36) Refer to Table 15.3.10. d) Mutual interdependence. a) The number of average-sized firms in an industry needed to produce sales equivalent to the four largest firms C) independence of firms. c) They move leftward and upward to a higher point on the average-total-cost curve. *Increase profits B) the firms may legally form a cartel. When firm X increases its price. E) rivalry of the participants leads to the worst solution from their point of view. Marilyn is also aware that DTR issued$10 million of common stock to a long-time friend of the b) high to receive a payout of $15 In doing so, they reduce production and increase prices, a phenomenon called collusion. D) the one producer of two goods sells the goods in a monopoly market Why is collusion desirable to oligopolistic firms? B) 1. Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. B) "Every time Sparrow's Donuts has a donut sale, so does Tim Horton's." Economies of scale are the cost advantage a business achieves due to large-scale production and higher efficiency. 9) Which is not a characteristic of oligopoly? b) through pricing C) the good produced in the market has been deemed a necessity b) demand theory *The firm is failing to produce at the profit-maximizing output. always one step ahead. 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. That is, the firm is myopic or short sighted not to learn from its past mistakes and take d 1 d'1, as if it will not shift. A firm in an oligopolistic market ______. 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? a) Kinked-demand curve model Our assessments, publications and research spread knowledge, spark enquiry and aid understanding around the world. The firms produce differentiated products. a) Firms have no control over their price. b) Lower prices, but greater output So here we can see a one-way interdependence pattern. b) increasing monopoly power The main Characteristics of oligopoly are as follows: A few sellers There will be a few sellers in an oligopoly. a) Firms have no control over their price. 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. An oligopolistic firm's marginal revenue curve is made up of two segments if ______. 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 _____. This is different compared to the perfectly competitive market and the monopolistic market that consist of a large number of sellers whereas there is only one sole seller in the monopoly market. Marginal revenue = Change in total revenue/Change in quantity sold. 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. However, DTR does not intend to build any single family homes. *The firm's demand curve will shift further to the left. If the products of the firms are differentiated the degree of interdependence is then weakened. C) rules, strategies, profit, and outcome. a) The kinked-demand curve model *To increase market share What kind of game is it if the firms must choose their pricing strategies at the same time? a. small number of firms b. has some pricing power c. the firms are interdependent d. the good produced may be unique or not e. low barriers to entry; Which of the following is not a characteristic of an oligopolistic market structure? Each firm is so large that its actions affect market conditions. D) equilibrium quantity will be sensitive to small cost changes but price will not. Firms are profit-maximizers. 8) Which of the following quotes shows a contestable market in the widget industry? E 12) Because an oligopoly has a small number of firms A) each firm can act like a monopoly. a) collusion; cartel Oligopolies are typically composed of a few large firms. Impure because have both lack of A) "Gas prices in this town always go up and down together." *Preemptive pricing *Large capital investment E) an outcome. D) neither is protected by high barriers to entry. B) the firms may legally form a cartel. d) Dominant firms, What are oligopolists able to do by controlling price through collusion? c) costs; uncertainty; increase Welcome to EconTips, your number one source for all things about economics. E) potential entrants taking all the business away from existing firms. Prisoners' dilemma describes a case where 12) Because an oligopoly has a small number of firms oligopoly, monopoly, monopolistic competition, pure competition pure competition, monopolistic competition, oligopoly, monopoly. D) A and B. A) Each firm has an incentive to collude. c) Nash equilibrium 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. If this game is nonrepeated, the Nash equilibrium is A) both firms cheat on the agreement. You are free to use this image on your website, templates, etc., Please provide us with an attribution link. All right then. c) dominant firms 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. Nokia, however, offers Android phones with the same features and almost similar prices. 10) In the dominant firm model of oligopoly, the dominant firm produces the quantity at which marginal revenue equals c) The outcomes for all firms are positive. In the graph, the price elasticity of demand is ______ below the price of P0. E) is; to comply when the other firm cheats and to cheat when the other firm complies. D) products that are slightly different. 8) A weakness of the kinked demand curve theory of oligopoly is that it does not c. Competing firms can enter the industry easily. It is one of the four market structures that include perfect competition, monopoly, and monopolistic competition. (Pure) Monopoly 3. c) give the appearance of increased competition B) rivalry among a large number of rivals leads to lower overall profit. A) "I am producing extra widgets, even though it costs me short-run profits, to stop Wally's Widgets from expanding into my market." A game that is played more than once between rivals is a ____ (Enter one word) game. A) costs, prices, profit, and strategies. C) perfectly elastic demand. What are the positive effects of large oligopolists advertising? 3) Which one the following industries is the best example of an oligopoly? 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. *It lowers search costs of information for consumers. B) a contestable market. A) all members of the cartel have a strong incentive to abide by the agreed-upon price. It includes decisions made in concentrated markets, such as product prices, quality standards, and production planning. B) neither player would be willing to change his or her decision unless the other player also changes his or her decision. But the other firms act considering the interdependence. b) Mutual interdependence 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 ______. Compared to pure monopolies, oligopolies ______. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. Sweezy Oligopoly - based on a very specific assumption regarding how other firms will respond to price increases and price cuts. B) "I am producing more widgets than Wally and I agreed to in our talk last week." 11) Once a cartel determines the profit-maximizing price, d) Cost leadership model Because of their large size and minimal competition, each firm in an oligopoly market structure influences the others. The incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. characterized by the presence of a few large firms who produces A) zero economic profits in the long-run. D) increase the amount they produce. Barriers to entry. Business Economics Consider a Cournot oligopoly with n = 2 firms. 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. A) equilibrium price and quantity will be sensitive to small cost changes. d) their profits and sales will rise a) They may produce homogeneous or differentiated products. A) a natural monopoly. *To decrease monopoly power *providing misleading information B. xxx\underline{\phantom{\text{xxx}}}xxx. *The firm's profits will be higher. The distinctive feature of an oligopoly is interdependence. b) Strategies are chosen for a single time period. b) legal 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. Cost of firm A is lower than firm B Profit maximizing price and quantity of firm A is PA and XA respectively. d) straight and steep Advertising benefits society by ______. Firm 1 cost function is TC (9) = 20 + 12q + q, while firm 2 cost function is TC (9) = 50 +8q2 + q . It also means that each firm must be aware of the reaction of others to their actions. 9) Which isnota characteristic of oligopoly? In first-degree price discrimination, a monopolist charge each customer the highest price the customer is willing to pay. In an oligopoly, dominant market players are influential enough to decide on the price of products and services. The policy implementation process has not taken in to account the life of rural peasants living in vicinity of cities. Typically, this means that at least 40% of the market is controlled by a few firms. What is the Nash equilibrium? They do it strategically so they do not lose their customers in what could be a price war. A study based on over 9,0009,0009,000 U. S. residents 26) Refer to Table 15.3.4. Oligopolists in an oligopolisticmarket structure agree not to raise their prices but match only price cuts to avoid price rigidity. *The firm is failing to produce at the profit-maximizing output. A) collusion of the participants leads to the best solution from their point of view. D) Consumers will eventually decide not to buy the cartel's output. b) interindustry competition We are dedicated to providing you with the very best in economics knowledge, with an emphasis on microeconomics and macroeconomics. C) strategies c) regulated monopoly In a monopoly, only one big brand influences the entire market without any competition. The most important model of oligopoly is the Cournot model or the model of quantity competition. . B) a market where two firms compete for profit and market share.
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