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c) They lose most of their excess-production capability. After each player chooses his or her best strategy and sees the result, *The game would eventually end in the Nash equilibrium (cell A). d) Firms choose strategies at the same time. They may produce homogeneous products or differentiated products. c) They move leftward and upward to a higher point on the average-total-cost curve. c) through collusion Nokia, however, offers Android phones with the same features and almost similar prices. believes that DTRs debt to equity ratio of 1.6 is probably the minimum that lenders will accept. Experts are tested by Chegg as specialists in their subject area. A game that is played more than once between rivals is a ____ (Enter one word) game. B) assumes marginal cost is constant. Four characteristics of an . c) sales of the largest firms in an industry When there are two market leaders in any industry or service, this is referred to as a duopoly. e) Its marginal cost curve is made up of two segments, d) Its marginal revenue curve would consist of two segments. One of theoligopoly characteristicsis the focus of its members on improving the product quality or offering benefits to make their brand unique. Business Economics Consider a Cournot oligopoly with n = 2 firms. C) specify how marginal cost is determined. 41) Refer to Table 15.3.12. In an oligopoly, a few dominant brands offer most of the products and services and make significant decisions on behalf of the rest. The point at which an upward-sloping marginal cost curve intersects a downward-sloping marginal revenueMarginal RevenueThe marginal revenue formula computesthe change in total revenue with more goods and units sold." Artificial intelligence (AI) services are on the rise, with every industry readying to integrate the technology sooner or later. a) Affect profits and influence the profits of rival firms is the demand curve for taxi rides in a town, and, 14) Refer to Figure 14.1.1. . 4. It is a reflection of quantity/output performance against cost/revenue performance. D) not an oligopoly. The four-firm concentration ratio is based on the ___. Some of its fundamental characteristics include the existence of a small number of firms, differentiated or homogeneous products, and barriers to entry. Oligopoly Models: 1. 5.3.5 Apply Concepts of Oligopoly and Oligopoly Models .pdf. 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. Prisoners' dilemma describes a case where Oligopolies are typically composed of a few large firms. b) potential for mergers and acquisitions D) is not; to comply when the other firm complies and to cheat when the other firm cheats I really hope you learned this article. b) Interindustry competition Products traded or traded homogeneously become the second characteristic of oligopoly. True or false: Firms in an oligopoly always produce a homogeneous product. a) Import competition B) "I am producing more widgets than Wally and I agreed to in our talk last week." *localized markets, *dominant firms D) 2,750. b) It will always be downward sloping because it is a price maker. d) achieve greater allocative efficiency but lesser productive efficiency, c) give the appearance of increased competition a) payoff Share with Email, opens mail client 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) Import competition c) Price war D) assumes that competitors will match price cuts and ignore price increases. c) Dominant firms Which statement is true about oligopolies? We can conclude that industry A is. a) localized markets d) its rivals match price decreases but ignore price increases, d) its rivals match price decreases but ignore price increases, Which of the following is true about the oligopolist if rivals match a price cut but ignore a price increase? The amount of time (in seconds) needed to complete a critical task on an assembly line was measured for a sample of 50 assemblies. 7) Why might only a few firms dominate an oligopolistic industry? c) threatens C)The sales of one firm will not have a significant effect on other firms. 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. D) Gear cheats, while Trick complies with the agreement. a) pricing theory In short,AI oligopoly is all set to shape the market, comprising a few large AI service providers dominating and influencing others in the business. a) price changes occur slowly *The game would eventually end in the Nash equilibrium (cell B or C). B) "Every time Sparrow's Donuts has a donut sale, so does Tim Horton's." East Asian regimes tend to have similar characteristics First they are orien. Oligopoly is a market with a few firms and in which a market is highly concentrated. d) have interdependent pricing. Which statement is true about oligopolies? . Oligopolistic firms do which of the following when they change their pricing strategies? Wal-Mart's marginal cost of a flat panel TV has fallen, and as a result Wal-Mart will ________. That means higher the price, lower the demand. Interdependence: The foremost characteristic of oligopoly is interdependence of the various firms in the decision making. B) interdependence of firms. 3) Canada's anti-combine law is enforced by Any change in either of them will affect the quantity/output sold by a producer. A) a Competition Tribunal. characterized by the presence of a few large firms who produces *The firm is failing to produce at the profit-maximizing output. c) Firms earn zero economic profits in the long-run. A) Each firm has an incentive to collude. D) zero. B. The number of suppliers in a market defines the market structure. A Computer Science portal for geeks. B) is not; to comply when the other firm cheats and to cheat when the other firm complies Marilyn has been involved in negotiations between DTR and prospective lenders as DTR And rest of the businesses or minor players follow the same. ), Oligopolists often compete through product development and advertising instead of price because ______. As a result, the implementation of the policy has been marginalizing the rural settled peasant . d) ow to receive a payout of $12 On the other hand, if an oligopolist reduces output by raising prices, the rest refrain from doing so. A) potential entrants entering and making monopoly profit. Monopolists are not allocatively efficient, because they do not produce at the quantity where P = MC. a) Import competition c) inflexible c) All oligopolists' or imperfect competitors' demand curves are down-sloping because they are price makers. Our assessments, publications and research spread knowledge, spark enquiry and aid understanding around the world. D) increase the amount they produce. 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. 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 Product differentiation refers to making a product look attractive and different from other products in the same class. E) None of the above. *The firm's profits will be lower. The firms produce differentiated products. D) payoffs a) The number of average-sized firms in an industry needed to produce sales equivalent to the four largest firms Pure because the only source of market power is lack of competition. 1) All games share four common features. C) Dr. Smith advertises only if Dr. Jones doesn't advertise. a) necessary Why is collusion desirable to oligopolistic firms? price changes, not production costs, so it can't be b. Therefore, the competing firms will be aware of a firm's market actions and will respond appropriately. 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. The competing firms are few in number but each one is large enough so as to be able to control the total industry output and a moderate. The equilibrium ________ a dominant strategy equilibrium because the strategy in this game is for a firm ________. Chapter 15: Monopolistic Competition and Olig, Pesticide Applicator Certification Core Manual, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal. B) collusion E) is not; frequently one of the smaller firms becomes the dominant firm, and the original dominant firm becomes less important. a) The possibility of price wars diminishes and profits are maximized. Which scenario describes a simultaneous game? E) equilibrium price and quantity will be insensitive to small demand changes. a) The outcomes for all firms are negative. a) are less efficient due to competition ), Which of the following is true about the oligopolist if rivals match a price cut but ignore a price increase? C. Some market power. It determines the law of demand i.e. a) Demand is highly elastic below the going price b) Mutual interdependence When two major players dominate a sector, the market becomes a duopolyDuopolyWhen there are two market leaders in any industry or service, this is referred to as a duopoly. C) changes in the output of any member firms will have no impact on the market price. a) over collusion D) All of the above. 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? Pure or Perfect Oligopoly: If the firms produce homogeneous products, then it is called pure or perfect oligopoly. It thus limits the competition to only those already in the group. Oligopolists seek to maximize market profits while minimizing market competition through non-price competition and product differentiation. In the scenario above, the market is. What kind of game is it when firms choose their optimal pricing strategy today without worrying about possible interactions in the future? The firms in the oligopolistic market are having full knowledge about the market particularly about their rival firms. Imperfect or Differentiated Oligopoly: ADVERTISEMENTS: a) is needed in (Enter one word per blank. A characteristic found only in oligopolies is A) break even level of profits. d) can set its price and output to maximize profits. A monopoly occurs when. C) other firms will raise their prices by an identical amount. c) They achieve allocative efficiency because they produce at minimum average total cost. Pure oligopoly - have a homogenous product. c) Blue jean designer *To obtain lower input prices 13) A dominant firm oligopoly might be one for which the Herfindahl-Hirschman Index is b) collusion model *Increase profits b) increasing monopoly power b) greater than or equal to 50% c) The outcomes for all firms are positive. B) unit elastic. Which of the following is not a characteristic of an oligopoly? a) Firms have no control over their price. For example, the existing firms might threaten to reduce the price drastically if entry occurs. a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and . c) less than or equal to 40% Social Studies, 22.06.2019 00:00. If productivity can be increased to $0.11 vans per labor hour, how many hours would the average laborer work that month? The control of oligopolists over specialized inputs, such as resources, price, and production, makes it difficult for a new firm to survive. $15. E) none of the above is done. D) All of the above. d) Interindustry competition, Which are barriers to entry in both monopolies and oligopolies? Each optometrist can choose to advertise his service or not. 14) The kinked demand curve model 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) a monopoly. homogeneous or differentiated products i. c) The supply curve model The distinguishing characteristics of oligopoly are briefly explained below: 1. 3) Which one the following industries is the best example of an oligopoly? D) There is more than one firm in the industry. *Ownership and control of raw materials *providing misleading information D) equilibrium quantity will be sensitive to small cost changes but price will not. as the price increases, demand decreases keeping all other things equal. There are just several sellers who control all or most of the sales in the industry. e) It could be downward sloping or kinked. Determinateness of demand curve is a part of law of demand and does not fall in oligopoly. The incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. E) Dr. Smith does not advertise if Dr. Jones advertises. b) collusion a) gentleman's agreement *price elasticity of demand A) a market where three dominant firms collude to decide the profit-maximizing price. *To increase control over the product's price B) perfectly inelastic demand. Which of the following statements correctly describes Dr. Smith's strategy given what Dr. Jones may do? C) a firm in monopolistic competition. Which of the following is not a characteristic of an oligopoly? For example, an industry with a five-firm concentration ratio of greater than 50% is considered an oligopoly. The value denotesthe marginalrevenue gained. The presidents friend constructs and sells single family homes. a) are always more efficient 4. Oligopoly. e) straight. If Marilyn believes that the $10 million stock issue was undertaken only to improve DTRs OA. 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. Interdependence *Prohibit the entry of new rivals. Based on the figure, if one firm cheats on the collusive agreement it can increase its payoff by Economics questions and answers. In these characteristics, manufacturers usually only produce and sell one product. b) Collusive pricing model Such companies have complete control of the market, earning high profits and gains in a specific sector or service. 10) In the dominant firm model of oligopoly, the dominant firm produces the quantity at which marginal revenue equals $4. The key characteristics of an oligopoly market structure include: Few firms : There are only a few firms in the market, which makes it easy for the firms to coordinate their behavior and to reach . d) its rivals match both a price cut and price increase, b) its rivals match a price cut but ignore a price increase, When members of an oligopoly meet to set prices to maximize profits it demonstrates the ______ and/or the ______ model. b) Lower prices, but greater output An oligopoly is a market structure where a few large firms collude and dominate a particular market segment. b) price leadership; collusion A) zero economic profits in the long-run. c) may be less desirable because they are not regulated by government to protect consumers Marilyn is also aware that DTR issued$10 million of common stock to a long-time friend of the What happens to oligopolistic firms when a recession occurs? D) Consumers will eventually decide not to buy the cartel's output. The concept serves to be useful for companies focusing on multiple product lines and operating more than one business unit at a time. Types of Market Structure Economists group industries into four distinct market structures: 1. d) independently, The shape of the demand curve for an oligopolistic firm ______. A) the government will impose price controls. Over a long time period, cheating ______ collusive oligopolies *Preemptive pricing e) price changes are typically expensive, b) product development and advertising are relatively difficult to copy, Oligopolies are not a desirable market structure because they achieve ______. from chapter 12 ^-^, What is the only stable outcome in a payoff matrix? corporations president in exchange for some land just before the negotiations with lenders began. they will make more pricing low than if they both price high. Which of the following represents the problem with the four-firm concentration ratio? A. 8) Firm X is competing in an oligopolistic industry. Use the figure below to answer the following question. c) horizontal or perfectly elastic About us. Consequently, the output and pricing policies of a particular company can affect market conditions. D) Bud has a dominant strategy but Miller does not. B) 1. OA. They do it strategically so they do not lose their customers in what could be a price war. Features: Many and small sellers, so that no one can affect the market A) is; to comply regardless of the other firm's choice . *Increase profits A) "Gas prices in this town always go up and down together." *world trade The main Characteristics of oligopoly are as follows: A few sellers There will be a few sellers in an oligopoly. Consider a simple case of three firm oligopoly. How oligopolists react to the price change by one firm can be best understood with the downward-sloping Kinked demand curve. 9) Which isnota characteristic of oligopoly? d) through advertising, Firms have a desire to cheat on a collusive agreement because ______. d) It will always be U-shaped. E) rivalry of the participants leads to the worst solution from their point of view. C) if Jane does not change her decision, Bob would like to change his. 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). 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. c) price leadership e) Firms may sell a differentiated product. Four characteristics of an oligopoly industry are: Few sellers. b) legal The more concentrated a market is, the more likely it is to be oligopolistic. c) Firms' advertising decisions are interdependent. c) through product development b) u-shaped 11) Which one of the following quotations best describes a dominant firm oligopoly? Oligopolistic behavior implies that oligopolists prefer competition ______. a) major firms in an industry ranked by employment In a(n) _____ game one firm moves first, committing to a strategy and then the rival firm responds. b) its rivals match a price cut but ignore a price increase E) an outcome. Consequently, the sales of the other firm will be definitely reduced by the same percentage. d) The advertising model, To reduce uncertainty or increase profits, oligopolists may change their prices ______. c) costs; uncertainty; increase A market is deemed oligopolistic or extremely concentrated when it is shared between a few common companies. *To decrease monopoly power *Large capital investment B) the firms may legally form a cartel. 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. 6) According to the kinked demand curve theory of oligopoly, at the quantity corresponding to the kink, the firm's 8) 8)Which is not a characteristic of oligopoly? 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. E) entry into the industry of rival firms will raise cartel profit as long as the new firms join the cartel. d) import competition, Suppose the rivals of an oligopolistic firm match either a price increase or decrease. View full document. If this occurs, then the firm's demand curve will look ______. B) This game has no Nash equilibrium. Instead, they try different approaches, such as rewarding customers for their loyalty, differentiating their product offerings, providing sales promotion schemes, acting as sponsors, etc. oligopoly, monopoly, monopolistic competition, pure competition pure competition, monopolistic competition, oligopoly, monopoly. The total market demand is P(Q) = 50 - 2Q, where Q is the total quantity produced by all (active) firms in the industry. 8) A weakness of the kinked demand curve theory of oligopoly is that it does not *mutual interdependence Production Cost is the total capital amount that a Company spends in producing finished goods or offering specific services. *To increase economies of scale. Sweezy Oligopoly - based on a very specific assumption regarding how other firms will respond to price increases and price cuts. 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? C) Art denies and Bob confesses. The payoffs in the table are the economic profit made by Bud and Miller. However, at this price profit of firm B is not maximized.The profit-maximizing price of firm B isPB (>PA) and the quantity is Xbe (