Deck 14: Oligopoly

Question 1

In oligopoly firms sometimes agree on prices. This is called:

A) Delusion
B) Illusion
C) Solution
D) Collusion

Answer 1

D

Question 2

In oligopoly:

A) A few firms dominate the industry.
B) There are many firms of a similar size.
C) One firm dominates the industry.
D) All products are homogeneous.

Answer 2

A

Question 3

In oligopoly:

A) Non-price competition is likely.
B) Every firm is small relative to the market as a whole.
C) Each firm is a price taker.
D) Price is equal to average cost.

Answer 3

A

Question 4

In the Kinked Demand Curve model of oligopoly it is assumed that:

A) An increase in price will be followed by other firms.
B) A decrease in price will not be followed by other firms.
C) An increase in price is not followed by other firms.
D) Price competition is common in the industry.

Question 5

A quota for members of an oligopoly is:

A) A limit on the amount produced
B) A limit on the price charged
C) A limit on the profits made
D) A limit on the number of firms in a market

Question 6

Predatory pricing (or a price war) occurs when:

A) Firms agree to fix the price.
B) One firm tries to undercut the competition and force them out of the market.
C) A firm sets a high price to generate the highest profit possible.
D) Firms agree to limit the amount they produce.

Question 7

Oligopoly differs from perfect competition in that in oligopoly:

A) There are few large firms.
B) There is always freedom of entry and exit.
C) Firms face an upward sloping demand curve.
D) Abnormal profits can only be earned in the short term.

Question 8

The Kinked Demand Curve model of oligopoly is based on a collusive model of oligopoly.

Question 9

In a cartel the firms in an oligopoly join together and may set the same price and overall quantity as a monopolist.

Question 10

If a limit is set on the amount that each member of a cartel can produce, this is called a _____.

Question 11

Which of the following is most likely to be associated with an oligopolistic structure?

A) Restaurants
B) Supermarkets
C) Commodities
D) Hairdressers

Question 12

In an oligopoly market structure, a firms' behaviour is said to be:

A) Unrelated to other firms
B) Independent
C) Interdependent
D) None of the above

Question 13

The n firm concentration ratio measures:

A) The profits of the largest n firms
B) The employees of the largest n firms
C) The market share of the largest n firms
D) The number of stores of the largest n firms

Question 14

Within the confectionery market, before changing its prices Nestlé should consider the likely behaviour of:

A) BP
B) Mars
C) Marks and Spencer
D) Heinz

Question 15

Firms who join together to behave like a monopoly are said to be in:

A) A partnership
B) A cartel
C) A joint venture
D) A quasi monopsony