9) Which is not a characteristic of oligopoly? One of theoligopoly characteristicsis the focus of its members on improving the product quality or offering benefits to make their brand unique. c) By changing pricing strategies C. Some market power. What does a demand curve look like for an oligopolistic firm? A dominant-bank oligopoly confronting a competitive fringe There are two sets of banks: dominant banks and fringe banks. Pure (Perfect) Competition 2. B) potential entrants entering and incurring economic loss. Which of the five do you feel is the most important? The concentration ratio measures the market share of the. Either way, Id like to hear from you. Advertising benefits society by ______. b) kinked demand d) achieve greater allocative efficiency but lesser productive efficiency, c) give the appearance of increased competition Which is the simple form of oligopoly market? A 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. C) the HHI for the industry is small. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright 2023 . E) cheat on each other. C. Some market power. b) high to receive a payout of $15 Four characteristics of an . Economists identify four types of market structures: (1) perfect competition, (2) pure monopoly, (3) monopolistic competition, and (4) oligopoly. A market is deemed oligopolistic or extremely concentrated when it is shared between a few common companies. The most important model of oligopoly is the Cournot model or the model of quantity competition. *The firm is failing to produce at the profit-maximizing output. $4. $1. d) greater than or equal to 60%, How can oligopolistic firms influence their profits and the profits of their rivals? A) "I am producing extra widgets, even though it costs me short-run profits, to stop Wally's Widgets from expanding into my market." It encompasses several industries, including banking and investment, consumer finance, mortgage, money markets, real estate, insurance, retail, etc. B) a market where two firms compete for profit and market share. Which of the following is NOT a characteristic of an oligopoly? 8) Firm X is competing in an oligopolistic industry. Because of their large size and minimal competition, each firm in an oligopoly market structure influences the others. Then the large firm may consider the other two firms are too small, hence ignore their reactions while taking decisions. A small number of sellers. a) over collusion b) Strategies are chosen for a single time period. E) a cartel. A) a natural monopoly. And rest of the businesses or minor players follow the same. You can calculate it by adding Direct Material cost, Direct Labor Cost, & Manufacturing Overhead Cost. In December, General Motors produced 6,600 customized vans at its plant in Detroit. 3) Which one the following industries is the best example of an oligopoly? 5.3.5 Apply Concepts of Oligopoly and Oligopoly Models .pdf. c) kinked *Prohibit the entry of new rivals, *Reduce uncertainty C) a perfectly competitive market. Why do the elements of structure, such as work specialization, formalization, span of control, chain of command, and centralization, have a tendency to change together? 13) Complete the following sentence. 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. For an industry to be considered an oligopoly the four-firm concentration ratio must be ______. As a result, both brands consistently work on the design, user interface, camera, and other aspects of their smartphones to make sure customers stick to their brand. E) marginal revenue curve is upward sloping. C) strategies What are the 4 characteristics of oligopoly? c) may be less desirable because they are not regulated by government to protect consumers 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. c) regulated monopoly D) a prisoner has no incentive to confess to his crime, and stands a greater chance of not going to prison. *It eliminates competition among firms. Gentleman's agreements are a type of covert collusion, occurring in social settings where a product's _____ is agreed upon and market shares are determined by _____ competition. 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. Also, they rely on free-market forces to earn higher profits than a competitive market. Which one of the following is the most important reason? A) potential entrants entering and making monopoly profit. 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. 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. C) both have MR curves that lie beneath their demand curves. It encompasses several industries, including banking and investment, consumer finance, mortgage, money markets, real estate, insurance, retail, etc.read more is in progress, the automobile industry has already introduced AI-powered self-driving cars. c) conveying information to consumers 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. D) a firm in perfect competition. Brand reputation, company size, and minimal completion make decision-making crucial and influential across the group. True or false: A cartel abides by a formally written agreement that specifies the output and price of each member firm and is a form of overt collusion. Business Economics Consider a Cournot oligopoly with n = 2 firms. (Enter one word for each blank. d) cost leadership. a) inelastic Because of this, every firm takes decisions very carefully by considering the possible reactions of the rival firms. For example, an industry with a five-firm concentration ratio of greater than 50% is considered an oligopoly. *Diseconomies of scale What are examples of monopoly and oligopoly? D) the four-firm concentration ratio for the industry is small. The four-firm concentration ratio is based on the ___. For example, when a government grants a patent for an invention to one firm, it may create a monopoly. A) collusion of the participants leads to the best solution from their point of view. b) Localized markets Use the figure below to answer the following question. D) increase the amount they produce. The competing firms are few in number but each one is large enough so as to be able to control the total industry output and a moderate. *The game would eventually end in the Nash equilibrium (cell A). That means higher the price, lower the demand. A) a firm in an oligopoly market. Each firm is so large that its actions affect market conditions. *The firm's demand curve will shift further to the left. Oligopoly as a market structure is distinctly different from other market forms. c) threatens B) a market where two firms compete for profit and market share. *Prohibit the entry of new rivals. A non-collusive oligopoly refers to a market situation where the firms compete with each other rather than cooperating. C) lower the price of their products. E) only when there is no Nash equilibrium. d) is always kinked C) average total cost. 0) If the efficient scale of production only allows three firms to supply a market, the market is a. b) Affect profits without influencing the profits of rival firms The key characteristics of an oligopoly market structure include: Few firms : There are only a few firms in the market, which makes it easy for the firms to coordinate their behavior and to reach . ), Which of the following is true about the oligopolist if rivals match a price cut but ignore a price increase? 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. 1) In the dominant firm model of oligopoly, the smaller firms behave as Which of the following is not a characteristic of an oligopoly? 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). Furthermore, no restrictions apply in such markets, and there is no direct competition. d) independently, The shape of the demand curve for an oligopolistic firm ______. c) Localized markets A) there are only two producers of a particular good competing in the same market c) competition what are the 5 characteristics of an oligopoly? E) equilibrium price and quantity will be insensitive to small demand changes. B) perfectly inelastic demand. You may also have a look at the following articles , Your email address will not be published. C) independence of firms. c) product development and advertising are relatively inexpensive The value denotesthe marginalrevenue gained. Oligopolies are typically composed of a few large firms. b) are always less efficient b) By increasing recruiting expenses c) Blue jean designer E) Dr. Smith does not advertise if Dr. Jones advertises. c) They achieve allocative efficiency because they produce at minimum average total cost. ENGL1190_V0854_2023WI_Communications23.docx. Marketers highlight the distinguishing features in the product commonly through packaging or a good design, which helps communicate the benefitting factors to the shoppers.read more. What are the four characteristics of market structure? Firms are more likely to cheat on a collusive agreement when the economy is experiencing a _____ (Enter one word). B) rivalry among a large number of rivals leads to lower overall profit. *The game would eventually end in either cell B or cell C. d) Mutual interdependence. Impure because have both lack of It determines the law of demand i.e. D) There is more than one firm in the industry. D) marginal revenue curve is discontinuous. 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. b. Which of the following is not a characteristic of an oligopoly? The main Characteristics of oligopoly are as follows: A few sellers There will be a few sellers in an oligopoly. 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. d) straight and steep b) The number of employees in an industry who ever have or are currently working for one of the four largest firms B) interdependence of firms. d) The firms in the industry are interdependent. *Patents, Which are reasons that that firms merge? *To decrease monopoly power a. The marginal revenue formula computesthe change in total revenue with more goods and units sold." 41) Refer to Table 15.3.12. c) All oligopolists' or imperfect competitors' demand curves are down-sloping because they are price makers. the breakkkk, The fact that industry concentration may be overstated because the four-firm concentration ratio only accounts for production within the United States represents what kind of shortcoming with the four-firm concentration ratio? 5) Which one of the following characteristics applies to oligopolistic markets? Oligopolists do not stress competing with each other on the pricing front. b) are few in number So when an oligopolist decreases prices to increase output, others follow the path. e) Firms may sell a differentiated product. It is assumed that all of the sellers sellidentical or homogenous products. B) total revenue. The amount of time (in seconds) needed to complete a critical task on an assembly line was measured for a sample of 50 assemblies. A characteristic found only in oligopolies is A) break even level of profits. It is assumed that all of the sellers sellidentical or homogenous products.read more, monopoly, and monopolistic competition. . Oligopolyis a market structure C)The sales of one firm will not have a significant effect on other firms. c) The outcomes for all firms are positive. E) None of the above. E) A and C. 8) A merger is unlikely to be approved if ________. b) strengthens E) the firms are interdependent. Social Studies, 22.06.2019 00:00. E) All of the above. Each firm is so large that its actions affect market conditions. 2003-2023 Chegg Inc. All rights reserved. Marginal revenue = Change in total revenue/Change in quantity sold. D) Dr. Smith advertises only if Dr. Jones advertises. B) both can earn an economic profit in the long run. A) is; to comply regardless of the other firm's choice Collusion becomes more difficult as the number of firms ____. a) low to receive a payout of $15 c. Competing firms can enter the industry easily. a) prices; uncertainty; increase The firms produce differentiated products. b) They achieve productive efficiency because their marginal revenue equals marginal cost. e) straight the students used balls . The concentration ratio is a tool that measures the market share leading companies have in an industry. A(n) _______ (Enter one word) is a market dominated by a few large producers of a homogeneous or differentiated product. a) The possibility of price wars diminishes and profits are maximized. B) This game has no Nash equilibrium. E) None of the above. d) The advertising model, To reduce uncertainty or increase profits, oligopolists may change their prices ______. Oligopoly refers to a market situation or a type of market organisational in which a few firms control the supply of a commodity. Oligopoly is an important form of imperfect competition. a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and . C) equilibrium price will be sensitive to small cost changes but quantity will not. 12) Which one of the following quotations best describes the kinked demand curve model of oliogopoly? Oligopolists in an oligopolisticmarket structure agree not to raise their prices but match only price cuts to avoid price rigidity. b) There are barriers to entry into the market. B) Other firms will enter the industry. a) Import competition *To increase control over the product's price Pure oligopoly - have a homogenous product. 6) Wal-Mart follows the kinked demand curve model of oligopoly. *To obtain lower input prices As a result, the implementation of the policy has been marginalizing the rural settled peasant . Which one of the following observations is correct? 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. d) elastic, An oligopoly firm's demand curve will be kinked if ______. d) Its marginal revenue curve would consist of two segments b) It will always be downward sloping because it is a price maker. See more documents like . The distinguishing characteristics of oligopoly are briefly explained below: 1. A) costs, prices, profit, and strategies. Monopolists are not allocatively efficient, because they do not produce at the quantity where P = MC. Many firms b. c) Dominant firms Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. They do so through collusion that results in higher prices and fewer production or product choices for customers. B) the firms may legally form a cartel. Non-Collusive Oligopoly-Sweezy's Kinked Demand Curve Model (Price-Rigidity) Usually, in Oligopolistic markets, there are many price rigidities. 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. *To increase market share Which statement is true about oligopolies? What are the 4 characteristics of oligopoly? How oligopolists react to the price change by one firm can be best understood with the downward-sloping Kinked demand curve. E) entry into the industry of rival firms will raise cartel profit as long as the new firms join the cartel. 1) All games share four common features. *Ownership and control of raw materials However, at this price profit of firm B is not maximized. B. 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. C) Miller has a dominant strategy but Bud does not. A game that is played more than once between rivals is a ____ (Enter one word) game. 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. The control of oligopolists over specialized inputs, such as resources, price, and production, makes it difficult for a new firm to survive. D) potential entrants not entering the market. *Increase profits *interindustry competition 1. *increasing sales and output All firms stick to what has been decided, thereby ensuring price stability in the sector. 8) A weakness of the kinked demand curve theory of oligopoly is that it does not corporations president in exchange for some land just before the negotiations with lenders began. D) the one producer of two goods sells the goods in a monopoly market $15. In these characteristics, manufacturers usually only produce and sell one product. c) They move leftward and upward to a higher point on the average-total-cost curve. This way, Samsung and Nokia ensure non-price competition by enhancing core capabilities to build a loyal customer base. ratio. The marketers of Budweiser Light beer and Miller Lite beer must decide whether or not to offer new advertising campaigns promoting their products. CFA Institute Does Not Endorse, Promote, Or Warrant The Accuracy Or Quality Of WallStreetMojo. c) costs; uncertainty; increase c) have no rivals c) Firms' advertising decisions are interdependent. The equilibrium ________ a dominant strategy equilibrium because the strategy in this game is for a firm ________. 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. a) They do not achieve allocative efficiency because their average total cost exceeds price. A) in a single-play game or a repeated game. c) sales of the largest firms in an industry The firms comprise an oligopolistic market, making it possible for already-existing smaller businesses to operate in a market dominated by a few. A) Each firm has an incentive to collude. It is used as one of the strategies to increase the business firm's revenue and increase the market share.read more. The core competencies in business refer to its resources and unique fundamental capabilities that distinguish it from market competitors.