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

e) straight 3) The Nash equilibrium for a sequential game in a contestable market with locked-in first stage prices results in Firm 1 cost function is TC (9) = 20 + 12q + q, while firm 2 cost function is TC (9) = 50 +8q2 + q . Oligopoly characteristics include high barriers to new entry, price-setting ability, the interdependence of firms, maximized revenues, product differentiation, and non-price competition. c) harder It helps avoid the potential price war and price rigidity. Interdependence: The foremost characteristic of oligopoly is interdependence of the various firms in the decision making. 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. *Increase profits *world trade An oligopoly is a market state where there is a limited amount of competition available for consumers to consider. $6. Instead, they try different approaches, such as rewarding customers for their loyalty, differentiating their product offerings, providing sales promotion schemes, acting as sponsors, etc. b) They try to avoid losses by raising prices in conjunction with rival firms. Pure (Perfect) Competition. C) firms in monopolistic competition. . . In third-degree price discrimination happens when customers are segregated by . 36) Refer to Table 15.3.10. Oligopoly as a market structure is distinctly different from other market forms. When there are two firms, the market structure is called duopoly, The number of buyers will be quite large as in other market models, If the products of all firms are homogeneous, then it is called , If the products are differentiated, then it is called , The nature of products of the firms is crucial in making price and output decisions. Greater the number of firms, the higher the degree of interdependence. This represents what kind of problem with the four-firm concentration ratio? E) none of the above. 300 laborers were employed at the plant that month. C) rules, strategies, profit, and outcome. c) The percentage of total industry sales accounted for by the four largest firms a) prices; uncertainty; increase As in an oligopoly market, the decision of one firm influences the process and working of another firm. Marilyn Cox is the office manager for DTR Inc. DTR constructs, owns, and manages apartment d) elastic, An oligopoly firm's demand curve will be kinked if ______. Pure or Perfect Oligopoly: If the firms produce homogeneous products, then it is called pure or perfect oligopoly. b) Mutual interdependence 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) upward-sloping 1) In the dominant firm model of oligopoly, the smaller firms behave as 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. It encourages existing brands to improve product quality and originality by instilling a sense of rivalry. The firms comprise an oligopolistic market, making it possible for already-existing smaller businesses to operate in a market dominated by a few. c) Dominant firms E) unknown. The presence of a small number of companies in an oligopoly market structure makes it highly concentrated. Oligopoly is said to prevail when there are few firms or sellers in the market producing or selling a product. Marginal revenue = Change in total revenue/Change in quantity sold. B) the firms may legally form a cartel. E) produce the efficient quantity. a) their prices will be unchanged An oligopoly is an industry dominated by a few large firms (Few sellers supplying, many buyers). C) 2. 5) Which one of the following characteristics applies to oligopolistic markets? Four characteristics of an oligopoly industry are: Few sellers. 1) All games share four common features. In second-degree price discrimination the monopolist offers a menu of quantity-based pricing options designed to induce customers to self-select based on how highly they value the product. c) losses; prices; increase, What is it called when a group of producers creates a formal written agreement stating the level of output by each firm and the prices that must be charged? *To increase economies of scale. C) the same as a monopoly. Which of the following is characteristic of oligopoly, but not of monopolistic competition? d) greater than or equal to 60%, How can oligopolistic firms influence their profits and the profits of their rivals? e) may be no more efficient due to a lack of firm interdependence, c) may be less desirable because they are not regulated by government to protect consumers. b) its rivals match a price cut but ignore a price increase d) Mutual interdependence. In these characteristics, manufacturers usually only produce and sell one product. *Preemptive pricing In a(n) _____ game one firm moves first, committing to a strategy and then the rival firm responds. 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 . It is calculated by dividing the change in the costs by the change in quantity. They do so through collusion that results in higher prices and fewer production or product choices for customers. 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. *To decrease monopoly power E) None of the above. 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. E) the firms are interdependent. Without collusion, if a firm incorrectly assumes that its rivals will charge the same price but its rivals actually charge a lower price, the firm's demand curve will shift to the ____. A. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. d) Firms choose strategies at the same time. A) a market where three dominant firms collude to decide the profit-maximizing price. It is assumed that all of the sellers sellidentical or homogenous products.read more, monopoly, and monopolistic competition. b) its rivals match price increases and price decreases C) is; to cheat regardless of the other firm's choice Their differences can range from. c) regulated monopoly E) a cartel. b) Collusive pricing model An oligopoly is an industry dominated by a few large firms. issued for the land? Four characteristics of an . land back or when DTRs debt to equity position improves, what should she do? D) if Bob does not change his decision, Jane would like to change hers. 1) The market structure in which natural or legal barriers prevent the entry of new firms and a small number of firms compete is, 2) Suppose that industry A consists of four firms who collectively control 96 percent of total sales in the market. Which of the following is not a characteristic of an oligopoly? Experts are tested by Chegg as specialists in their subject area. A) suggests that price will remain constant even with fluctuations in demand. attempts to raise $425 million to use to build apartments in a growing area of Tulsa. E) rivalry of the participants leads to the worst solution from their point of view. B) a monopoly. e) low to receive a payout of $8. C) The sales of one firm will not have a significant effect on other firms. *Patents, Which are reasons that that firms merge? D)There is more than one firm in the industry. 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. c) Blue jean designer 1. In an oligopoly, a few dominant brands offer most of the products and services and make significant decisions on behalf of the rest. B) interdependence of firms. Established firms in the market may take strategic actions to prevent new entries. *To increase market share *The firm is failing to produce at the profit-maximizing output. To further understand market modules follow the below topics. b) legal E) only when there is no Nash equilibrium. b) Lower prices, but greater output For example, the existing firms might threaten to reduce the price drastically if entry occurs. 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 0. What are the 4 characteristics of oligopoly? d) Cost leadership model The distinctive feature of an oligopoly is interdependence. d) vertical D) the industry is government regulated They believe in making customers stick to their brands for core competenciesCore CompetenciesThe core competencies in business refer to its resources and unique fundamental capabilities that distinguish it from market competitors. You can calculate it by adding Direct Material cost, Direct Labor Cost, & Manufacturing Overhead Cost. B) "I am producing more widgets than Wally and I agreed to in our talk last week." d) cheat, Which of the following represent shortcomings of the four-firm concentration ratio? Which statement is true about oligopolies? d) independently, The shape of the demand curve for an oligopolistic firm ______. c) conveying information to consumers what are the 5 characteristics of an oligopoly? Over a long time period, cheating ______ collusive oligopolies D) A and B. The firms produce differentiated products. C. The choices made by one firm have a significant effect on other firms. E) a competitive market produces two goods. Save my name, email, and website in this browser for the next time I comment. For example, an industry with a five-firm concentration ratio of greater than 50% is considered an oligopoly. c) inflexible E) a market with two distinct products. 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? Some of its fundamental characteristics include the existence of a small number of firms, differentiated or homogeneous products, and barriers to entry. 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. 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. Strategic independence. A) only Bob would like to change his decision. A) rules . The four-firm concentration ratio is based on the ___. E) potential entrants taking all the business away from existing firms. However, firm B will follow the leaders price and equilibrium quantity in order to avoid the uncertainty that can be arisen. b) increasing monopoly power Marilyn has been involved in negotiations between DTR and prospective lenders as DTR *Cause price wars during business recessions The concentration ratio is a tool that measures the market share leading companies have in an industry. price changes, not production costs, so it can't be b. c) through product development a) price leadership D) the four-firm concentration ratio for the industry is small. D) perfectly inelastic. We unlock the potential of millions of people worldwide. D) its profit will rise by the same percentage. D) assumes that competitors will match price cuts and ignore price increases. Also, as there are few sellers in the market, every seller influences the behavior of the other firms and other firms influence it. All firms stick to what has been decided, thereby ensuring price stability in the sector. a) An outcome in the payoff matrix from which one firm wants to deviate since the current strategy is not optimal given the rival's strategic choice. A) "Gas prices in this town always go up and down together." c) is always downward sloping B) "Every time Sparrow's Donuts has a donut sale, so does Tim Horton's." 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). a) Cartel c) Firms earn zero economic profits in the long-run. a) The same as monopolistic competition 5) According to the kinked demand curve theory of oligopoly, each firm believes that if it raises its price, b) it will lower the firm's costs Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. c) Its marginal cost curve is made up of two segments Many firms b. In first-degree price discrimination, a monopolist charge each customer the highest price the customer is willing to pay. ECO-FINALS_LESSON-1 - Read online for free. As their products seem visually identical, both the brands have to make sure they offer customers something that the other does not. c) Price war b) Interindustry competition 11) Because an oligopoly has a small number of firms, A) each firm can act like a monopoly. View full document. Instead, they collaborate on various fronts, such as economies of scaleEconomies Of ScaleEconomies of scale are the cost advantage a business achieves due to large-scale production and higher efficiency. The other two share the rest (20%). C) is; the dominant firm is making an economic profit Oligopoly Models: 1. You may also have a look at the following articles , Your email address will not be published. c) Dominant firms E) other firms will not raise theirs. 1) A cartel is a group of firms which agree to It is the most important feature of an oligopolistic market. d) cost leadership. Collusion becomes more difficult as the number of firms ____. *mutual interdependence Oligopolyis a market structure Products traded or traded homogeneously become the second characteristic of oligopoly. c) costs; uncertainty; increase What kind of problem does this represent with the four-firm concentration ratio? The value denotesthe marginalrevenue gained. c) It will always be kinked because it is a price maker. C) "Construction prices in this town seem to be always set by Big Jim's Dandy Construction Company." 16) The firms Trick and Gear form a cartel to collude to maximize profit. Based on the elasticity of demand and its response to the price change, the demand curveDemand CurveDemand Curve is a graphical representation of the relationship between the prices of goods and demand quantity and is usually inversely proportionate. b) collusion model d) Its marginal revenue curve would consist of two segments, d) Its marginal revenue curve would consist of two segments What kind of game is it when firms choose their optimal pricing strategy today without worrying about possible interactions in the future? A) behave competitively. D) There is more than one firm in the industry. bc it's similar to monopoly but has the difference of having more firms lol. However, DTR does not intend to build any single family homes. *The firm's demand curve will shift further to the left. What would have been DTRs debt to equity ratio if the$10 million of stock had not been A firm in an oligopolistic market ______. D) "I have been spending extra on research and development of my new two-way widget." 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E) Each firm has an incentive to cheat. Why Developing Countries Should Focus on International Trade? Besides, high capital requirements, licensing, patents, market demand, economies of scale, limit-pricing, and customer loyalty restrict the entry of new businesses. Which of the following is not a characteristic of oligopoly? The land is in an area zoned only for xxx\underline{\phantom{\text{xxx}}}xxx. 3) Canada's anti-combine law is enforced by It is used as one of the strategies to increase the business firm's revenue and increase the market share. The existence of oligopoly requires that a few firms are able to gain significant market power, preventing other, smaller competitors from entering the market. Marginal revenue = Change in total revenue/Change in quantity sold. a) are less efficient due to competition Impure oligopoly - have a differentiated product. B)Firms set prices. 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. b) are few in number *Reduce inputs used in production While it is true that strategic behavior and mutual interdependence characterize oligopolies, this is not the reason why they are price makers. Why is collusion desirable to oligopolistic firms? 12) Because an oligopoly has a small number of firms 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. c) They lose most of their excess-production capability. Production Cost is the total capital amount that a Company spends in producing finished goods or offering specific services. The most important model of oligopoly is the Cournot model or the model of quantity competition. d) price leadership; kinked-demand, From society's standpoint, what are the effects of collusion in an oligopolistic industry? 2003-2023 Chegg Inc. All rights reserved. a. 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. $15. b) Its demand curve is downward-sloping a) low to receive a payout of $15 Furthermore, no restrictions apply in such markets, and there is no direct competition. E) marginal cost. Economists identify four types of market structures: (1) perfect competition, (2) pure monopoly, (3) monopolistic competition, and (4) oligopoly.