a) price leadership Types of Market Structure Economists group industries into four distinct market structures: 1. Demand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. An example of a pure oligopoly would be the steel industry, which has only a few producers but who produce exactly the same product. b) Interindustry competition 8) 8)Which is not a characteristic of oligopoly? Marginal revenue = Change in total revenue/Change in quantity sold. 7) Why might only a few firms dominate an oligopolistic industry? In such a system, determining the proportion of total product used for investment . d) achieve greater allocative efficiency but lesser productive efficiency, c) give the appearance of increased competition c) its rivals match a price increase but ignore a price cut C) one prisoner has no chance to be acquitted since there is no other prisoner to support his testimony. There are just several sellers who control all or most of the sales in the industry. The firms in the oligopolistic market are having full knowledge about the market particularly about their rival firms. d) Oligopolistic collusion, Compared to monopolies, oligopolies ______. A) suggests that price will remain constant even with fluctuations in demand. C) Trick cheats, while Gear complies with the agreement. (Pure) Monopoly 3. B) assumes marginal cost is constant. Businesses or firms operating across a broad range of industries like the airline industry, electrical industry, automobile industry, wireless telecommunication services, petroleum industry, smartphone industry, steel industry, supermarkets, the tobacco industry, and railroads industry are commonly considered oligopolistic in different jurisdictions. a) The possibility of price wars diminishes and profits are maximized. Also, as there are few sellers in the market, every seller influences the behavior of the other firms and other firms influence it. 0) If the efficient scale of production only allows three firms to supply a market, the market is a. Thus, each firm gains a considerable market share with minimal potential profits. 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 . E)Firms are profit -maximizers. C. Some market power. The firms comprise an oligopolistic market, making it possible for already-existing smaller businesses to operate in a market dominated by a few. The total market demand is P(Q) = 50 - 2Q, where Q is the total quantity produced by all (active) firms in the industry. c) Dominant firms Oligopoly. D) Dr. Smith advertises only if Dr. Jones advertises. b) Its demand curve is downward-sloping 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. Barriers to entry. 4) Which one of the following industries is the best example of an oligopoly? d) Its marginal revenue curve would consist of two segments, d) Its marginal revenue curve would consist of two segments Oligopoly is a market with a few firms and in which a market is highly concentrated. B) unit elastic. What is the characteristics of oligopoly? *The game would eventually end in either cell B or cell C. b) its rivals match a price cut but ignore a price increase *increasing sales and output a) purely competitive market Advertising benefits society by ______. Raised barriers to entry, price-making power, non-price competition, the interdependence of firms, and product differentiation are alloligopoly characteristics. Oligopolistic behavior implies that oligopolists prefer competition ______. A) specify the technology of production. Four characteristics of an oligopoly industry are: Few sellers. what are the 5 characteristics of an oligopoly? d) They do not achieve allocative efficiency because their price exceeds marginal cost. E) marginal cost. . Which of the following is not a characteristic of an oligopoly? E) Firms set prices. An oligopoly is a market structure with a small number of firms, none of which can keep the others from having significant influence. The policy implementation process has not taken in to account the life of rural peasants living in vicinity of cities. c) kinked In December, General Motors produced 6,600 customized vans at its plant in Detroit. D) the four-firm concentration ratio for the industry is small. An oligopoly is a market state where there is a limited amount of competition available for consumers to consider. C) the good produced in the market has been deemed a necessity Business Economics Consider a Cournot oligopoly with n = 2 firms. 5) Which one of the following is not a feature common to all games? c) game theory Characteristics: There are few firms in the market serving many consumers. B) is not; to comply when the other firm cheats and to cheat when the other firm complies d) By updating manufacturing equipment, What is the four-firm concentration ratio? *It eliminates competition among firms. a) often Firms are profit-maximizers. read more rather than lower prices to gain profits and market share. 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. a) The outcomes for all firms are negative. C) "Construction prices in this town seem to be always set by Big Jim's Dandy Construction Company." $4. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. In this market, there are a few firms which sell homogeneous or differentiated products. C) Miller has a dominant strategy but Bud does not. *To increase economies of scale, *To increase market share The amount of time (in seconds) needed to complete a critical task on an assembly line was measured for a sample of 50 assemblies. ECO-FINALS_LESSON-1 - Read online for free. D) zero. Firms in the industry make price and output decisions with an eye to the decisions and policies of other firms in the industry. Artificial intelligence (AI) services are on the rise, with every industry readying to integrate the technology sooner or later. Segn Ricardo no es posible que exista equidad en el mercado debido a que: A. found that the most prevalent disorder was A) costs, prices, profit, and strategies. Use the figure below to answer the following question. 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. The urban land lease policy is not very friendly to rural households land in general and the poor land holders in particular. debt to equity ratio and that it will be reversed whenever the presidents friend wants the d) ow to receive a payout of $12 0. A) only Bob would like to change his decision. True or false: A one-time game occurs when firms will choose their pricing strategy for today without concern about future interactions with their rivals. 31) Refer to Table 15.3.7. What are the 4 characteristics of oligopoly? What are examples of monopoly and oligopoly? c) harder Mutual interdependence solely means that they base their decisions on how they think their rivals will react. B) Dr. Smith does not advertise no matter what Dr. Jones does. E) None of the above. B) in a single-play game but not a repeated game. b) its rivals match price increases and price decreases 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. E) cheat on each other. 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. D)There is more than one firm in the industry. c) Dominant firms If so, then the firm's demand curve will be ______. d) through advertising You may also have a look at the following articles , Your email address will not be published. a) The same as monopolistic competition 11) Because an oligopoly has a small number of firms. They do it strategically so they do not lose their customers in what could be a price war. 3) The Nash equilibrium for a sequential game in a contestable market with locked-in first stage prices results in Select one: O a. there are a few firms that are mutually interdependent O b. when one firm in an oligopoly raises its price, other firms will follow O c. firms may collude in order to act like a monopoly O d. barriers to entry exist to limit the entrance of new firms What are the four characteristics of market structure? *The firm's profits will be lower. b) are always less efficient B. For a particular industry there may be a low four-firm concentration ratio since it is measured on a nationwide scale, but there can still be a local oligopoly. The profit-maximizing price of firm B is PB(>PA) and the quantity is Xbe. c) price leadership; cartel D) is not; to comply when the other firm complies and to cheat when the other firm cheats 6) According to the kinked demand curve theory of oligopoly, at the quantity corresponding to the kink, the firm's E) Bud and Miller each have a dominant strategy. A) Dr. Smith advertises no matter what Dr. Jones does. The concentration ratio is a tool that measures the market share leading companies have in an industry. The value denotesthe marginalrevenue gained. How oligopolists react to the price change by one firm can be best understood with the downward-sloping Kinked demand curve. C) 2. What happens to oligopolistic firms when a recession occurs? 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. 2) In the dominant firm model of oligopoly, the larger firm acts like a) Cartel In other words, Therefore, within the oligopoly market the "ordinary" producers must have careful preparation to follow the changes in a policy coming from the main producers. 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} E) None of the above. O D. Some barriers to entry. Nokia, however, offers Android phones with the same features and almost similar prices. c) through product development You'll get a detailed solution from a subject matter expert that helps you learn core concepts. a. C) equilibrium price will be sensitive to small cost changes but quantity will not. The factors that determine a market structure include the number of businesses, control over prices, and barriers to market entry. *manipulating consumer preferences Click the card to flip Definition 1 / 84 B. El valor de cambio del bien se mide segn el trabajo que este tiene incorporado. The labor productivity at this plant is known to have been 0.100.100.10 vans per labor-hour during that month. e) undefined, In the graph, the price elasticity of demand is highly ______ above the price of P0. D) if Bob does not change his decision, Jane would like to change hers. Based on the payoff matrix, if the two firms agreed to both follow national strategies there is an incentive for them to cheat. c) It will always be kinked because it is a price maker. e) straight. 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) All oligopolists' or imperfect competitors' demand curves are down-sloping because they are price makers. 1) A cartel is a group of firms which agree to A) behave competitively. E) none of the above. The incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. Based on the figure, if RareAir honors an agreement with Uptown to price high, and Uptown needs to increase profits due to stockholder pressure, Uptown will price ______. So go ahead and leave a comment below. always one step ahead. For example, an industry with a five-firm concentration ratio of greater than 50% is considered an oligopoly. The value denotesthe marginalrevenue gained. When the negotiations began, DTR had debt of$80 million and equity of $50 million. 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?" In a(n) _____ game one firm moves first, committing to a strategy and then the rival firm responds. C) The sales of one firm will not have a significant effect on other firms. C) firms in monopolistic competition. Why is collusion desirable to oligopolistic firms? E) specify what happens if costs change. Economists identify four types of market structures: (1) perfect competition, (2) pure monopoly, (3) monopolistic competition, and (4) oligopoly. b) By increasing recruiting expenses What are the 4 characteristics of oligopoly? c) regulated monopoly a) Kinked-demand curve model *To increase market share read more, and marginal revenue is the product price. 8) Which of the following quotes shows a contestable market in the widget industry? D) Gear cheats, while Trick complies with the agreement. 9) In the dominant firm model of oligopoly, the dominant firm faces a d) game theory. *Patents, *Preemptive pricing If one of the firms cheats on this agreement, what will happen? b) neither productive efficiency nor allocative efficiency b) Affect profits without influencing the profits of rival firms A) is; to comply regardless of the other firm's choice E) more elastic than the demand just above the price at the kink. A) 0. land back or when DTRs debt to equity position improves, what should she do? Experts are tested by Chegg as specialists in their subject area. The presidents friend constructs and sells single family homes. The concentration ratio measures the market share of the. B) marginal cost curve is discontinuous. 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) the government will impose price controls. 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. The marketers of Budweiser Light beer and Miller Lite beer must decide whether or not to offer new advertising campaigns promoting their products. c) is always downward sloping 13) Complete the following sentence. B) a market where two firms compete for profit and market share. believes that DTRs debt to equity ratio of 1.6 is probably the minimum that lenders will accept. a) kinked and steep A) a firm in an oligopoly market. E) marginal revenue curve is upward sloping. A) a natural monopoly. D) entry into the industry of rival firms will have no impact on the profit of the cartel. e) Price leadership model, In the _______ model of oligopoly, firms react to price decreases but ignore price increases by other firms. A) a market where three dominant firms collude to decide the profit-maximizing price. *Cause price wars during business recessions D) a prisoner has no incentive to confess to his crime, and stands a greater chance of not going to prison. c) its rivals ignore price increases and price decreases C) Firms in the cartel will want to raise the price. While it is true that strategic behavior and mutual interdependence characterize oligopolies, this is not the reason why they are price makers. c) Firms earn zero economic profits in the long-run. B) both firms comply with the agreement. c. Competing firms can enter the industry easily. 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. *price elasticity of demand 5.3.5 Apply Concepts of Oligopoly and Oligopoly Models .pdf. B) a market where two firms compete for profit and market share. 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. *world trade ratio. 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. Here, they focus on each other and try to exceed customer expectations in every possible way. View full document. C. Some market power. *To increase economies of scale. A) collusion of the participants leads to the best solution from their point of view. c) price leadership d) strategic theory. The existence of oligopoly requires that a few firms are able to gain significant market power, preventing other, smaller competitors from entering the market. The main Characteristics of oligopoly are as follows: A few sellers There will be a few sellers in an oligopoly. If one firm is large enough to account, which is that 80% of sales in the industry. The concept serves to be useful for companies focusing on multiple product lines and operating more than one business unit at a time. 1. Marketers highlight the distinguishing features in the product commonly through packaging or a good design, which helps communicate the benefitting factors to the shoppers. D) patents, copyrights, barriers to entry, and rules. *Diseconomies of scale Oligopoly as a market structure is distinctly different from other market forms. a) is needed in It is one of the four market structures that include perfect competition, monopoly, and monopolistic competition. Furthermore, no restrictions apply in such markets, and there is no direct competition. When members of an oligopoly react to price changes by a ____ _____ dominant firm, the model is most applicable. c) may be less desirable because they are not regulated by government to protect consumers b) Strategies are chosen for a single time period. . 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 . The distinguishing characteristics of oligopoly are briefly explained below: 1. (Figure) summarizes the characteristics of each of these market structures. Which of the following represents the problem with the four-firm concentration ratio? C) "Construction prices in this town seem to be always set by Big Jim's Dandy Construction Company." e) Firms may sell a differentiated product. a) pricing theory a) collusion; cartel Oligopoly is an important form of imperfect competition. D) monopolistic competition. A) a Competition Tribunal. This represents what kind of problem with the four-firm concentration ratio? *Large capital investment For example, when a government grants a patent for an invention to one firm, it may create a monopoly. *Reduce uncertainty Our assessments, publications and research spread knowledge, spark enquiry and aid understanding around the world. A) kinked demand curve. a) over collusion An oligopoly (from Greek , oligos "few" and , polein "to sell") is a market form wherein a market or industry is dominated by a small group of large sellers (oligopolists). E) downward-sloping demand curve with no kink. An oligopoly is a market structure that involves few producers and suppliers (www.oecd.org). It can be also called as one form. Updated: Aug 16, 2022. command economy, economic system in which the means of production are publicly owned and economic activity is controlled by a central authority that assigns quantitative production goals and allots raw materials to productive enterprises. B) raise the price of their products. What kind of game is it when firms choose their optimal pricing strategy today without worrying about possible interactions in the future? 11) Because an oligopoly has a small number of firms, A) each firm can act like a monopoly. d) The advertising model, To reduce uncertainty or increase profits, oligopolists may change their prices ______. A) Strategic Independence Prisoners' dilemma describes a case where Thus, the land is worth b) pure monopoly d) through advertising, Firms have a desire to cheat on a collusive agreement because ______. E) only when there is no Nash equilibrium. 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 What are the 4 characteristics of oligopoly? D) assumes that competitors will match price cuts and ignore price increases. OA. c) inflexible a) localized markets b) strengthens A study based on over 9,0009,0009,000 U. S. residents The land is in an area zoned only for 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." *The firm is failing to produce at the profit-maximizing output. *Ownership and control of raw materials What would have been DTRs debt to equity ratio if the$10 million of stock had not been Why does a rise in the current asset to total asset ratio result in a decline in net working capital's estimate of both profits and risk? b) demand theory B) "I am producing more widgets than Wally and I agreed to in our talk last week." We unlock the potential of millions of people worldwide. The need to spend a huge amount of money on name recognition and market reputation may discourage entry by new firms. d. 2. . C) perfectly elastic demand. A) each firm can act like a monopoly. a) are monopolies Marginal revenue = Change in total revenue/Change in quantity sold. Features: Many and small sellers, so that no one can affect the market C) if Jane does not change her decision, Bob would like to change his. E) a cartel. as the price increases, demand decreases keeping all other things equal.read more shifts. Question: Which of the following is NOT a characteristic of an oligopoly? D) 2,750. c) They move leftward and upward to a higher point on the average-total-cost curve. b) Collusive pricing model Monopolists are not allocatively efficient, because they do not produce at the quantity where P = MC. C) specify how marginal cost is determined. d) their profits and sales will rise. Which of the following is not a characteristic of oligopoly? they set up a 1 meter (100 cm) track. D) perfectly inelastic. b) Mutual interdependence If productivity can be increased to $0.11 vans per labor hour, how many hours would the average laborer work that month?