Characteristics of Oligopoly quiz #1 Flashcards
Characteristics of Oligopoly quiz #1
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What are two types of oligopolies? Oligopolies can be classified as homogeneous (identical products, e.g., aluminum) and differentiated (products differ, e.g., soft drinks like Coke and Pepsi). Why is the automobile industry considered an oligopoly? The automobile industry is considered an oligopoly because it is dominated by a few large firms, each with significant market power and interdependence in pricing and output decisions. Which best describes how advertising influences consumer choice in an oligopoly? Advertising in an oligopoly can differentiate products and influence consumer preferences, often leading to increased brand loyalty and limited consumer choice among a few major brands. When does an oligopoly exist in a market? An oligopoly exists when a market is dominated by a few producers who are interdependent and face barriers to entry. Which statement is true about oligopolies? Oligopolies are characterized by a few firms with significant market power and interdependent decision-making. Why is competition limited in an oligopoly? Competition is limited in an oligopoly due to barriers to entry, such as ownership of key resources, government regulation, and economies of scale. Which of the following is not a characteristic of oligopoly: few sellers, identical or differentiated products, free entry and exit, interdependence? Free entry and exit is not a characteristic of oligopoly; oligopolies have significant barriers to entry. Why is collusion desirable to oligopolistic firms? Collusion allows oligopolistic firms to coordinate pricing and output, increasing profits by reducing competition. What are the positive effects of large oligopolists advertising? Large oligopolists' advertising can increase brand awareness, differentiate products, and potentially expand market share. In an oligopoly, how do firms interact? Firms in an oligopoly are interdependent, meaning each firm's decisions affect and are affected by the actions of other firms. In the framework of an oligopoly, what is a key feature of firm behavior? A key feature is strategic decision-making, where firms consider competitors' likely responses to their actions. Which of the following would most likely create the setting for an oligopoly: high barriers to entry, many small firms, identical products, no market power? High barriers to entry would most likely create the setting for an oligopoly. Which of the following statements about oligopolies is not correct: Firms are interdependent, there are many sellers, barriers to entry exist, products may be identical or differentiated? The statement 'there are many sellers' is not correct; oligopolies have few sellers. What are three models used to study pricing and output by oligopolies? Three models are the Cournot model, Bertrand model, and Stackelberg model. When two firms interact in an oligopolistic market, what is a likely outcome? Their pricing and output decisions are interdependent, often leading to strategic behavior such as matching price changes. Which of the following examples illustrates an oligopoly market: wheat farming, soft drink industry, local bakery, online retail? The soft drink industry (e.g., Coke and Pepsi) illustrates an oligopoly market. Which of the following characteristics is prevalent in oligopolies: many sellers, interdependence, free entry, no market power? Interdependence is prevalent in oligopolies. Which of the following industries is an illustration of homogeneous oligopoly: aluminum, soft drinks, clothing, electronics? Aluminum is an illustration of a homogeneous oligopoly. Which statement about oligopoly is false: Firms are interdependent, there are few producers, products are always identical, barriers to entry exist? The statement 'products are always identical' is false; products can be identical or differentiated. Which firm would an economist most likely label as an oligopolist: a local bakery, a major aluminum producer, a small farm, a single utility company? A major aluminum producer would most likely be labeled as an oligopolist. Which of the following is the best example of oligopoly: wheat farming, aluminum production, local restaurants, online marketplaces? Aluminum production is the best example of oligopoly. Which product category is the best example of an oligopoly? Soft drinks (e.g., Coke and Pepsi) are a classic example of an oligopoly product category. Which of the following apply to oligopoly industries: few firms, barriers to entry, interdependence, identical or differentiated products? All of these apply: few firms, barriers to entry, interdependence, and identical or differentiated products. Which of the following are characteristics of oligopolistic markets? Few producers, interdependence, barriers to entry, and products that may be identical or differentiated. What is an oligopoly? An oligopoly is a market structure with a few producers who are interdependent and face barriers to entry. Which situation could be the best example of an oligopoly? A market where a few large firms dominate, such as the soft drink or aluminum industry. What is an oligopoly? Part 2: An oligopoly is a market structure with what features? An oligopoly is a market structure with few producers, interdependence, and barriers to entry. What characterizes a market with oligopolistic competition? Few firms, interdependent decision-making, and significant barriers to entry. When an oligopoly exists, how many producers dominate the market: none, one, a few, many? A few producers dominate the market in an oligopoly. Oligopolies are not a desirable market structure because they achieve what outcome? Oligopolies may lead to reduced competition, higher prices, and less consumer choice compared to more competitive markets. An oligopoly firm is similar to a monopolistically competitive firm in that both Both have some control over price and may sell differentiated products. Which of the following describes an oligopoly: many sellers, few sellers, no barriers to entry, identical products only? Few sellers describes an oligopoly. What is an oligopoly? Part 2: An oligopoly is a market structure with what characteristics? Few producers, interdependence, and barriers to entry. A market structure in which only a few sellers offer a similar product is called a Oligopoly. In an oligopolistic market, consumer choice is nonexistent, limited, extensive, or infinite? Consumer choice is limited in an oligopolistic market. Why is the automobile industry considered an oligopoly? Because a few large firms dominate the market and are interdependent in their decisions. In an oligopoly, which of the following conditions exist: many sellers, few sellers, no barriers to entry, independent decision-making? Few sellers and interdependent decision-making exist in an oligopoly. In the framework of an oligopoly, what strategy can work like a silent form of cooperation? Price leadership, where one firm sets the price and others follow, can act as a silent form of cooperation. When two firms interact in an oligopolistic market, which of the following statements is true? Each firm's decisions affect the other, leading to strategic behavior and possible price matching. What generally causes U.S. companies in oligopoly to have similar prices? Interdependence and strategic behavior, such as price matching, often result in similar prices.
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