Oligopoly (2)

What are the main characteristics of oligopoly?

• Few firms, independent, high barriers of entry
• Few firms, interdependent, high barriers of entry 
• Many firms, interdependent, low barriers of entry
• Many firm, independent, low barriers of entry

What is a collusive oligopoly?

• Firms produce homogeneous products
• Firms that act together to determine price or output
• Firms that compete with each other in determining output
• Firms that cheat to maximise profits

What is the equilibrium of the below game?

• A,X
• A,Y
• B,X
• B,Y

An example of a market that is NOT an oligopoly is one for...

• soft drinks 
• cars 
• athletic shoes 
• corn

An extreme case of oligopoly in which firms collude to raise joint profits is known as a:

• duopoly

• cartel

• dominant producer

• price war

• price leadership

Which of these is not a feature of an oligopolistic market?

• Firms acting as price makers

• Extensive price competition

• The number of firms is usually small

• Firms are interdependent

One difference between oligopolies and monopolistically competitive markets is that

• there is no deadweight loss in monopolistically competitive markets, but there is in oligopolies

• the products sold in monopolistically competitive markets are identical

• oligopolies have fewer barriers to entry

• firms maximize profits in monopolistically competitive markets but not in oligopolies

• there are fewer firms in oligopolistic markets than in monopolistically competitive ones

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.

How might an oligopoly control prices?

• Collusion

• Price leadership

• Nonprice competition

• All of the above

The following table shows the profits associated with the pricing strategies of two oligopolistic firms, Agronomia and Farmingdale. Each firm has two possible strategies: to charge a low price or a high price. The first entry in each cell shows the profits to Agronomia and the second the profits to Farmingdale. If the two firms do not cooperate, what will be the profit for each firm?

• Agronomia = $50; Farmingdale = $100
• Agronomia = $150; Farmingdale = $150
• Agronomia = $300; Farmindale = $50
• Agronomia = $100; Farmingdale = $100