#1
In oligopolistic markets, what is a characteristic of the interdependence among firms?
Firms' actions affect competitors' profits and strategies.
ExplanationInterdependence leads to strategic decision-making.
#2
Which of the following is a common feature of oligopoly?
High barriers to entry
ExplanationOligopolies have high barriers to new entrants.
#3
What is the primary goal of a firm in an oligopolistic market?
Maximizing profit
ExplanationMaximizing profit is the primary goal in oligopoly.
#4
Which market structure is characterized by a few large firms dominating the industry?
Oligopoly
ExplanationOligopoly is characterized by a few dominant firms.
#5
What is a distinguishing feature of a duopoly in oligopoly?
Existence of only two firms in the market
ExplanationDuopoly involves only two firms in the market.
#6
What is a primary challenge faced by firms in oligopolistic markets?
Strategic decision-making in response to rivals' actions
ExplanationFirms must make strategic decisions considering competitors.
#7
Which strategy involves a firm maintaining prices at a level equal to competitors' prices?
Price leadership
ExplanationPrice leadership entails matching competitors' prices.
#8
What is a key characteristic of the Cournot model in oligopoly?
Firms compete by setting quantity simultaneously.
ExplanationCournot model involves firms setting quantities simultaneously.
#9
Which concept refers to the situation where firms tacitly agree to limit competition and increase profits?
Collusion
ExplanationCollusion entails firms tacitly agreeing to limit competition.
#10
What is a common strategy used by firms in an oligopolistic market to differentiate their products?
Advertising
ExplanationAdvertising is commonly used for product differentiation in oligopoly.
#11
What is a distinguishing characteristic of the kinked-demand curve model in oligopoly?
Price rigidity due to asymmetrical responses to price changes
ExplanationKinked-demand curve model results in price rigidity due to asymmetric responses.
#12
What is a potential consequence of price rigidity in oligopoly?
More elastic demand
ExplanationPrice rigidity may lead to more elastic demand.
#13
What is a characteristic of a contestable market in oligopoly?
Ease of entry and exit
ExplanationContestable markets allow easy entry and exit.
#14
What is a key assumption of the Stackelberg model in oligopoly?
Firms make decisions sequentially.
ExplanationStackelberg model assumes sequential decision-making.
#15
What is a potential drawback of price collusion among firms in an oligopoly?
Lower profits
ExplanationPrice collusion may lead to lower profits due to reduced competition.