#1
In an oligopoly market, how many firms typically dominate the industry?
A few
ExplanationOligopoly markets are characterized by a small number of dominant firms.
#2
Which market structure is characterized by high barriers to entry and few firms dominating the market?
Oligopoly
ExplanationOligopoly is a market structure with high entry barriers and a small number of dominating firms.
#3
Which of the following is a characteristic of oligopoly markets?
Interdependence among firms
ExplanationOligopolistic firms often rely on each other's actions, leading to strategic interdependence.
#4
What is the kinked demand curve model used to explain in oligopoly markets?
Price rigidity
ExplanationThe kinked demand curve model in oligopoly explains why prices tend to remain stable despite changes in costs or demand.
#5
Which market structure is most similar to oligopoly but features a larger number of firms?
Monopolistic competition
ExplanationMonopolistic competition shares similarities with oligopoly but involves a greater number of competing firms.
#6
Which concept suggests that firms in an oligopoly may match price changes but not initiate them?
Price leadership
ExplanationPrice leadership in oligopoly refers to firms following the price changes of a leading competitor.
#7
What is a common measure used to assess the level of market concentration in an oligopoly?
Herfindahl-Hirschman Index (HHI)
ExplanationHHI is a common measure indicating market concentration by assessing the market shares of firms in an oligopoly.
#8
Which strategy involves setting prices just below a competitor's price in an oligopoly?
Predatory pricing
ExplanationPredatory pricing is a strategy where a firm sets prices below competitors to gain a competitive advantage.
#9
What is a potential consequence of collusion in an oligopoly market?
Reduced consumer choice
ExplanationCollusion among oligopolistic firms can lead to reduced competition and limited choices for consumers.
#10
What is the term for a situation where firms in an oligopoly compete by attempting to differentiate their products?
Non-price competition
ExplanationNon-price competition in oligopoly involves firms differentiating their products rather than competing solely on price.
#11
Which economic concept describes the tendency for oligopolistic firms to avoid competing aggressively on price to maintain stable profits?
Price rigidity
ExplanationOligopolistic firms often exhibit price rigidity, avoiding aggressive price competition to ensure stable profits.
#12
In an oligopoly, what is the term for a situation where one firm reduces prices, leading other firms to follow suit?
Price leadership
ExplanationPrice leadership occurs when one firm sets the trend by changing prices, prompting others to follow suit in an oligopoly.