#1
In an oligopoly market, firms often engage in price competition to gain market share. What is this behavior called?
Price war
ExplanationIntense competition through price reduction.
#2
Which pricing model suggests that oligopolistic firms might collude to act like a monopoly?
Price leadership
ExplanationOne firm sets prices, others follow to mimic monopoly.
#3
Which of the following is NOT a characteristic of oligopoly?
Perfect competition
ExplanationLacks large number of small firms.
#4
Which pricing model assumes that firms have complete information about their competitors' strategies and react accordingly?
Nash equilibrium
ExplanationFirms react optimally to rivals' actions.
#5
In oligopoly, what is the term used to describe a situation where firms match each other's price changes?
Price signaling
ExplanationFirms adjust prices in response to rivals.
#6
What strategy involves one firm undercutting its competitors' prices in an attempt to increase market share?
Predatory pricing
ExplanationSelling below cost to eliminate competition.
#7
What is the main assumption in the Cournot model of oligopoly?
Firms produce the same quantity simultaneously
ExplanationSimultaneous quantity decision by firms.
#8
Which pricing model in oligopoly assumes that firms set their quantities simultaneously and independently?
Cournot model
ExplanationFirms decide quantities independently.
#9
What is the key assumption of the Bertrand model in oligopoly?
Firms have perfect information about rivals' prices
ExplanationComplete knowledge of competitors' prices.
#10
What is the primary drawback of the kinked demand curve model in oligopoly?
It cannot explain price rigidity
ExplanationLacks explanation for stable prices.
#11
Which pricing model in oligopoly assumes that one firm sets its quantity first, followed by the other firms adjusting their quantities accordingly?
Stackelberg model
ExplanationLeader sets quantity, others adjust accordingly.