3) Which one the following industries is the best example of an oligopoly? However, at this price profit of firm B is not maximized. c) Its marginal cost curve is made up of two segments b) Strategies are chosen for a single time period. E) Each firm has an incentive to cheat. D) in neither a repeated game nor a single-play game. a. The need to spend a huge amount of money on name recognition and market reputation may discourage entry by new firms. 8) Firm X is competing in an oligopolistic industry. The distinguishing characteristics of oligopoly are briefly explained below: 1. It encompasses several industries, including banking and investment, consumer finance, mortgage, money markets, real estate, insurance, retail, etc. *world trade 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. 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The Oligopoly Market: Example, Types and Features | Micro Economics The existence of oligopoly requires that a few firms are able to gain significant market power, preventing other, smaller competitors from entering the market. Patent rights or accessibility to technology may exclude potential competitors. In December, General Motors produced 6,600 customized vans at its plant in Detroit. c) it will prevent a price war You can calculate it by adding Direct Material cost, Direct Labor Cost, & Manufacturing Overhead Cost. c) competition Impure oligopoly - have a differentiated product. In such a system, determining the proportion of total product used for investment . Firm B adopts this price and sells XB(Oligopoly theory | Industrial economics | Cambridge University Press d) Localized markets, Suppose the rivals of an oligopolistic firm ignore both a price increase and decrease. C) Parliament. If this game is nonrepeated, the Nash equilibrium is A) both firms cheat on the agreement. *To obtain lower input prices CFA And Chartered Financial Analyst Are Registered Trademarks Owned By CFA Institute. A) is; all other firms act as if they are perfectly competitive B) is not; other firms can enter, which increases supply, decreases the price, and drives economic profit down to zero a. We reviewed their content and use your feedback to keep the quality high. Question: Which of the following is NOT a characteristic of an oligopoly? C) 2. d) easier. a) fewer firms than monopolistic competition. A. firms have no control over their price B. firms may sell a differentiated product C. firms have market power D. firms may sell a standardized product E. the market contains a few large products A, C In an oligopolistic market, the two types of retaliation include. Barriers to entry. . The payoffs in the table are the economic profit made by Bud and Miller. 1) A cartel is a group of firms which agree to C) specify how marginal cost is determined. About us. from a social viewpoint, monopolistic competition is better than perfect competition None of these Question 8 (1 point) A firm using advertising differs from a firm not using advertising in that the firm using advertising. b) its rivals match price increases and price decreases D) payoffs Advertising benefits society by ______. Top 5 Characteristics of an Oligopoly - EconTips *Patents, *Preemptive pricing d) can set its price and output to maximize profits. Besides, high capital requirements, licensing, patents, market demand, economies of scale, limit-pricing, and customer loyalty restrict the entry of new businesses. Some of its fundamental characteristics include the existence of a small number of firms, differentiated or homogeneous products, and barriers to entry. (Pure) Monopoly 3. a) The number of average-sized firms in an industry needed to produce sales equivalent to the four largest firms Firms in the industry make price and output decisions with an eye to the decisions and policies of other firms in the industry. characterized by the presence of a few large firms who produces C) "If only Wally and I could agree on a higher price, we could make more profits." a) greater than or equal to 40% a) over collusion What are examples of monopoly and oligopoly? d) elastic, An oligopoly firm's demand curve will be kinked if ______. A) This game has no dominant strategies. Firms in anoligopoly marketfocus on non-price competition and less innovation but ensure their brands are uniquely identifiable. Firms are profit-maximizers. d) The market contains a few large producers. 36) Refer to Table 15.3.10. 41) Refer to Table 15.3.12. B) is not; to comply when the other firm cheats and to cheat when the other firm complies Due to minimal competition, each of them influences the rest through their actions and decisions. D) Bud has a dominant strategy but Miller does not. D) the one producer of two goods sells the goods in a monopoly market 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. 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. C) is; the dominant firm is making an economic profit d) independently, The shape of the demand curve for an oligopolistic firm ______. E) produce the efficient quantity. Therefore, necessarily they tend to react. An oligopoly is a market structure that involves few producers and suppliers (www.oecd.org). price changes, not production costs, so it can't be b. 0) If the efficient scale of production only allows three firms to supply a market, the market is a. As a result, each firm obligates to adhere to pre-determined price and quantity/output levels to maximize revenue. *The game would temporarily move to either cell B or cell C. Furthermore, no restrictions apply in such markets, and there is no direct competition. 7) The kinked demand curve theory of oligopoly predicts that *Large capital investment A) kinked demand curve. *dominant firms Characteristics of Oligopoly - QS Study B)Firms set prices. 13) Complete the following sentence. a) Import competition Raised barriers to entry, price-making power, non-price competition, the interdependence of firms, and product differentiation are alloligopoly characteristics. B) neither player would be willing to change his or her decision unless the other player also changes his or her decision. ), Oligopolists often compete through product development and advertising instead of price because ______. 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. a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and . The characteristics of an oligopoly market or oligopolistic strategy are mentioned below: Interdependence . oligopoly, monopoly, monopolistic competition, pure competition pure competition, monopolistic competition, oligopoly, monopoly. Types of Market Structure Economists group industries into four distinct market structures: 1. E) none of the above is done. True or false: Firms in an oligopoly always produce a homogeneous product. d) Oligopolistic collusion, Compared to monopolies, oligopolies ______. 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). Solved Which of the following is NOT a characteristic of an - Chegg The marginal revenue formula computesthe change in total revenue with more goods and units sold." Monopolistic Competition and Economic Efficiency, Monopolistic Competition Equilibrium| Long-run, Short-run, What is Inflation Mean | Definitions, Types, Causes, How to Calculate the GDP [Definition & Formula], Main Theories of Inflation (With Diagram), Indifference Curve Q&A [Download Indifference Curve Pdf]. C) Miller has a dominant strategy but Bud does not. Which of the following is not a characteristic of an oligopoly? Marilyn c. Competing firms can enter the industry easily. Many firms b. Assignment 7.pdf - Principles of Microeconomics Instructor: 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. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. 6) According to the kinked demand curve theory of oligopoly, at the quantity corresponding to the kink, the firm's You can calculate it by adding Direct Material cost, Direct Labor Cost, & Manufacturing Overhead Cost. A) specify the technology of production. However, too much price decrease can lead to a price warPrice WarA price war is a competition among the competitors of the business in lowering the price of their products to gain an advantage over their competitors in price and capture a greater market share. 12) Because an oligopoly has a small number of firms Oligopoly Models: 1. c) threatens d) Firms choose strategies at the same time. 1. C) independence of firms. D) assumes that competitors will match price cuts and ignore price increases. Experts are tested by Chegg as specialists in their subject area. A) Each firm faces a downward-sloping demand curve. 3) The Nash equilibrium for a sequential game in a contestable market with locked-in first stage prices results in When the number of firms in an oligopolistic industry increases from 3 to 10, it is ______ to collude. 5) Which one of the following is not a feature common to all games?