Chapter 11: Oligopoly and Monopolistic Competition

An industry that is dominated by a few large firms is 

• monopolistic competition.
• a monopoly.
• perfect competition.
• an oligopoly.

conspiring among business to set the prices of competing production

• pricing fixing
• trust
• market share
• oligopoly

This is an illegal practice of an oligopoly working together to set prices. 

• collusion 
• monopolistic competition 
• competitive pricing
• priceline negotiation 

The most recognizable form of non-price competition is? 

• More Locations 
• Better Customer Service
• Advertising 
• Low Price 

Which of the following usually results from colluding firms? 

• more is produced
• profit decreases
• prices are higher
• more firms enter the market

The characteristic of oligopolistic firms that makes them different from all other types of firms is that oligopolistic firms:

• Advertise their products
• Consider each other's decisions
• Produce differentiated products
• Face high barriers to entry

The concentration ratio measures the

• Number of plants owned by an oligopoly.

• Percentage of total profits made by a firm in a specific market.

• Proportion of total output produced by the four largest producers in a specific market.

• Relative size of a firm compared to other industries.

The goal of a company in an oligopoly industry is to

• Increase market share and profits.

• Obtain the highest price possible.

• Always follow rivals if they raise price.

• Be the market leader in innovation.

A kinked demand curve indicates that rival oligopolists match all

• Increased advertising.

• Advertising reductions.

• Price increases.

• Price reductions.

The study of how decisions are made when strategic interaction between firms exists is known as

• Game theory.

• Contestable market theory.

• Market power theory.

• Predatory pricing theory.