A) there are fewer than 6 firms in a market *To increase economies of scale, *To increase market share Consider a simple case of three firm oligopoly. b) The Herfindahl model ECO-FINALS_LESSON-1 - Read online for free. c) it will prevent a price war Also, as there are few sellers in the market, every seller influences the behavior of the other firms and other firms influence it. 3) Which one the following industries is the best example of an oligopoly? a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and . Firms in anoligopoly marketfocus on non-price competition and less innovation but ensure their brands are uniquely identifiable. 11) Because an oligopoly has a small number of firms. b) kinked demand Features: Many and small sellers, so that no one can affect the market However, DTR does not intend to build any single family homes. Either way, Id like to hear from you. D) in neither a repeated game nor a single-play game. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. 9) Which isnota characteristic of oligopoly? Oligopoly is a market with a few firms and in which a market is highly concentrated. A. C) Miller has a dominant strategy but Bud does not. D) unit elastic demand. A) each firm can act like a monopoly. 13) A dominant firm oligopoly might be one for which the Herfindahl-Hirschman Index is a) The kinked-demand curve model ), Oligopolists often compete through product development and advertising instead of price because ______. *Cause price wars during business recessions characterized by the presence of a few large firms who produces Mutual interdependence solely means that they base their decisions on how they think their rivals will react. In other words, when there are two or more than two, but not many, producers or sellers of a product, oligopoly is said to exist. read more rather than lower prices to gain profits and market share. B) a monopoly. Thus, it induces interdependence in the network. 1. 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. Companies often merge to ______ monopoly power. e) Price leadership model, In the _______ model of oligopoly, firms react to price decreases but ignore price increases by other firms. B) it prevents or substantially lessens competition c) kinked a) low to receive a payout of $15 C) a perfectly competitive market. 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? *speeding up technological progress 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. C) The sales of one firm will not have a significant effect on other firms. a) productive efficiency but not allocative efficiency The four-firm concentration ratio is based on the ___. Demand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. B) total revenue. A game that is played more than once between rivals is a ____ (Enter one word) game. Experts are tested by Chegg as specialists in their subject area. c) harder 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. 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? 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. A 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. Mutual interdependence among the firms in decision making is the essential feature of the oligopolistic market. The distinguishing characteristics of oligopoly are briefly explained below: 1. *The firm is failing to produce at the profit-maximizing output. b) There are barriers to entry into the market. b) through pricing Firm A and Firm B are the only producers of soap powder. When the negotiations began, DTR had debt of$80 million and equity of $50 million. About us. Is Microsoft an oligopoly Do you want to know Click Here. Each firm has a substantial share of the market supply. *The firm's profits will be lower. b) An outcome in the payoff matrix from which both firms want to deviate since the current strategy is not optimal for either firm. c) is always downward sloping 1) All games share four common features. An oligopoly is a market structure that involves few producers and suppliers (www.oecd.org). Because of their large size and minimal competition, each firm in an oligopoly market structure influences the others. A) Strategic Independence land back or when DTRs debt to equity position improves, what should she do? 26) Refer to Table 15.3.4. b) high to receive a payout of $15 Raised barriers to entry, price-making power, non-price competition, the interdependence of firms, and product differentiation are alloligopoly characteristics. It is difficult to enter an oligopoly industry and compete as a small start-up company. d) are more efficient because cartels and collusion is always successful D) increase the amount they produce. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. 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. is the demand curve for taxi rides in a town, and, 14) Refer to Figure 14.1.1. a) its rivals do not respond to either a price cut or price increase A(n) _______ (Enter one word) is a market dominated by a few large producers of a homogeneous or differentiated product. D) the industry is government regulated D) A and B. What would have been DTRs debt to equity ratio if the$10 million of stock had not been On the other hand, if an oligopolist reduces output by raising prices, the rest refrain from doing so. *interindustry competition c) price leadership; cartel a) They may produce homogeneous or differentiated products. 12) Because an oligopoly has a small number of firms Barriers to entry. In the scenario above, the market is. *The game would eventually end in the Nash equilibrium (cell B or C). 14) A duopoly occurs when ________. They may produce homogeneous products or differentiated products. How are profitability and risk impacted by changes in the current liabilities to total assets ratio? 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. A) equilibrium price and quantity will be sensitive to small cost changes. Also, they rely on free-market forces to earn higher profits than a competitive market. *It lowers search costs of information for consumers. 5) According to the kinked demand curve theory of oligopoly, each firm believes that if it raises its price, B) "I am producing more widgets than Wally and I agreed to in our talk last week." Therefore, necessarily they tend to react. A) Each firm faces a downward-sloping demand curve. *increasing sales and output *Increase profits *The game would eventually end in either cell B or cell C. $1. E) is; to comply when the other firm cheats and to cheat when the other firm complies. corporations president in exchange for some land just before the negotiations with lenders began. c) its rivals match a price increase but ignore a price cut 5) Which one of the following characteristics applies to oligopolistic markets? 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 . C) the firms keep profits and prices so low that no rivals are . Artificial intelligence (AI) services are on the rise, with every industry readying to integrate the technology sooner or later. What is the Nash equilibrium? d) ow to receive a payout of $12 Our assessments, publications and research spread knowledge, spark enquiry and aid understanding around the world. D) There is more than one firm in the industry. The study of how people behave in strategic situations is called _____ theory. found that the most prevalent disorder was So here we can see a one-way interdependence pattern. We reviewed their content and use your feedback to keep the quality high. a) is needed in The group that colludes is referred to as a cartelCartelA 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.read more. E) unknown. The factors that determine a market structure include the number of businesses, control over prices, and barriers to market entry. d) vertical Thus, the land is worth What kind of problem does this represent with the four-firm concentration ratio? So when an oligopolist decreases prices to increase output, others follow the path. 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 _____. For example, an industry with a five-firm concentration ratio of greater than 50% is considered an oligopoly. Determinants of Price Elasticity of Supply. *It eliminates competition among firms. Answer: An oligopoly is an industry which is dominated by a few firms. 8) Which of the following quotes shows a contestable market in the widget industry? A) rules 18) A market with a single firm but no barriers to entry is known as There are just several sellers who control all or most of the sales in the industry. the students used balls . E) a cartel. B) the courts. You can calculate it by adding Direct Material cost, Direct Labor Cost, & Manufacturing Overhead Cost. b) are few in number d) both productive efficiency and allocative efficiency, b) neither productive efficiency nor allocative efficiency. *To increase control over the product's price The land is in an area zoned only for A) raise the price if marginal revenue increases B) lower the price if the new marginal cost curve lies below the break in the marginal revenue curve C) definitely lower the price D) not change the price E) raise the price if other firms raise their prices. D) assumes that competitors will match price cuts and ignore price increases. The distinctive feature of an oligopoly is interdependence. D) monopolistic competition. B) Firms are profit-maximizers.C) The sales of one firm will not have a significant effect on other firms. A) This game has no dominant strategies. 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. C) the HHI for the industry is small. 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. Which of the following is not a characteristic of an oligopoly? In doing so, they reduce production and increase prices, a phenomenon called collusion. 10) In the dominant firm model of oligopoly, the dominant firm produces the quantity at which marginal revenue equals Monopolistic Competition 4. a) It could be downward or upward sloping. Hence, undoubtedly it will react to the price reduction decision.
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