buyers will be quite large as in other market models, If the products of all firms are homogeneous, then it is called , If the products are differentiated, then it is called , The nature of products of the firms is crucial in making price and output decisions. B) is not; to comply when the other firm cheats and to cheat when the other firm complies a) Its demand curve is downward-sloping a) Affect profits and influence the profits of rival firms The presence of a small number of companies in an oligopoly market structure makes it highly concentrated. 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. a) Import competition d) Its marginal revenue curve would consist of two segments a) The same as monopolistic competition 6) Wal-Mart follows the kinked demand curve model of oligopoly. e) It could be downward sloping or kinked. c) price leadership; cartel 5. b) The possibility of price wars diminishes, but profits might be lower. ECO-FINALS_LESSON-1 - Read online for free. 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." $4. Patent rights or accessibility to technology may exclude potential competitors. C) 2. Even though the products of companies A and B are similar, there must be something that distinguishes them. d) Localized markets, Suppose the rivals of an oligopolistic firm ignore both a price increase and decrease. E) other firms will not raise theirs. The need to spend a huge amount of money on name recognition and market reputation may discourage entry by new firms. B) both firms comply with the agreement. A) price. C) changes in the output of any member firms will have no impact on the market price. Experts are tested by Chegg as specialists in their subject area. They are In short,AI oligopoly is all set to shape the market, comprising a few large AI service providers dominating and influencing others in the business. c) regulated monopoly The land is in an area zoned only for As a result, each firm obligates to adhere to pre-determined price and quantity/output levels to maximize revenue. List the three steps followed under the gross profit method of estimating inventory. Which of the following is not a characteristic of oligopoly? Each firm has a substantial share of the market supply. b) upward-sloping D) the one producer of two goods sells the goods in a monopoly market B) neither player would be willing to change his or her decision unless the other player also changes his or her decision. Marilyn *The firm's profits will be higher. d) is always kinked c) They lose most of their excess-production capability. 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. *Patents, *Preemptive pricing What is the Nash equilibrium? 31) Refer to Table 15.3.7. D) entry into the industry of rival firms will have no impact on the profit of the cartel. Lets identify the oligarchy before identifying the characteristics of an oligopoly. B) the firms may legally form a cartel. In the credit card industry, for example, Visa and MasterCard have a duopoly. ADVERTISEMENTS: This fact is recognized by all the firms in an oligopolistic industry.