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It is used as one of the strategies to increase the business firm's revenue and increase the market share.read more. *manipulating consumer preferences Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. A) Dr. Smith advertises no matter what Dr. Jones does. d) independently, The shape of the demand curve for an oligopolistic firm ______. A) average total cost curve is discontinuous. Which one of the following observations is correct? c) may be less desirable because they are not regulated by government to protect consumers A) "I am producing extra widgets, even though it costs me short-run profits, to stop Wally's Widgets from expanding into my market." C) the good produced in the market has been deemed a necessity C) strategies Share with Email, opens mail client 11) Once a cartel determines the profit-maximizing price, What are the 4 characteristics of oligopoly? b) interindustry competition 5. A Computer Science portal for geeks. A) there are only two producers of a particular good competing in the same market C) independence of firms. A) potential entrants entering and making monopoly profit. C) there are numerous producers of two goods competing in a competitive market Increasing returns to scale is a term that describes an industry in which the rate of increase in output is higher than the rate of increase in inputs. A. cutting prices 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 dominant-bank oligopoly confronting a competitive fringe There are two sets of banks: dominant banks and fringe banks. *The firm's profits will be lower. Each optometrist can choose to advertise his service or not. 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. a) Import competition 16) A monopolistically competitive firm is like an oligopolistic firm insofar as A) both face perfectly elastic demand. The number of suppliers in a market defines the market structure. B) a market where two firms compete for profit and market share. Which of the following is characteristic of oligopoly, but not of monopolistic competition? b) product development and advertising are relatively difficult to copy 6) In the prisoners' dilemma with players Art and Bob, each prisoner would be best off if A) both prisoners confess. D) potential entrants not entering the market. a) L-shaped a) The same as monopolistic competition B) total revenue. Save my name, email, and website in this browser for the next time I comment. What are three models used to study pricing and output by oligopolies? 14) A duopoly occurs when ________. D) firms in perfect competition. e) straight. a) They move downward and to the right to a lower operating point on the average-total-cost curve. a. What does a demand curve look like for an oligopolistic firm? O B. a. E) produce the efficient quantity. C) is; to cheat regardless of the other firm's choice b) are less efficient because they are often regulated by the government Oligopoly is one of the four market structures and identified by a small number of big businesses operating in a particular industry. It also means that each firm must be aware of the reaction of others to their actions. So when an oligopolist decreases prices to increase output, others follow the path. D. Th; Which of the following is a characteristic of an oligopoly market structure? Economics questions and answers. a) gentleman's agreement c) price leadership E) other firms will not raise theirs. D) All of the above. A) Strategic Independence *It helps reduce demand for material products. a) They may produce homogeneous or differentiated products. The amount of time (in seconds) needed to complete a critical task on an assembly line was measured for a sample of 50 assemblies. Question: Which of the following is NOT a characteristic of an oligopoly? E) specify what happens if costs change. homogeneous or differentiated products i. B) "Every time Sparrow's Donuts has a donut sale, so does Tim Horton's." 300 laborers were employed at the plant that month. Four characteristics of an . In an oligopoly, dominant market players are influential enough to decide on the price of products and services. A(n) _______ (Enter one word) is a market dominated by a few large producers of a homogeneous or differentiated product. E) is; to comply when the other firm cheats and to cheat when the other firm complies. They may produce homogeneous products or differentiated products. d) The firms in the industry are interdependent. B) each member will face the temptation to cheat on the cartel price to increase its sales and profit. Pure because the only source of market power is lack of competition. For an industry to be considered an oligopoly the four-firm concentration ratio must be ______. B. It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. However, at this price profit of firm B is not maximized. For example, the existing firms might threaten to reduce the price drastically if entry occurs. 21) It is difficult to maintain a cartel for a long period of time. What happens to oligopolistic firms when a recession occurs? d) They do not achieve allocative efficiency because their price exceeds marginal cost. E) A and C. 8) A merger is unlikely to be approved if ________. $3. C) Trick cheats, while Gear complies with the agreement. (Enter one word per blank. Established firms in the market may take strategic actions to prevent new entries. C) firms in monopolistic competition. d) The advertising model, To reduce uncertainty or increase profits, oligopolists may change their prices ______. Consider a simple case of three firm oligopoly. a) necessary d) achieve greater allocative efficiency but lesser productive efficiency, c) give the appearance of increased competition OA. C) a perfectly competitive market. Oligopoly Models: 1. D. El desempleo voluntario hace que no se produzca el crecimiento econmico. In an oligopoly, a few dominant brands offer most of the products and services and make significant decisions on behalf of the rest. b. e) Price leadership model, a) Kinked-demand curve model Interdependence: The foremost characteristic of oligopoly is interdependence of the various firms in the decision making. B) raise the price of their products. D) Consumers will eventually decide not to buy the cartel's output. E) entry into the industry of rival firms will raise cartel profit as long as the new firms join the cartel. B) a contestable market. In the credit card industry, for example, Visa and MasterCard have a duopoly.read more. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. So here we can see a one-way interdependence pattern. 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. A) kinked demand curve. *Large capital investment As a result, the implementation of the policy has been marginalizing the rural settled peasant . E) potential entrants taking all the business away from existing firms. A) is; to comply regardless of the other firm's choice The other two share the rest (20%). Required fields are marked *. The more concentrated a market is, the more likely it is to be oligopolistic. B) interdependence of firms. Demand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. Such companies have complete control of the market, earning high profits and gains in a specific sector or service. Based on the figure, if one firm cheats on the collusive agreement it can increase its payoff by Oligopoly is a market structure characterized by a few firms. Keep its price constant and thus increase its market share B. Without collusion, if a firm incorrectly assumes that its rivals will charge the same price but its rivals actually charge a lower price, the firm's demand curve will shift to the ____. 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. 13) A tit-for-tat strategy can be used E) cheat on each other. Barriers to entry. Marginal costMarginal CostMarginal 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 includes decisions made in concentrated markets, such as product prices, quality standards, and production planning. That is, the firm is myopic or short sighted not to learn from its past mistakes and take d 1 d'1, as if it will not shift. 1) A cartel is a group of firms which agree to A) behave competitively. Determinateness of demand curve is a part of law of demand and does not fall in oligopoly. Examples of oligopolies Car industry - economies of scale have caused mergers so big multinationals dominate the market. d. 2. . d) Interindustry competition, Which are barriers to entry in both monopolies and oligopolies? c) Dominant firms Prisoners' dilemma describes a case where Answer: An oligopoly is an industry which is dominated by a few firms. A type of implicit understanding used by oligopolists to coordinate prices without engaging in outright collusion is known as ______. C) both have MR curves that lie beneath their demand curves. The most important model of oligopoly is the Cournot model or the model of quantity competition. c) through collusion C) Firms in the cartel will want to raise the price. The characteristics of oligopoly include interdependence, product differentiation, high barriers to entry, uncertainty, price setters. 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. O D. Some barriers to entry. a) Import competition *It enhances competition and reduces monopoly power. 2) In the dominant firm model of oligopoly, the larger firm acts like *The game would eventually end in either cell B or cell C. 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 _____. D) "I have been spending extra on research and development of my new two-way widget." The policy implementation process has not taken in to account the life of rural peasants living in vicinity of cities. D) not an oligopoly. In a(n) _____ game one firm moves first, committing to a strategy and then the rival firm responds. 11) Because an oligopoly has a small number of firms. Which of the following is not a characteristic of oligopoly? *localized markets, Barriers to entry into an oligopoly most resemble those of a ______. c) horizontal or perfectly elastic a) Kinked-demand curve model 8) 8)Which is not a characteristic of oligopoly? The need to spend a huge amount of money on name recognition and market reputation may discourage entry by new firms. But the other firms act considering the interdependence. 1) All games share four common features. The payoffs in the table are the economic profit made by Bud and Miller. *The firm's profits will be lower. CFA And Chartered Financial Analyst Are Registered Trademarks Owned By CFA Institute. B) Other firms will enter the industry. Have you a question about something that I covered. 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? The firms in the oligopolistic market are having full knowledge about the market particularly about their rival firms.