Oligopoly (1)

Which of the following best describes an oligopoly?

• many monopolistically competitive firms

• a few firms sharing monopoly power

• a former monopoly that has been broken up by the government

• a government-granted franchise or monopoly

Collusion most frequently occurs in industries that are

• oligopolistic

• monopolistically competitive

• monopolistic

• perfectly competitive

An oligopoly is a market structure in which many firms sell products that are similar but not identical

• TRUE

• FALSE

The unique feature of an oligopoly market is that the actions of one seller have a significant impact on the profits of all of the other sellers in the market

• TRUE

• FALSE

When oligopolists collude and form a cartel, the outcome in the market is similar to that generated by a perfectly competitive market

• TRUE

• FALSE

If oligopolists engagein collusion and successfully form a cartel, the market outcome is

• the same as if it were served by a monopoly

• The same as if it were served by competitive firms

• The same as if it were served by competitive firms

• Known as Nash equilibrium

As the number of sellers in an oligopoly increases

• Collusion is more likely to occur because of larger number of firms can place pressure on any firm that defects

• Output in the market tends to fall because each firm must cut back on production

• The price in the market moves further from marginal cost

• The price in the market moves closer to marginal cost

Collusion is difficult for an oligopoly to maintain

• Because antitrust laws make collusion illegal

• Because, in the case of oligopoly, self-interest is in conflict with cooperation

• If additional firms enter of the oligopoly

• For all the above reasons

Equilibrium quantity for the oligopolist is at

• 0e

• 0f

• 0g

• 0h

The price charged by the profit-maximising oligopolist would be

• 0a

• 0b

• 0c

• 0d