Unit 2.11 Market power - Oligopoly(HL)

What is an oligopoly?

• A market with only one firm

• A market with no competition

• A market where a small number of large firms dominate

• A market dominated by a large number of small firms

What is the concentration ratio in oligopolistic markets?

• The ratio of total revenue of the largest firms to total market revenue

• The ratio of total profit to total revenue

• The ratio of total revenue of all firms in the market

• The ratio of total market share to total revenue

What are barriers to entry in oligopolistic markets?

• High costs and regulations

• No competition

• No barriers at all

• Low costs and easy regulations

What do firms in oligopolistic markets sell?

• Differentiated products

• Services only

• Identical products

• No products

What is interdependent decision making in oligopolistic markets?

• Firms follow government decisions

• Firms do not make any decisions

• Firms make decisions based on competitors' reactions

• Firms make decisions independently

What is collusion in oligopolistic markets?

• Competition between firms

• Government intervention

• Sharing information about price and output decisions

• No communication between firms

What is the most extreme form of collusion?

• Cartel

• Perfect competition

• Monopoly

• Price leadership

What are the conditions for collusion to operate effectively?

• No relationships between producers

• Product differentiation

• Many firms involved

• No barriers to entry

Why is collusive behavior illegal in most countries?

• It promotes competition

• It leads to higher prices and lower output

• It benefits consumers

• It leads to lower prices

What is tacit collusion?

• Informal coordination of price and output decisions

• No communication between firms

• Government intervention

• Formal agreement between firms