a) price changes occur slowly Suppose that one of the two firms decided to reduce the price of its product by some amount resulting 20 % increase in its sales. 8) 8)Which is not a characteristic of oligopoly? D) the four-firm concentration ratio for the industry is small. Which of the following is NOT a characteristic of an oligopoly? Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. a) By decreasing total suppliers It is assumed that all of the sellers sellidentical or homogenous products. 8) A weakness of the kinked demand curve theory of oligopoly is that it does not A) behave competitively. *Preemptive pricing 14) A duopoly occurs when ________. Greater the number of firms, the higher the degree of interdependence. E) potential entrants taking all the business away from existing firms. 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. Oligopolistic behavior implies that oligopolists prefer competition ______. Wal-Mart's marginal cost of a flat panel TV has fallen, and as a result Wal-Mart will ________. 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. Raised barriers to entry, price-making power, non-price competition, the interdependence of firms, and product differentiation are alloligopoly characteristics. Firms are profit-maximizers. C) average total cost. chapter 26 oligopoly Flashcards | Quizlet Consequently, the output and pricing policies of a particular company can affect market conditions. For example, it has been found out that insulin and the electrical industry are highly oligopolist in the US. *It eliminates competition among firms. e) increasing search time. D) in neither a repeated game nor a single-play game. c) price leadership; cartel Established firms in the market may take strategic actions to prevent new entries. A duopoly is Use the figure below to answer the following question. b) Demand is highly elastic below the going price In doing so, they reduce production and increase prices, a phenomenon called collusion. 5. The concentration ratio measures the market share of the. The land is in an area zoned only for Determinateness of demand curve is a part of law of demand and does not fall in oligopoly. The concept serves to be useful for companies focusing on multiple product lines and operating more than one business unit at a time. B) neither player would be willing to change his or her decision unless the other player also changes his or her decision. View full document. d. 2. . Impure because have both lack of Which of the following statements correctly describes Dr. Smith's strategy given what Dr. Jones may do? The more concentrated a market is, the more likely it is to be oligopolistic. Advertising can persuade consumers to pay higher prices for products that are well _____ (one word) instead of purchasing unadvertised products with lower prices. 6) Wal-Mart follows the kinked demand curve model of oligopoly. It is used as one of the strategies to increase the business firm's revenue and increase the market share.read more. And that is what turns out to be the unique selling proposition (USP) of the respective brands in the oligopolistic industry. E) more elastic than the demand just above the price at the kink. 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. B) both can earn an economic profit in the long run. A) a natural monopoly. The profit-maximizing price of firm B is PB(>PA) and the quantity is Xbe. Production Cost is the total capital amount that a Company spends in producing finished goods or offering specific services. Two different industries can have the same the four-firm concentration ratio, yet the amount of monopoly power of each of the firms in the two industries can be drastically different. c) inflexible B) interdependence of firms. c) They move leftward and upward to a higher point on the average-total-cost curve. The policy implementation process has not taken in to account the life of rural peasants living in vicinity of cities. c) it will prevent a price war When the number of firms in an oligopolistic industry increases from 3 to 10, it is ______ to collude. 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We unlock the potential of millions of people worldwide. C) perfectly elastic. But in practice, there are several barriers to entre which make it quite difficult for the new firms to join the industry or market. A)Each firm faces a downward -sloping demand curve. Your email address will not be published. In oligopoly market there are? Explained by Sharing Culture from chapter 12 ^-^, What is the only stable outcome in a payoff matrix? Oligopoly is an important form of imperfect competition. is the demand curve for taxi rides in a town, and, 14) Refer to Figure 14.1.1. b) Mutual interdependence When this structure is in place for an economy, then only a small number of producers, distributors, and sellers interact with the customer base to distribute items. What is it called when firms reach a verbal or tacit agreement with rivals about price in a social setting like the golf course? The need to spend a huge amount of money on name recognition and market reputation may discourage entry by new firms. b) There are barriers to entry into the market. C) both have MR curves that lie beneath their demand curves. c) Its marginal cost curve is made up of two segments C) The sales of one firm will not have a significant effect on other firms. 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. These firms are large enough that their quantity influences the price and so impacts their rivals. 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. Pure (Perfect) Competition 2. b) depends on the firm's cost structure D) firms in perfect competition. Any change in either of them will affect the quantity/output sold by a producer. O D. Some barriers to entry. *To decrease monopoly power And rest of the businesses or minor players follow the same. It is one of the four market structures that include perfect competition, monopoly, and monopolistic competition. *Prohibit the entry of new rivals. We are dedicated to providing you with the very best in economics knowledge, with an emphasis on microeconomics and macroeconomics. 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 . The market has been shared equally by firms A and B, The cost of firm A is lower than firm BProfit maximizing the output of firms A is XA and the price is PA. Firm B adopts this price and sells XB(=XA) amount. CFA And Chartered Financial Analyst Are Registered Trademarks Owned By CFA Institute. read more rather than lower prices to gain profits and market share. c) may be less desirable because they are not regulated by government to protect consumers It is calculated by dividing the change in the costs by the change in quantity. While adopting the leaders price, if firm B supplies less amount than XB which needs to maintain the equilibrium price, the leader will push to a non-profit maximizing position. Pure (Perfect) Competition. $15. If productivity can be increased to $0.11 vans per labor hour, how many hours would the average laborer work that month? 6. d) The market contains a few large producers. ECON 1001: Chapter 14 (Oligopoly and Strategic Behavior) - Quizlet 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. E) a cartel. Hence, undoubtedly it will react to the price reduction decision. b) Lower prices, but greater output If this game is nonrepeated, the Nash equilibrium is A) both firms cheat on the agreement. c) conveying information to consumers a) depends on the actions of rivals to price changes *To increase control over the product's price Which of the following is not a characteristic of an oligopoly? The other two share the rest (20%). 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]. Why is collusion desirable to oligopolistic firms? . *It lowers search costs of information for consumers. In an oligopoly, a few dominant brands offer most of the products and services and make significant decisions on behalf of the rest.

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