which is not a characteristic of oligopoly which is not a characteristic of oligopoly

East Asian regimes tend to have similar characteristics First they are orien. Which of the following is characteristic of oligopoly, but not of monopolistic competition? The core competencies in business refer to its resources and unique fundamental capabilities that distinguish it from market competitors. *speeding up technological progress *It lowers search costs of information for consumers. a) The outcomes for all firms are negative. Click the card to flip Definition 1 / 84 c) inflexible d) Firms choose strategies at the same time. debt to equity ratio and that it will be reversed whenever the presidents friend wants the In the credit card industry, for example, Visa and MasterCard have a duopoly.read more. a) are less efficient due to competition E) none of the above is done. B)Firms set prices. a) Firms have no control over their price. Product differentiation refers to making a product look attractive and different from other products in the same class. Required fields are marked *. Either way, Id like to hear from you. d) game theory. A firm in an oligopolistic market ______. E) marginal cost. How are profitability and risk impacted by changes in the current liabilities to total assets ratio? It thus limits the competition to only those already in the group. *Ownership and control of raw materials *The firm's profits will be lower. Oligopoly is a market with a few firms and in which a market is highly concentrated. e) increasing search time. Demand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. Which of the following is not a characteristic of oligopoly? b) Localized markets D) the one producer of two goods sells the goods in a monopoly market Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. Oligopolies are typically composed of a few large firms. single family housing and would be an attractive site for single family homes. c) By changing pricing strategies a) depends on the actions of rivals to price changes O D. Some barriers to entry. d) The market contains a few large producers. An oligopoly is a market state where there is a limited amount of competition available for consumers to consider. d) Oligopolistic collusion, Compared to monopolies, oligopolies ______. A duopoly is b) OPEC An oligopolistic market exhibits the followingoligopoly features: It raises barriers for new entrants to enter into the respective sector. It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. If this occurs, then the firm's demand curve will look ______. c) kinked The firms comprise an oligopolistic market, making it possible for already-existing smaller businesses to operate in a market dominated by a few. 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 12) Because an oligopoly has a small number of firms A) each firm can act like a monopoly. c) Dominant firms About us. What kind of problem does this represent with the four-firm concentration ratio? An oligopoly in economics refers to a market structure comprising multiple big companies that dominate a particular sector through restrictive trade practices, such as collusion and market sharing. The concentration ratio is a tool that measures the market share leading companies have in an industry. The land is in an area zoned only for Experts are tested by Chegg as specialists in their subject area. C) other firms will raise their prices by an identical amount. c) price leadership; cartel It is calculated by dividing the change in the costs by the change in quantity. 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. b) are few in number In December, General Motors produced 6,600 customized vans at its plant in Detroit. a) They move downward and to the right to a lower operating point on the average-total-cost curve. a) Cartel 14) The kinked demand curve model . 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. c) allocative efficiency but not productive efficiency E) specify what happens if costs change. 3) Canada's anti-combine law is enforced by When the number of firms in an oligopolistic industry increases from 3 to 10, it is ______ to collude. A. a) purely competitive market 5) Which one of the following characteristics applies to oligopolistic markets? C) 2. 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. a) Its demand curve is downward-sloping E) None of the above. Barriers to entry. B) predict that an increase in price by one firm is accompanied by price increases of other firms if every firm experiences a large enough increase in marginal cost. Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. C) independence of firms. 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. A) each firm can act like a monopoly. C) average variable cost curve is discontinuous. 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? 5.3.5 Apply Concepts of Oligopoly and Oligopoly Models .pdf. a) Firms have no control over their price. Because of this, every firm takes decisions very carefully by considering the possible reactions of the rival firms. *It lowers search costs of information for consumers. D) neither is protected by high barriers to entry. Monopolistic Competition 4. And that is what turns out to be the unique selling proposition (USP) of the respective brands in the oligopolistic industry. The most important model of oligopoly is the Cournot model or the model of quantity competition. 12) Which one of the following quotations best describes the kinked demand curve model of oliogopoly? d) through advertising An oligopoly is an industry dominated by a few large firms. A) a natural monopoly. Though, it is rare to find pure oligopoly situation, yet, cement, steel, aluminum and chemicals producing industries approach pure oligopoly. B) each member will face the temptation to cheat on the cartel price to increase its sales and profit. Given the emergence and expected evolution of AI-driven services in various niches, it is likely that there will be a highly concentrated market devoted explicitly to the AI needs of consumers. After each player chooses his or her best strategy and sees the result, A) all members of the cartel have a strong incentive to abide by the agreed-upon price. a) Affect profits and influence the profits of rival firms So here we can see a one-way interdependence pattern. It is assumed that all of the sellers sellidentical or homogenous products.read more, monopoly, and monopolistic competition. B) is not; to comply when the other firm cheats and to cheat when the other firm complies A) is; to comply regardless of the other firm's choice *providing misleading information 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. c) Localized markets Your email address will not be published. read more rather than lower prices to gain profits and market share. The labor productivity at this plant is known to have been 0.100.100.10 vans per labor-hour during that month. Welcome to EconTips, your number one source for all things about economics. B) "Every time Sparrow's Donuts has a donut sale, so does Tim Horton's." d) The same as a monopoly, By controlling ______ through collusion, oligopolists may be able to reduce ______, ______ profits and block the entry of new rivals. It helps avoid the potential price war and price rigidity. Furthermore, no restrictions apply in such markets, and there is no direct competition. Impure because have both lack of Cost of firm A is lower than firm B Profit maximizing price and quantity of firm A is PA and XA respectively. Demand and cost differences, the number of firms in the industry, and the potential for cheating all represent _____ (one word) to collusion. b) pure monopoly 5) According to the kinked demand curve theory of oligopoly, each firm believes that if it raises its price, a) By decreasing total suppliers d) does not influence. Established firms in the market may take strategic actions to prevent new entries. So go ahead and leave a comment below. E) A and C. 8) A merger is unlikely to be approved if ________. attempts to raise $425 million to use to build apartments in a growing area of Tulsa. a) payoff a) Import competition Interdependence: The foremost characteristic of oligopoly is interdependence of the various firms in the decision making. 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. C) Trick cheats, while Gear complies with the agreement. A) behave competitively. Characteristics of an oligopoly The market has been shared equally by firms A and B The cost of firm A is lower than firm B Profit maximizing the output of firms A is XA and the price is PA Firm B adopts this price and sells XB (=XA) amount. B) the firms may legally form a cartel. E) an oligopoly. B) there are two producers of two goods competing in an oligopoly market *The firm is failing to produce at the profit-maximizing output. The number of suppliers in a market defines the market structure. The value denotesthe marginalrevenue gained. The market share of the firms is unequal. Oligopolists do not stress competing with each other on the pricing front. B) neither player would be willing to change his or her decision unless the other player also changes his or her decision. *The firm is failing to produce at the profit-maximizing output. e) straight a) its rivals do not respond to either a price cut or price increase If Marilyn believes that the $10 million stock issue was undertaken only to improve DTRs D. Th; Which of the following is a characteristic of an oligopoly market structure? c) give the appearance of increased competition 18) A market with a single firm but no barriers to entry is known as *mutual interdependence B) it prevents or substantially lessens competition 5) Which one of the following is not a feature common to all games? b) competitively What are the four characteristics of market structure? Marginal revenue = Change in total revenue/Change in quantity sold. In the credit card industry, for example, Visa and MasterCard have a duopoly. One of theoligopoly characteristicsis the focus of its members on improving the product quality or offering benefits to make their brand unique. a) localized markets For an industry to be considered an oligopoly the four-firm concentration ratio must be ______. It determines the law of demand i.e. Any change in either of them will affect the quantity/output sold by a producer. *increasing sales and output See more documents like . d) Its marginal revenue curve would consist of two segments, d) Its marginal revenue curve would consist of two segments D) monopolistic competition. Which of the following is NOT a characteristic of an oligopoly? *To increase market share b) demand theory What are the 4 characteristics of oligopoly? C) the good produced in the market has been deemed a necessity What is the characteristics of oligopoly? The need to spend a huge amount of money on name recognition and market reputation may discourage entry by new firms. E) produce the efficient quantity. as the price increases, demand decreases keeping all other things equal. In an oligopoly, dominant market players are influential enough to decide on the price of products and services. This represents what kind of problem with the four-firm concentration ratio? It determines the law of demand i.e. D) 2,750. The urban land lease policy is not very friendly to rural households land in general and the poor land holders in particular. c) They lose most of their excess-production capability. B) both prisoners deny. OA. d) are more efficient because cartels and collusion is always successful c) regulated monopoly An oligopoly in economics refers to a market structure comprising multiple big companies that dominate a particular sector through restrictive trade practices, such as collusion and market sharing. Impure oligopoly - have a differentiated product. La renta de la tierra de primera calidad ser siempre superior a la renta de la tierra de segunda categora. D) assumes that competitors will match price cuts and ignore price increases. Therefore, necessarily they tend to react. c) product development and advertising are relatively inexpensive A) only Bob would like to change his decision. The factors that determine a market structure include the number of businesses, control over prices, and barriers to market entry. d) Localized markets, Suppose the rivals of an oligopolistic firm ignore both a price increase and decrease. 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. Why Developing Countries Should Focus on International Trade? For example, when a government grants a patent for an invention to one firm, it may create a monopoly. Which of the following is not a characteristic of an oligopoly? It encourages existing brands to improve product quality and originality by instilling a sense of rivalry. 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. E) more elastic than the demand just above the price at the kink. Besides, high capital requirements, licensing, patents, market demand, economies of scale, limit-pricing, and customer loyalty restrict the entry of new businesses. $6. $3. A) suggests that price will remain constant even with fluctuations in demand. A)Each firm faces a downward -sloping demand curve. 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 C) if Jane does not change her decision, Bob would like to change his. a) low to receive a payout of $15 C) the same as a monopoly. B) a market where two firms compete for profit and market share. ECO-FINALS_LESSON-1 - Read online for free. A characteristic found only in oligopolies is A) break even level of profits. Hence, undoubtedly it will react to the price reduction decision. The firms in the oligopolistic market are having full knowledge about the market particularly about their rival firms. b) price leadership; collusion It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. 2003-2023 Chegg Inc. All rights reserved. Oligopolies are typically composed of a few large firms. c) It will always be kinked because it is a price maker. You may also have a look at the following articles , Your email address will not be published. A) price. 10) In the dominant firm model of oligopoly, the dominant firm produces the quantity at which marginal revenue equals Following are the characteristics of oligopoly: Interdependence. E) is not; frequently one of the smaller firms becomes the dominant firm, and the original dominant firm becomes less important. Which statement is true about oligopolies? 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. Which of the following is not a characteristic of an oligopoly? a) low to receive a payout of $15 d) through advertising, Firms have a desire to cheat on a collusive agreement because ______. b) potential for mergers and acquisitions A) equilibrium price and quantity will be sensitive to small cost changes. 14) A duopoly occurs when ________. c) less than or equal to 40% e) undefined, In the graph, the price elasticity of demand is highly ______ above the price of P0. E) None of the above. a) They do not achieve allocative efficiency because their average total cost exceeds price. 12) Because an oligopoly has a small number of firms b) Mutual interdependence they will make more pricing low than if they both price high. The distinctive feature of an oligopoly is interdependence. 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. The profit-maximizing price of firm B is PB(>PA) and the quantity is Xbe. C) Firms in the cartel will want to raise the price. 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. 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. 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). b) increasing monopoly power d) greater than or equal to 60%, How can oligopolistic firms influence their profits and the profits of their rivals? That means higher the price, lower the demand. 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. B) total revenue. For example, it has been found out that insulin and the electrical industry are highly oligopolist in the US. Types of Market Structure Economists group industries into four distinct market structures: 1. They may produce homogeneous products or differentiated products. corporations president in exchange for some land just before the negotiations with lenders began. a) kinked and steep Social Studies, 22.06.2019 00:00. Based on her experience with past negotiations, Marilyn knows that lenders are concerned about DTRs debt to equity What are the positive effects of large oligopolists advertising? In these characteristics, manufacturers usually only produce and sell one product. 6) Wal-Mart follows the kinked demand curve model of oligopoly. Each firm has a substantial share of the market supply. 3) The Nash equilibrium for a sequential game in a contestable market with locked-in first stage prices results in Some of its fundamental characteristics include the existence of a small number of firms, differentiated or homogeneous products, and barriers to entry. Determinants of Price Elasticity of Supply. A) a Competition Tribunal. In the scenario above, the market is. An oligopoly exists when a market is dominated by a small number of suppliers or firms. c) Firms earn zero economic profits in the long-run.